Of all the “hidden” costs of owning a business, the time it takes to find and implement a new hire is one of the largest.
Hiring someone new is far more involved than figuring out salary and benefits. The soft costs of lost productivity, added stress, and time to interview applicants can negatively impact a business’ bottom line.
Successful advisory business owners need to approach hiring the same way they build their business in every other area: by creating a proactive process. To do that, they need to assess when it’s time for a new hire and to really understand the difference between hiring proactively and reactively.
When to Hire?
There is no hard and fast rule that tells you when it’s the best time to grow your team. That’s a common reason why so many advisors end up burning out before they realize they need help.
If you’re more of a proactive business leader, you would measure your team’s workload, capacity and stress levels, make projections and estimate how much a new hire could improve your operations and internal efficiencies.
However, most advisors often enter the hiring process in full-on reaction mode where stress, overwork and burnout are driving the hiring decision, not economics. When it comes to hiring, you can either approach it reactively or proactively, and there’s a huge difference between the two.
Perils of Reactive Hiring
Reactive hiring is like picking a gas station after you’re on empty. Of course, you’d prefer to get the cheapest or highest quality gas, but your options are limited to whatever is within walking distance.
When you hire reactively, you’ve reached the point where your business can’t grow or function correctly without a new recruit, so any decision you make often is rushed.
When stress is driving a decision, time is not on your side. At this point, advisors may skip critical steps in the hiring process, including screening for culture, skills, trust and talent. And, skipping these steps cost firms productivity, and future profit.
The alternative is being proactive. Proactive firms take the position of deepening their bench of candidates, even when they aren’t hiring.
Two Steps to Take
Having a strategy in place for growing your team is directly tied to every other area of growth in your firm — revenue, clients, profit, reputation and more. This kind of future-forward thinking lets you build the team you want, rather than the team that was simply available when you need someone to fill a seat.
To begin, a commitment to interviewing and recruiting year-round brings familiarity and extends the timeline to find new recruits when you need them. And when you need a new hire, you already have a solid roster of people to choose from.
Second, be intentional about the growth you want to achieve, and not just as it relates to the bottom line. The cost of hiring the wrong person will far outweigh the cost of planning ahead so you can hire the right one.
Jarrod Upton, MBA, MS, CFP® is Chief Operations and Senior Consultant at Herbers & Company, an independent management consultancy for financial advisory firms. He can be reached at www.HerbersCo.com.