What You Need to Know
- Many advisors guide their employees the same way they guide their clients. This is a mistake.
- An owner or core group of leaders should guide employees to solve problems and make decisions on their own.
- Training and pushing decision-making throughout the organization rather than keeping it centralized will maximize the firm's capacity.
For most advisor firms, the principal way to sustain organic growth is to add more clients. To do that, firms need to expand their capacity, either through hiring more advisors or building a more efficient business.
Many advisory firm leaders will hire first. There is nothing wrong with doing so, but a great many independent firms already have the capacity they need to grow — it’s just a matter of unlocking it. How to do that? Before I tell you, let’s take a step back.
Advisors typically become successful by spending years helping their clients solve many problems, from buying cars to funding their retirement. When those advisors find themselves running a business that they’ve built, bought or inherited, they automatically begin to treat their employees like they treat their clients. It just comes naturally.
The problem is, talking to employees like clients centralizes a firm’s communication and problem-solving. It becomes the responsibility of one professional or a small group of professionals to give the solutions. In such cases, we find entire organizations relying heavily on a few people to solve all the problems they encounter, usually in consensus with other leaders, much like they work in consensus with their clients.
See the connection? How you communicate with your clients is not the same as how to communicate with your employees. When decision-making and problem-solving ability in a business is centralized to key decision-makers, the amount of time spent on employee management skyrockets.
In other words, those at the top of the leadership structure end up spending a huge amount of bandwidth — typically 30% to 50% of their time — managing employees. This top-down management is the core reason that firms run into capacity constraints as they grow. If key leaders must spend a great deal of time managing every employee, it steals time away from achieving business growth goals.
How do you unlock time for more business management without increasing employee management? There’s no shortcut to fixing this problem. To achieve sustainable growth, leaders must change the ethos of the organization to a decentralized one — one in which an owner or core group of leaders will guide employees at all levels of the organization to solve problems and make decisions on their own.
Doing this requires real commitment, but the payoff is that it decreases the employee management function and instantly frees capacity to grow.
Here are some tips on getting started.
Choose empathy over giving advice.
Herbers & Co. conducted a 2022 Leadership Study, and the No. 1 trait employees were looking for in their leader, among both women and men, was empathy. One shortcoming of many advisory firm leaders is that they truly don’t know how to lead people when they are not giving advice. They’re extremely comfortable guiding clients who seek their advice. But applying an advice-giving approach to employees is a good way to ensure that you’ll be riding the employee management hamster wheel in perpetuity.