Over the years, I’ve come to realize that, as with many other elements that are key to building a successful independent advisory business, the success or failure of a compensation plan largely depends on other factors in a business. More often than not, these building blocks need to be addressed first.
The big mistake employers, job candidates, and even existing employees make is thinking that compensation is all about the money. It isn’t. I’d even go so far to as say that employees who can’t be convinced of that may not be good employees.
Don’t get me wrong. What we’re paid is important, but more often, other aspects of a job determine people’s happiness, satisfaction, motivation and performance at work. By focusing first on creating those key job elements, both your initial and future discussions with employees about their compensation will go more smoothly.
Here are the essential elements for laying a good foundation for employee relationships and putting compensation into a broader context:
Core values. You’ve undoubtedly heard about determining and articulating your firm’s “core values,” but my experience is that most firm owners don’t take this seriously enough.
Largely, this is due to advisory firm owners already knowing what their core values are — and living them every day. They see that helping people align their finances to live happier, more fulfilling lives enables them to lead happier lives as well. And that working together as a team, and treating each other with respect and kindness while doing it, makes it even better.
But owners often don’t realize people without their training, background and experiences may not understand this reality. Therefore, it’s important to communicate these values and standards to all employees; if for no other reason so they’ll know that even though we’re all in the financial services business, our purpose is broader and more important.
Organizational structure. Again, when you’re at the top, this might not feel important to you. That’s because you know exactly where you fit into your business. But when you’re an employee, things may not be so clear.
I’ve found that people tend to be happier — and perform better — when they know where they fit in and the role they play. It’s important to know whom you report to and who reports to you, as well as to understand how your job fits into the overall mission of the firm and to grasp the quality of care that clients receive.
Every job may not be equally important, but all jobs are important. This lesson is learned by anyone who has ever lost a client because his or her assistant failed to pass on a message to call the client back.
Career track. Just as it’s important to know where their job fits in, most folks also are motivated by advancement. They need to feel that they are learning, growing, and becoming more valuable to others, and to themselves.
Most of us are motivated by knowing that doing our current job well can lead us to a position we might like even better. Be sure to communicate not only where an employee can go, but also what it will take to get there.
Training programs. This element frequently is overlooked, and yet, from the perspective of an employee or potential employee, it’s one of the most important. It’s good to talk about a possible career track, but your training programs tell employees that you’re serious about helping them to advance.
The more specifics you can provide, the better; therefore it is an advantage to have training programs in place. These programs can and should include everything from teaching new employees about the firm and how it works (processes and procedures) to how your tech systems operate and what it takes to become a supervisor, manager, advisor and even an owner.