I’ve been confronted with many questions over the years regarding the hiring of staff. When is the right time to hire your first assistant? At what point do you decide to hire additional staff? How should you pay your employees, and what benefits should you provide? And, of course, perhaps the most important question of all: How do you find the right “fit” for your company?
I believe advisors typically hire people later than they should. It’s kind of like a glass of water. If the glass is full, we cannot add more water (business). We must first obtain a bigger glass. So, we must increase capacity before we can increase volume.
Another mistake I often see involves how we look at the money side of hiring staff. Adding human capital is not an expense. It’s an investment. Regardless of the type of employee you’re hiring, you should see a four to five times return on your investment. So, if you hire someone with a total salary and benefit cost of $50,000 per year, then you should ultimately see an increase in revenue of $200,000 to $250,000. When hiring administrative staff, the return comes from your own increased production, because you are able to focus more on high-profit activity.
The pay scale
So how do you go about hiring staff, and what should you pay? I learned a very valuable lesson from my father, who was the chief legal counsel for one of the largest universities in the southeast. He always told me, “Jim, hire the smartest, most qualified people you can find.” This can sometimes involve a greater investment than we’d prefer; however, in my experience, it always pays off in spades.
I also believe that we should not go cheap when it comes to paying people. My overriding philosophy is to pay employees on the upper end of what your market should bear, based on each employee’s job responsibilities. It never pays to go cheap. Not only does it enable you to successfully keep your best employees, I believe it is our responsibility as business leaders in our respective communities.
Not just punching the clock
When looking for great employees, I think the No. 1 ingredient is to find people who understand what you’re all about. It’s not so much about “what” we do in this business, it’s “why” we do it that matters. No matter how talented an employee may be, I’ve found that if they don’t understand the “why” of what I do, they simply will not work out in the long run. Ultimately they are just punching a time clock.
When you hire good, qualified people, and they understand the “why” of what you do, you can create a very valuable practice. Your employees will become much more loyal, because it is not just about the money for them. When everyone is paddling in the same direction, your company can accomplish amazing things to benefit the people you serve.
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