Virtually every firm owner has at some point experienced the challenging financial and non-financial impacts of staff turnover.
The estimated financial cost, depending on the source, can range anywhere from 1-3 times a departing team member’s compensation. This is not the most detrimental cost though – even worse is the psychological impact of frequent turnover in firms, and how it causes the existing team members to lose confidence in their leader(s), increases the difficulty to recruit good new talent (due to perceived impaired culture and employee-unfriendly reputation), and can lead to an overall downward spiraling of morale.
Most turnover stems from the following factors: 1) Unclear role and responsibility; 2) Insufficient screening for skill and cultural fit; 3) Lack of clear expectations; and 4) Poor overall management/mentoring.
In this month’s article, we will discuss how unclear roles and responsibilities can set up a new hire for failure before they even start.
The typical approach to establish the expected roles and responsibilities of a new team member is creating a job description, where the workload is determined by having each current team member submit a list of things they do not want to do or otherwise wish to handoff, now or in the future. This list gets compiled, and then someone is hired to do all of those things.
There is not anything inherently wrong with this approach, with the exception that at best may not be particularly exciting, and at worst is overwhelming and much more than one new hire can effectively manage, no matter how efficient they are. Instinctively, firm owners may know it is probably more than one person can take on, but plunge ahead regardless to keep human capital costs low. This could be compared to the “slush fund” that is listed on the client expense sheet that everything seems to flow into because the client does not want to take the time to track their expenses... and consequently makes it impossible to actually get a handle on their spending or truly figure out what the next action steps should be.
Suggestion: If the list of responsibilities is more than a page long, it’s time to break it up into multiple roles.
Because of the uncertainty in how to create a clear and compelling job description, some firms swing to the opposite extreme and adopt a “we’ll-create-it-as-we-go” route. But in tight talent markets, hiring the right fit is daunting enough when clarity around the role and responsibilities exists, and it is simply impossible to attract and screen the right candidates in a competitive job environment for a position that is not very clearly defined.
In addition, if a new hire is brought on to create financial plans at a high level and volume, it is going to be a challenge for them to switch between this role and the client service, admin, ops role that new planners are sometimes expected to perform on top of their financial planning responsibilities. It is true that firm owners might have done “everything” when they first started, but it usually was not at the same capacity the firm owner is now requiring of the new hire. Firms must be clear on what they are hiring for... or again, the default is a catch-all candidate for a catch-all position (who may not be especially good at any key tasks the firm really needs done!).
Every candidate must adapt and adjust as the workflow in the firm does, but these aberrations should be periodic and temporary not constant. This is why regularly scheduled employee reviews are vital to a new planner’s career and the success of the organization overall. Regular discussions about what is going well and what is not - goes a long way to preventing someone getting so far off course they cannot be brought back inline.
Suggestion: Firms should also be cognizant that a laundry list of various duties sometimes spread across multiple departments, which also is not compelling to the next generation job seeker. Instead, focus on the challenges of the position, and why what they get to do at your firm will help them develop the skills they need to succeed in the financial planning profession.
Team members need to be placed in stimulating positions and pushed, so they have a better chance at recognizing their full potential. However, there is a fine balance to ensure that they stay somewhere between challenged and overextended.
Suggestion: If after you break everything out, there is not enough work for two additional team members, consider outsourcing to a virtual assistant, or even your interns (if you have an intern program), before recruiting and integrating an additional hire.
Contact us if you have any questions about how we save you time and hassles when hiring a new planner for your firm.