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Practice Management > Building Your Business

You’re the Owner, So Own Up

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Have you ever seen a football coach go into the media room after his team has taken a big-time beating and make a statement that goes something like: “This one’s on me — the other coach just out-coached me”? It doesn’t happen a lot, but it does happen, usually by good coaches.

Why would they say that? The coach wasn’t on the field, he didn’t play the game. And he’s certainly not helping himself with the team owner (or college athletic director). But good coaches know that their players undoubtedly are already going to feel bad enough about being trounced, and they don’t need him or the media piling on. What’s more, he’s sending a message: We’re all in this together — we win as a team, and we lose as a team.

As the independent advisory business transitions from small business to the next level, firm owners need to transition, too. We’ve written a lot over the years, about how, as firms grow, owners need to become good people managers. They also need to become good leaders; and one of the most critical times for owner-advisors to step up and be a leader is when they or their employees make a mistake or when some new initiative doesn’t do as well as expected. The biggest challenge we face in working with advisory firms is when firm owners won’t take responsibility for their decisions and constantly blame their employees for their failures and mistakes.

As we’ve written about many times, one of the hardest ideas for owner-advisors to get their minds around is that as their firms grow, their success depends less and less on what they do, and more and more on what their employees do. Consequently, their relationship with their employees becomes increasingly important. Here are a few of the ways we’ve seen those relationships deteriorate when firm owners fail to take responsibility:

  • Loss of motivation. Put yourself in an employee’s position: they do as they were directed to do (often, without being asked if they think it was a good idea), things turn out badly, and their firm owner blames them. How excited would you be about your job? Your firm? How hard would you try the next time around?
  • Erosion of trust. The above scenario leads what we’ve come to understand as a betrayal of trust. As in any relationships, employees need to believe that the person or people that they work for has their best interests at heart: that they want their employees to do good jobs, and that are all working together toward the success of their business. But when things go badly, and managers don’t own up to their part in it, that bond is broken. And employees start to feel more like adversaries than team members.
  • Loss of an owners’ mentality. In our work with advisory firms, we emphasize creating an “owner’s mentality” in every employee. That is, creating the feeling of having a stake in the success of the business, a knowledge that each employee’s contribution has a positive effect on that success. When employees start of feel that “we’re not really all in this together,” their connection to the business’s success evaporates, as does their impact on its success.
  • High turnover. It’s not hard to see how this would result in a firm having a hard time keeping their employees. And, as the history of the independent advisory business taught us: high employee turnover is a big-time drag on firm growth.

Rather than blaming employees, we work with owner-advisors and other managers to act more constructively. Here’s what we recommend:

1) When a problem occurs, hold off making any judgment until you fully understand what happened and why. Just doing this will solve most of the above issues. But for many owners, it’s not easy to do: it requires a completely open mind, especially to the possibility that you may have played some role in what happened. Ask a lot of questions; really listen to the answers. It’s never a bad thing for owners to really understand what’s going on their businesses, and usually the best source of that information is their employees, but they have to listen. And just really listening to employees will build better relationships. 2) Determine your part in the problem first. The whole situation will go a lot better if the owner starts out looking for what they could have done better. It might be better training, or more clear instructions, or possibly having asked the employee(s) for their opinions first. In fact, this step is so powerful for creating good employee relationships that, like the coach above, finding a way to share in the responsibility for a problem is almost always a good idea. 

3) Don’t overreact. If it does turn out that one of your employees did make a mistake and/or contributed to some important failure, you should certainly expect them to take responsibility. (We find that employees who can’t or won’t do this usually don’t make very good team members.) But when an employee does take responsibility, downplay it as much as possible. Sharing some of the blame can be a big help. They undoubtedly already feel badly, so your job is to build them back up so they can continue to be valuable employees.

4) Finally, fix the problem as team.  Japanese businesses have a saying: “Don’t fix the blame; fix the problem.” The important thing is getting the business back on track, and the employee back to performing at a high level.  The best way to do this is to fix the problem together; that way the employee(s) will at least remember some success in addition to their mistake.

We find that owners taking responsibility is more than just being fair. It’s a powerful way to reinforce the idea that “We are a team: we’re all in this together.”