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Numbers rule. Investments, financial plans and future goals can be assessed quantitatively. But the fundamental component of an advisor’s practice is the people. Having the right people on your team to work with your clients and support your efforts is crucial to your long-term success, which is why I created a structured process for hiring the best employees.
In too many cases, advisors are technically competent but lack the people skills to assess the right candidates and fit people into appropriate roles. When problems arise, it can be time-consuming to coach, mentor or putt an employee on a performance management plan. In some cases, the person can be coached to success, but more often it does not work out.
The Department of Labor Statistics shows that approximately 50% of all employees leave a job within the first six months of being hired. Couple this data with statistics from Dr. Bradford Smart’s book, Topgrading, which show that the loss of a staff member within 24 months of hire can cost a firm up to 18 times that person’s salary, and we see that poor hiring decisions are very costly.
In an advisory practice, every role matters, and every team member must contribute at the highest level they are able.
What are the best practices for hiring the best people? After years of observing what went wrong in practices large and small, I created the 360° Hiring and Feedback Process – a step-by-step way to create a role, identify the right person for it and help them succeed with effective feedback and appraisal. (Learn more about the process here.)
Let’s look at a few of the important components for increasing long-term successful hires:
- Identify success for the role. What is the role’s accountability within the firm? What does the person in the role need to do to succeed? Write a job description addressing the following key areas:
- Who the employee reports to and who other key stakeholders are
- The role’s major areas of accountability
- Measures of performance for this person/role
- Unique working conditions or related requirements
- Critical success factors for the role (actions and behavioral)
- Competencies, which include domain, technical and “soft” skills
- Align compensation with business objectives. In too many cases, the compensation plan has been developed around the candidate and their needs or around what the firm values at that given point in time. Review what the firm needs to accomplish from a business perspective, and then choose compensation that motivates the person in the right direction. So if client retention has been a problem, for example, the compensation plan should include something specific to this issue.