Your firm has a unique culture, whether you craft that culture intentionally or it arises on its own. In every business, transformative events imprint on employees, clients and vendors. The way you handle business decisions and how you treat each of these parties impacts your firm’s culture—and casts you as either a mercenary or a missionary.
In this context, a missionary culture is based on a strong belief in what the firm does and a desire to inspire people to convert to their way. A mercenary culture, on the other hand, is driven by money.
Now I recognize the danger of segregating an entire industry into two overly simplistic categories. Obviously, variations exist within each type, and one should not infer that mercenaries are inherently evil or missionaries necessarily good. They simply run on a different kind of fuel. This analogy allows you to examine whether you are creating the environment you admire and desire, or whether you are encouraging your partners, clients and associates to act in a way that is not ideal.
For example, companies that value production over all else encourage mercenary behavior, as do organizations that consider shareholders more important than clients or employees. Firms that are overly stingy with expenses and resources also fall into this category. The common denominator is behavior driven by immediate financial results tied to short-term acts.
Those who behave like missionaries tend not to be “me-first” or “money-first” types. They are more inclined to consider the impact on clients and employees before inquiring about cost or return. They look toward a longer-term payoff because they believe that by doing the right thing, the rewards will eventually come. It’s not uncommon to find recovering mercenaries in this group, those who have made enough money to feel like they can be more generous in their behavior, but still ask themselves how much something costs or how much they can make.
While both types can be successful in business, whether you define success by profits, growth or value, their chosen approach clearly dictates the firm’s culture. The best advisors have a healthy balance between financial reward and doing what’s right. The worst are those who preach commitment to clients, employees and family but make decisions primarily for the money. The world hates hypocrites whether in religion, politics or business, so mercenaries posing as missionaries present a dangerous threat to the health of any organization.
Mercenary businesses can be compelling because their owners and top producers often achieve great wealth quickly. These firms are vulnerable to pitfalls, however: high staff turnover, low morale, increased client complaints, fraud and other forms of malfeasance. Many believe the country’s largest banks and brokerage firms contributed to the Great Recession in just this manner. Companies that become too large and unwieldy must manage to the lowest common denominator, and often that means filtering every decision through revenue, cost and profits. These metrics are simple to measure, contain obvious levers and allow shareholders to relate to decisions viewed through a financial prism. With a heavy tilt toward generating financial returns no matter what, the stewards of these firms lose sight of what matters most.
The new model advisor seems to find the missionary model more compelling because it focuses less on sales and more on advice. The risk to firms drifting too far in this direction comes in the failure to recognize the need to manage to profitability and hold people accountable for results. Missionary models often over-customize for clients and over-accommodate for staff, an agonizing scenario for high performers.
Studies prove that organizations in tune with the needs of their employees and clients tend to be higher performing businesses over the long term. For example, a study conducted by Moss Adams revealed that niche-focused advisory firms that build a value proposition around the requirements of a particular set of clients grow three times faster than the average practice. By comparison, underperforming firms tend to have more of a “product” focus (meaning a focus on what they sell versus who they serve) and lag behind those that are geared to the needs of a specific client community.
Advisory firms organized around a mission or purpose to impact the lives of others also function as a sort of spiritual guide to those working in the business. For example, some firms choose to select clients based on what they wish to do with their wealth, not just a desire to get richer. For employees of advisory firms, we found that money does not create the same type of sustaining motivation that personal growth, helping others and career advancement does. Money provides a short-term boost to employee productivity, but it’s like a highly caffeinated beverage rather than a healthy, well-balanced meal. That said, without a fair and appropriate reward aligned with the behavior you seek, even missionaries will become disillusioned.
It takes a long time to detect how short-term decisions for financial gain impact the long-term health of an enterprise and how the behavior of its leaders converts missionaries to mercenaries. This often becomes the unintended consequence of making finance the sole filter for business actions.
When employees see how the company makes its decisions, they tend to behave in a way that is valued by the firm regardless of whether it reflects their own set of beliefs. As a result, short-term positive financial results encourage leaders to double down on the strategy regardless of the long-term impact on how clients and employees feel about the company. Like Pavlov’s theory of behavior, every time someone rings the (money) bell, these leaders begin to salivate. Once caught in this trap, it’s hard to extricate the business from what it has become. Meanwhile, those within the firm who have a missionary mindset tend to get frustrated by the discrepancy between what they value and what the firm leaders are doing.
Make no mistake: The same behavior found in large banks and brokerage firms exists within Main Street advisory practices. I’ve often heard advisors say something to the effect that you must pay top dollar if you want something done right. I’ve always questioned the logic of rewarding people to do the right thing. How far have we descended when every action must be impelled by a financial reward? When did we as an industry become a kennel of Pavlov’s dogs?
There is one absolute truth about working in financial services: If you are good at what you do and the marketplace recognizes it, you will make a lot of money, certainly more than a large percentage of the population. The question is whether this gets you to where you want to be as a business. Does your culture allow you to create an enterprise with lasting value that is an employer of choice for the right kind of people? If yes, that makes each decision you make much easier. If no, what will you do about it?
Many firms with a mercenary culture thrive for the short term—but people often flee this environment because it emphasizes revenue production over all other values. The first and most important question to ask when assessing the culture you have created is simple. What do you want your business to be known for, both to employees and clients?