Advisors get frustrated when team members dont care as much or work as hard as they do. Yet advisors do not realize that its hard for people to stay motivated if they dont see any reward for working harder, better or faster. For advisory firm staff, hard work and firm revenue growth do not necessarily correlate to increased compensation. As a result, growth is often a firm-driven directive rather than an objective in which team members have a common interest.
In conversations over the past years, staff members have expressed to me a desire to know how to advance their contribution, compensation and careers. Unfortunately, few firms have provided them with formalized career paths. This disconnect creates significant untapped potential for firms to better harness their human capital -- by actively engaging their teams for growth and greatness.
CLEAR & COMMON LANGUAGE
First, you need a common language. Weve seen many firms suffer when team members lose motivation because they cant see how their contribution is positively affecting their situation.
Firms should provide raises when there is a tangible reason and a measurable benefit. If you give people a bonus because the firm made more money this year, its a gift. There is no discernible way to connect work with the bonus, and there is uncertainty about the behavior being rewarded.
Annual raises not linked to advancement in responsibility or contribution frequently lead employees to expect a raise because theyve been around for another year. Advisors who provide raises this way -- beyond cost-of-living increases -- cant quantify whether theyre getting any benefit in return for the pay increase.
Instead, use a
This is not just a job description, which may provide information on defined outcomes, roles and responsibilities. Career ladders define how greater contributions lead to increased responsibility and compensation.
Career ladders allow individuals to share responsibility for advancing their compensation and careers. Performance reviews become less focused on what you did and how much you get and more focused on evaluating how individuals actively contributed to their own growth -- and how doing so advanced the firm.
CASE STUDY
A firm we worked with had issues with turnover, morale, and performance. We suggested some changes, including the introduction of a new compensation plan and career ladder program. This gave team members and the firm a way to discuss performance, professional development and advancement.
One employee was very capable, but she had a negative attitude. We found out that she had once been motivated, but was now dissatisfied and her performance had declined. She approached every performance review wondering how much of a raise she might get. This was problematic: Although she was actually quite well paid, she felt the raises were insufficient, while the firm's advisors believed those raises were unearned.
Implementing a career ladder changed the situation. The firm's advisors met with the employee and reviewed the career ladder, highlighting what she needed to do to advance herself. They then outlined a plan that would support her in fulfilling these criteria.
During the next months, her performance and attitude improved significantly -- and, when it was raise time, because she had actually earned the increase, everyone felt good about it.
Of course, some employees also fail to meet the raise criteria. But when that happens, theres a lot less friction because the career ladder provides an objective set of criteria to meet and everyone knows the score before the review. The dynamic has shifted from pay raise not given to pay raise not earned.
CAREER PATH ESSENTIALS
When developing career paths, here are some practices to consider:
- Create position & firm advancement paths. Organizational growth goes beyond a single position. For example, an administrative assistant may become a client relationship manager, then a paraplanner, and eventually a junior advisor.
- Tie contribution to compensation. A good career ladder will align individual interests with firm interests by demonstrating how a greater contribution to the firm results in increased compensation, assigning value and measurability to the raise.
- Be clear about transitions. Clarify not only the requirements for advancement but also how to advance. Transition to the next rung should include mastery of basic duties and the ability to successfully complete more advanced ones.
Our experience has been that firms that adopt career paths become far more attractive to current and potential employees. Any firm that has taken the time, trouble, and expense of creating formalized job descriptions, compensation plans and career ladders appears to be professional and clearly demonstrates commitment to its team members.
Matthew Matrisian is senior vice president at Genworth Wealth Management and author of The Power of Practice Management.
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