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Industry Spotlight > Advisors

5 Keys to Managing When Everyone's Out Sick, Again

By Jeff Berman

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What You Need to Know

  • Advisory firms have reported as much as 30% of the workforce being out due to illness at the same time, Angie Herbers says.
  • Widespread absenteeism stands to affect pay, benefits, turnover and M&A activity.
  • Don't run your firm at full capacity, and give your staff permission to take time off when they're sick, Herbers advises.

Advisory firms have been struggling with large shares of their workers unable to work because of COVID-19 or other illness since fall 2021, setting the stage for a potentially costly epidemic of advisor burnout in the coming months, according to Angie Herbers, managing partner and founder of advisor consultancy firm Herbers & Co.

Across advisory firms, “we’re seeing upwards of 30% of the workforce being out, and that’s either due to COVID, due to flu or other illness [and], potentially in some areas, allergies,” she told ThinkAdvisor in a phone interview.

“We are seeing quite a lot of leaders that started to see this increase in workforce absenteeism in November and [it] carried on to December [and] on to January,” she said. “We’ve never seen workforce absenteeism this high in my 20 years doing consulting, and I think it’s a unique issue that we’re dealing with as a result of COVID.”

This is “happening at all size firms,” she pointed out. “The larger firms are seeing workforce absenteeism in their service departments and with advisors. We’re seeing in the small firms that it’s happening across the entire firm.”

Employees being asked to return to the office after a few days, while they are still sick, is “potentially spreading illness around,” she said. After all, she added: “It’s not discriminating against size of firm. It’s hitting all size firms depending on how those firms are running.”

This trend has many implications. For one thing, the standard of client service is being put at risk and often must be made up by healthy teammates, she explained. Those teammates then become susceptible to burnout and must be tended to from a mental health/wellness perspective.

The problem forced many leadership teams to hold off on returning to their offices and shift back to remote work, she said.

Impact on Pay and Benefits

“I do think that how leadership of advisory firms react” to this complex problem will impact pay, benefits and turnover rates, Herbers said.

“If they are asking their advisors to work through illness or work even though they may not have symptoms but may have fatigue, the culture of how you are running those firms, high levels of maximizing the capacity of the firm is going to lead to advisors seeking other jobs, potentially for more money or a different set of benefits within a culture,” she explained.

Advisors will also potentially want more pay to work while they’re sick or even to work long hours to help colleagues out sick, she said.

“The vast majority” of advisors “don’t want to leave the sector,” she noted. Those coming to her firm seeking work have been saying they just don’t like the way they were treated throughout this crisis by their firms and “want a firm who’s more focused on a team environment that cares about our wellness.”

Potential M&A Impact

Contrary to the views of some pundits who forecast M&A activity slowing this year, Herbers predicted that, maybe “three, six, 12 months in the future,” we will see M&A activity spike as advisory firm owners burn out and look to sell their businesses.

“M&A activity in the advisory industry has traditionally had an increase when we have turbulent markets or down markets and/or some sort of crisis,” she noted. “In 2021, we had high market levels. You were coming off of 2020, which was a burnout year for many advisory firms. And we saw a 44% increase in M&A activity in 2021.”

Now, there is a “bit of a turbulent market” again, along with many people out of work, she added.

As a result, she forecasts the “same levels of M&A activity in 2022 that we saw in 2021” or the activity “will increase even more due to what we’re seeing.”

There are, however, a few steps that advisory firm leaders can take to either stop the pandemic’s impact on their companies and workforces, or at least lessen the problem, according to Herbers.

Here are the five things she suggested:

1. Don’t run your offices at capacity.

“The number one thing” firm owners can do is stop pushing their teams to run at full speed, according to Herbers.

This takes us back to “basic business planning,” she said, noting, “we’ve seen, in recent years, advisory firms running at 100% capacity — in other words, not leaving space within their organizations for advisors to be sick, to take vacations, to be ill, in the industry.”

And that is a huge strategic mistake because “running your firm at 100% capacity is not sustainable” — especially “when you get into these crisis periods,” she warned.

“Ensuring that you’re running at something at or under 80% capacity — so you have some space” will go a long way toward easing the issue, she added.

2.  Give your staff permission to be ill.

“What we are seeing across the firms is that they are asking their employees that, if they have COVID and don’t have symptoms, or if they have the flu and they don’t feel so bad, just to continue to work from home, not come into the office and spread it around,” Herbers said.

“This is posing a big problem because what’s happening is the advisory firms are asking their employees to continue to work, even when” they’re ill, even when at home, “which has been leading a couple weeks later to some burnout,” she pointed out.

It is important to “give your staff permission to be ill, and then try to limit the amount of work that is actually being done [by them], because we want them to get well as fast as possible,” she said.

3. Allow for a ‘reset’ period.

“If firms get to a point of these very high levels, which is 30% of their workforce out of the office, you’ve got a remaining workforce that’s picking up all of that slack,” Herbers noted.

So “there has to be some sort of reset period” to allow people who may be working very long hours to, in the future, when some of the workforce gets back to work, to take a break, to “reset so that they aren’t also putting their health … at risk” by burning out, she explained.

Otherwise, this issue “will ultimately lead to potential turnover, potential culture issues [and] extended periods of workforce absenteeism,” she said, adding it’s also “going to burn the leaders out just trying to manage all of that.”

4. Return to a remote environment if needed.

“Prevention is the best option when we’re seeing high levels” of a workforce out sick, Herbers said. “One of the ways to not spread illness is to go back to a 100% virtual environment” and remain there “for the time being as we see COVID cases increasing and then flu and illness spreading across” the country, she noted.

“That would be the best way to prevent some of these things from happening … Because [of] the nature of an advisory firm, when you have 30% of your workforce out, you’re running into serving-the-client issues or [not] being able to help the client when the client really needs the help,” she explained.

Additionally, “making sure that you’re allowing a hybrid work culture” will help in the long run, she added.

5. If you’re not already doing it, follow CDC guidelines.

“If you’re not following CDC guidelines, then you’re just putting yourself and, more importantly, your clients, at risk,” according to Herbers.

“To me, that would be pushing the lines of business ethics,” she said, urging firms to “follow the rules,” and adding: “There’s a reason those rules exist and, whether you agree with them or not, it is in the best interest of the well-being of your clients and of your staff. And there’s really, to me …  no exception as to why you wouldn’t follow that guidance.”

If you are running an advisory firm and do all of those things, “you’ll capture the growth in a potential down market,” she predicted. “You’ll have the capacity to serve that growth and, [if] you continue to hire great talent who [are] frustrated with the cultures that they’re in,  you’re going to win in three to five years down the road. Hopefully. Assuming we don’t have another pandemic,” she said with a laugh.

Pictured: Angie Herbers

Jeff Berman

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