To stay ahead, a typical rule of thumb for growing firms (also depends on how fast growth rate is) is to start the hiring process when they reach 80% capacity, and firms that are not growing need to start the hiring process when they reach 100% of capacity.
Hiring the right people and at the right time can catapult your firm’s growth like nothing else. The historical average for recruiting a new employee is about 90 days; it could be quicker or take much longer, but generally, you should expect something around a three-month timeframe. Then it can take at least several months to get your new hire onboarded and trained.
Here are some of the pitfalls we see when firms delay their hiring and what to do about them.
- Momentum and Opportunity Loss - For some organizations, it is difficult to tell a highly sought-after prospect they are going to have to wait to onboard, have their initial plan created, etc.
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- What to do instead - Consider slowing down the marketing process, or implementing a waitlist - it is likely this is already happening anyway, as the business development activities are, most of the time, much easier to push down the priority list in favor of current client service and leading/managing the firm, because you aren't coming face to face with them each day.
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- Existing Staff Burnout - Firm growth and unfilled positions due to departures place additional burdens on the current team members. This can negatively impact morale, which can lead to reduced client service as well as potentially cause someone to leave, putting you in an even deeper hole.
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- What to do instead - Communicate with your people ahead of time and let them know your game plan for hiring. We get calls frequently from disgruntled staff members who tell us that management “isn't doing anything about our understaffing problem.” Also, it might be a nice gesture to give them a one-time cash bonus of a few hundred or a few thousand (depending on how long they were overworked) for filling in and covering to enable the business to hire someone. Or once you are back to full strength, the granting of an extended PTO, flex time, etc.
- Client Service Dropoff - When there are too many clients to service with fewer people to take care of them, something has to give, and it is likely it will be a combination of both reduced service and staff burnout.
- What to do instead - There are lots of virtual firms offering admin, operations, and general client support services for RIAs. Consider engaging outsourcing resources like these at least temporarily to take some of the weight off the current internal team until you can build the team back up to full strength.
- Rushing the Hiring Process - When you finally decide to start the hiring process, there is added pressure to find the perfect candidate quickly to ease everyone’s pain. Rushing to hire someone is similar to rushing to get married - it usually does not end as well.
- What to do instead - Stick to your hiring process, but do look for ways to increase efficiencies, for example, cutting out one of the interviews, as long as you have multiple interviews, e.g. lunch interview. Reducing the time between interviews can also help expedite the process. Hiring a headhunter that might find you a candidate speeds up the process as well, in addition to utilizing an active outreach strategy (reaching out to candidates) rather than just passively hoping someone will apply to the job posting.
- Onboarding and Training Suffer - As we have noted, the team is already overworked, and now they have to spend more time training, which is beneficial for the long term, but is painful in the short term.
- What to do instead - Consider streamlining and focusing on the core areas of training initially, then coming back to other ancillary areas later once things return to normal. E.g. if your primary systems/software are: Redtail, Schwab, Holistiplan, SS Analyzer, Vanilla, FP Alpha, and eMoney. Have a new hire focus training on CRM, Institutional custodian and FP software, since those are probably going to be the most frequently used tools initially, and they can add the rest later.
We hope this was helpful food for thought. Take the time to plan out and project your new hires so you can stay ahead of the game.
Contact us at info@newplannerrecruiting.com if you have any questions or would like us to help with your next financial planner hire.
Caleb and the New Planner Recruiting Team*
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