Angie Herbers

Over the past 20 years, we’ve seen many advisor firms unintentionally stop growing. But why?

In many cases, the growth plateau was either a conscious or unconscious decision made by firm owners, who had realized their staffs had become too large for them to manage.

Some owners brought in managers to take up some of their load. However, in most cases, this just added to their management overload.

Once we realized how widespread this phenomenon had become, we started looking for ways to enable advisory firms to continue to grow  without overloading their leaders, hiring unnecessary managers and implementing useless performance reviews.

The traditional performance management systems of an advisory firm business model are largely broken, and what’s most helped to fix these systems has been building “self-managed teams.”

Tools and Training

We helped give self-managed teams the tools and training they need to succeed, a clear idea of the job they are supposed to be doing and a simple, yet accurate, way to measure whether they are succeeding. A small group of people are in the best position to figure out what needs to be done — and then to do it.

A self-managed team is one that works autonomously within the business and that manages itself — without outside oversight and/or performance reviews.

It has full responsibility over one area, which typically is a segment of the business and/or a group of clients. Often, the team is made up of a group of four people and/or advisors with a range of experience and expertise.

These teams share leadership roles, with complete autonomy to make decisions within their scope/client bases. In other words, each team member is a player and a coach.

Their roles include making decisions about remote work, schedules, accountability and goals. The teams have self-accountability to be successful, and all members of the team share in any blame or kudos.

Measuring Success

We have found that the best way to measure the success of these autonomous teams is to keep it simple, which is quite effective. Instead of performance reviews, the most productive teams should be evaluated by looking at their client satisfaction — which often is tied to strong, fast growth.

Also, rather than zooming in on profitability or growth figures, watch client satisfaction as reflected in a team’s client referral rate. Each self-managed team should have a client referral rate of 43% or higher annually.

“The rule of 43” means all team members are responsible for increasing the team’s client satisfaction. This entails both boosting the rate of referrals from clients and sharing these referrals with other teams in the advisory firm.

All teams should see their individual members as equally important and all their services as ways to increase client satisfaction.

Unlike performance reviews that create a hierarchy (i.e., the giver and receiver), self-managed teams are based on flat organizational structures, which eliminate greater or lesser egotistical mentalities.

Overall, we find that self-managed teams truly live up to expectations, greatly reducing or eliminating the management load of the firm leadership.

The only time we’ve seen things go wrong with self-managed teams is when the owner or another member of a firm’s leadership tries to manage one or more of the teams. In other words, trying to control people.

For self-managed teams to work at the highest level, leaders must trust their teams. And trust is the root of all great leadership and teams.

One word of caution: Before you try to implement a performance review in your culture to manage it remotely, create teams that self-manage. Have, say, four people held accountable to each other and focused on helping each other out.

You should be rewarded with performance and retention, instead of dissatisfaction and turnover.