Over the past month, I have been referring to COVID-19 as the “wise virus” within our consulting culture. I started calling it that because it has reminded so many of us about the importance of people in our lives.
As we wait for what unfolds over the coming months and year, advisors need to take steps today to lessen the impact of this crisis on the future of their businesses. But first, it’s important to address the topic of people, that is, you and your employees.
A wise mentor once told me, “The faster you accept challenging things, the sooner you move on.” Over the past two months or so, many owners, industry publications and consultants have been focusing on the numbers of financial advisory firms — falling revenues, lower profits, tighter cash flows. In doing so, they miss the bigger, much more serious, picture.
The major risk to financial advisory firms is not the financial markets, but rather is: What happens if some or all your advisors get sick? What happens if your support staff gets sick? What if you get sick? What happens if your firm becomes incapable of serving its clients?
In a service-based business, if there is no one to serve the clients, the long-term effect will be much more catastrophic than a period of reduced revenues and profits, which will eventually recover. A business can financially survive a bad quarter, especially when it has recurring revenue.
However, a service-based business cannot survive losing the employees who serve its clients. In a crisis such as today’s, firm owners must accept where they need to put their financial focus in order to keep the business functioning. And that focus must stay on staff.
In a traditional market downturn with falling revenues, firms may consider layoffs. However, with the crisis we face now, getting rid of your people is the last thing you should consider.
If your people are made to feel expendable during times when they also fear for their health, it’s guaranteed that you will lose respect as a leader. And those who don’t get laid off surely will be looking for new opportunities when the crisis is over. For these firms, this means that as one crisis ends, another will begin.
Consequently, cutting people in this crisis is risky. Here are three steps you can take instead:
Be vulnerable and compassionate
As this crisis has left us sheltering at home, it gives people time to think. Some may start to think about their jobs, careers, lives, businesses and what they want to do after the crisis ends.
Times of crisis nearly always come with time to reflect. As a leader, you are likely reflecting, too. I encourage you to let your team know what you are contemplating. By doing so, people will start opening up to you. They will start to relate and connect to you more. They will start to comfort you, as well. They might even tell you they want a different career.
We helped a firm work through the Colorado wildfires. It was the firm’s leader who showed his sorrow for what was left and opened up to his team. I will never forget how the employees all asked to take pay cuts so they could keep the team intact.