The goal for many of today’s independent advisory firms is to grow to $1 billion in client assets under management. However, to get there, these businesses need a chief executive officer who is dedicated full-time to running and growing the business.
To fill this role, the founding owners of firms must decide whether they want the CEO job, or want someone from either inside or outside their firm to fill that role.
Although it’s a difficult decision, most firm owners still prefer to take the job themselves. Yet a growing percentage seem to be taking a different direction: either promoting someone from within, or bringing in an outsider to fill the CEO role.
Granted, it’s a tough decision for most firm owners to stop working with clients and/or to stop becoming the rainmaker for new clients. Yet it seems just as difficult for many firm owners to let a new CEO actually serve as the CEO. This can create many problems within their firms — and seriously jeopardize the future of their businesses.
Here are steps that owner advisors need to take to successfully add an effective chief executive:
1. Hire the right person. Decide what the needs of your business are and what you want in a CEO to meet those needs. Remember that nobody’s good at everything.
Good CEOs have a good grasp of their abilities and do not hesitate to work with other experts to fill in the gaps. Still, it will be easier to let them do their job if they have most of the attributes that you believe the job requires.
2. Make the CEO’s role very clear. For some reason, advisory firm owners seem to be inclined to “just do something” now and work out the “details” later. While that may work in some instances, hiring a CEO is not one of them.
For a CEO who is not the firm founder/owner to be successful, their role has to be very clear to everyone in the firm from the beginning: the owner, other partners, all employees, and themselves.
While it’s important to know what you will need in a CEO before and during your search, it’s also good to let the person you choose play a role in defining the job, too.
3. Make sure everyone understands their role. Bringing in a new CEO is no time for secrets. It’s unsettling for everyone in the firm to have a “new boss.”
Thus, it’s important to reduce as much uncertainty as possible. A major step in this direction is for everyone to understand what the CEO’s job is, and how this executive’s addition to the business is going to work. This would include where their job fits into the chain of command and what their authority covers.
4. Create a game plan together for the future of the business. While you need to have a vision for your business, your new CEO is going to be your partner in implementing it.
What’s more, whether the CEO comes from the outside or from within, he or she will have a different perspective on your business. Don’t miss this opportunity to get fresh ideas on your business: where it is now, where it could go and what it needs to get there.
5. Give them the authority to do their job. This is the hardest step for most firm owners — letting go. A CEO who doesn’t have authority to make decisions and to take action cannot succeed.
Now, there’s nothing wrong with specifying key strategic decisions that you want to be involved in: that’s important. But as for the day-to-day decisions, if you can’t leave them to the CEO, don’t hire them in the first place.
The bottom line is that if a new CEO doesn’t have your complete support, you are setting both them and your business up to fail. Don’t go behind their backs, don’t have private conversations with partners or employees and don’t undermine their authority.
In my experience, the success or failure of new CEO more than anything else, depends on the firm’s owner — you.