What’s really urgent in business? Rarely successful management strategies and especially compensation structures.
In December, my firm gets a lot of calls about creating comp plans. The firms reaching out usually want new plans for the next year, and they want them before the holidays start.
This represents two common trends among advisory firm leaders: a desire for new comp plans and waiting until the very last minute to build them.
The first trend is basically harmless. It doesn’t really matter when one introduces a new compensation plan. However, moving to do so at the end of the year, though, runs the risk that you are interfering with staff members’ holiday plans; usually a new fiscal year is a better time to implement such change.
But the second trend — leaving a major project to the last minute — is much more widespread and is very detrimental to the success of many advisory businesses. Plus, it’s one of the most common ways firms leaders set themselves up to fail.
What’s the Problem?
I’ve given this trend considerable thought over the years, but I’m still not sure why advisory firms fall into this pattern so frequently.
Maybe there’s a fear of failure, and by leaving projects to the last minute, leaders create a built-in excuse for failure, if/when things don’t work out. Then they can say, “It’s because we didn’t have enough time.”
Most firm leaders and owners start down this slippery slope on a project when they create urgency in situations that don’t require any urgency at all. Compensation plans are a perfect example; they don’t need to be created at any time in particular.
This means leadership can give itself as much time as it takes to do the task right: a month, a quarter or even a year. The point is that, like many projects in an advisory business, doing them well is way more important than doing them quickly.
The second most common reason for the “need” to do things ASAP concerns firm leadership waiting too long to address a well-known problem — creating more urgency in the process.
Common areas where this often happens are tied to trends that tend to be ignored, such as increasing employee turnover, increasing client turnover, falling profitability, slowing revenue, etc.