How Workforce Stress Is Changing Advisory Firms

Employees have been under pandemic-related pressure for two years now, and many are teetering on the edge of burnout if they haven’t already succumbed to it. Between that and the fact that we are in winter months with cold weather, COVID and flu season, we’ve been seeing rising rates of employee management issues. Among them: high reports of workforce stress.

Among the hundreds of companies in our consulting network, we’ve seen upward of a 30% to 40% increase in employee stress. While employee turnover has garnered headlines lately, stress at companies of all sizes can pose a serious threat to smoothly functioning operations and overall employee morale and performance. As we move forward, it will be worth keeping an eye on the long-term effect of stress in the workforce, especially chronic stress.

High levels of stress not only tax firms’ resources in the immediate term, but also impose a higher workload on team members who are consistently dealing with the mental tax of a stressful workplace. The cumulative effect of picking up the slack for absent co-workers due to illness can easily lead to frustration and burnout.

When a workforce is stretched, everything from client service to compliance tasks can be compromised. In other words, sustained high levels of stress are not compatible with business success. Firm leaders have long taken the issue seriously, but the best practices for managing it have changed, as has so much else, over the course of the COVID-19 pandemic.

Before the pandemic, the standard management playbook required leaders to keep track of their employees’ performance and take corrective action. Policies were created to dictate when to arrive at the office and when to leave. Vacation, sick days and personal days were all enumerated and codified. If an employee exceeded their allotted sick days, financial penalties were levied or vacation days were eliminated.

New Tactics

That people-management structure has been torn down during the pandemic. In its place has emerged a structure built around compassion and flexibility. If there were an overarching statement to set the tone for the new approach, it might be: “Do what you need to do, when you need to do it. Take care of yourself. We support you.”

That’s quite a departure from the rigid, rules-based norms that prevailed from the 1990s until the mid-2000s. In those days, money was both the stick and the carrot used to motivate employees to meet business goals. Later, leadership culture moved from that crude approach to one aimed more at supporting team members’ careers — career paths were more clearly delineated, and personal development was actively supported through goals and other means.

Employee management by focusing first on well-being is now ascendant, thanks to the pandemic. It’s based on evidence that team members’ happiness — physical, emotional and financial — is key to success because it promotes optimal performance. Today, good leaders are acknowledging that their workforces are being hit with unique challenges, and they are prioritizing well-being — asking not what team members have accomplished lately, but what they need and how the organization can support them.

Creative Solutions

This more enlightened management approach requires creative solutions to managing stress. Companies that have more flexible cultures still can’t afford to have team members who are so focused on their own care that they consistently force fellow team members to pick up the slack. In the old days, being out of the office too often due to sick days, personal days or vacation days would warrant a stern talking-to with the worker in question.

Employees are no longer tolerating that sort of thing; they understand the leverage they possess and are increasingly prioritizing their well-being.

The new management approach encourages mutual support. The idea is that employees should take care of themselves, and the organization should give them latitude to do that. But once they’ve met their own needs, the ethos is to help others.

What might this look like in a real-world setting? One example: Instead of saying “I’m taking the day off,” a team member might find a buddy and divide halves of the workdays to relieve some of the pressure.

Trusting that your team members will support one another once they’ve met their own needs is important. Our experience is that employees generally do reward organizations for supporting and trusting them.

Unrestricted vacation time, an increasingly common part of modern businesses’ menu of benefits, might seem to be a Pandora’s box, for example. But employees tend to be quite conscientious about when and how they use this benefit, and they coordinate with colleagues to make sure balls don’t drop in their absence.

An Encouraging Word

I’ve written this before, but an encouraging word to employees can go a long way toward creating a culture of well-being and supportive interdependence. Traditional management impulses tell leaders to dictate solutions, creating unnecessary friction and resentment. But it’s support, trust and clear communication about shared goals that can create exceptional outcomes. While it seems simple, many leaders struggle to move away from “telling people what to do” to encouraging them to take care of themselves.

One factor that frequently contributes to burnout is an emphasis on perfection. In traditional management frameworks, an insistence on perfection was considered a virtue. A team member who was sad or tired might be expected to just chug coffee, force negative emotions down and get into high gear.

A shift is occurring that acknowledges the reality that people are not machines, and that excellence levels will vary from day to day. The idea is to encourage team members to do the best they can on a particular day.

This kind of leadership requires an organization-wide culture that is comfortable with human emotion. Crying in the office or on a Zoom call? Absolutely. The doors should be open to all emotions, even so-called negative ones. Employees should learn to be kind and encouraging to themselves as an element of well-being to decrease team members’ stress.

COVID has hastened the evolution of management practices throughout the wealth management field. Amid the heightened stress, sickness and burnout, we’re seeing a shift in management culture. The best managers are now being measured on their empathy and encouragement of their team members to take care of themselves without judgment, and then help take care of their colleagues — as they model that behavior themselves.

The future of management is upon us, and business leaders must be ready to put aside traditional, top-down approaches. We’re in an era that requires empathy, encouragement and trust, and that can be uncomfortable, at first, for old-school leaders accustomed to granting or withholding money to motivate people.

We know that financial incentives take organizations only so far. That’s because, beyond a certain level of financial security, people prioritize deeper needs. A big one is the desire to contribute, within a group, to big accomplishments — such as helping clients retire and send their kids to college, or build a business to its full potential.

The problem of stress can also be an opportunity, a chance for business owners to think deeply about their management culture and make sure they’re on the right path. Thanks to the pandemic, there is no going back.

Angie Herbers is an independent consultant to the advisory industry. She can be reached at angie@angieherbers.com.