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Practice Management > Building Your Business > Leadership

How to Expand Capacity Without Adding Employees

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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.

The best advisory-firm leaders I’ve worked with over the past two decades understand that leading clients and leading employees are very different competencies. They understand that client communication is distinct from employee communication. And they know how to pivot between the two. 

In leading employees, it’s necessary to understand and accept that employees are rarely asking for your advice. The language of non-advice leadership might sound like: “What do you think?” “How can I help you solve it?” When an employee approaches a leader seeking help, you’ll hear the language of redirection: “This is a decision I think you can make. I trust you.”

When you have conversations with employees but avoid telling them what to do, it encourages their independence and frees up your time.

Choose productive capacity over useless busyness.

One mistake that many leaders of advisory firms make is believing that everyone needs to be busy, including themselves. Some leaders believe that the firm is more productive when employees are actively talking with clients, running financial scenarios, conducting meetings, etc. On the flip side, leaders believe they need to be running financial pro formas, updating client experiences, etc. But productivity doesn’t necessarily mean being in motion.

Productive leaders for their firm spend time being still — thinking, strategizing, analyzing potential outcomes of strategic decisions. The delegation of employee management back to the employees themselves (i.e., managing themselves) allows leaders to create the space they need for this critical “non-busy” work.

Having space also allows leaders to simply be available to employees who might be struggling with finding a particular solution. A leader who is “busy” all the time doesn’t have time to help employees be their best. Think about it: When an employee tells a busy manager they have a problem, the manager likely won’t want to delve into a conversation about what possible solutions the employee sees. The most expedient way for that leader to get back to what they are doing is to give the employee advice, tell the employee what to do, and send them on their way. 

In doing this, of course, managers shoot themselves in the foot. They have not only missed an opportunity to encourage independent judgment and decision-making, but have also reinforced the idea that the way for employees to get things done is to go to you for solutions. It might seem paradoxical at first, but if you stop being busy with busywork, you’ll be available to train employees to solve problems on their own.

Choose to slow down to speed things up.

Who won the race, the tortoise or the hare? When leaders slow down to help others, employees get more engaged, more creative in solving problems and more loyal to the firm. It’s a deep-seated human need to contribute to the success of something larger than ourselves, and contributing is even more satisfying if we feel like we are working with a trusted decision-maker rather than someone who gives or takes orders. 

To grow organically and sustainably, organizations need to add capacity. But before layering on more hiring, we can find capacity in the people we have. The key is training and pushing decision-making throughout the organization rather than keeping it centralized with one or two leaders.

Doing so unlocks efficiency and the capacity to serve more clients. And when it’s eventually time to add more advisors, bringing in the right ones and giving them autonomy within a decentralized organization will make them more engaged and motivated, creating extra value and further impetus for growth.

Angie Herbers is founder and chief executive of Herbers & Co. She brings two decades of experience to consulting, researching and training financial advisory firms on long-term, scalable growth.


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