Stepping Up

Recognize your inclination to focus on the small stuff. It's natural to try to control the things you can, but that doesn't mean you have to give in to that impulse. As a leader, down markets are your time to shine–not make things worse for your employees. So before you do anything, be sure you're not becoming part of the problem. Don't do anything that you normally don't do–scrutinize people's work, over manage, nag them, or criticize them unduly–except to increase your help and support.

Be clear about how this market is affecting your firm. Good business leaders recognize the challenges that their firms face. Instead of blindly boasting (even to yourself) how your firm is unaffected by the market, take a hard look at the reality of the situation. Does increased client handholding increase workload? For whom? What about falling portfolio performance: Have you increased your investment research and portfolio turnover? Is the firm attracting a higher flow of new clients? How is that being handled, and by whom? And who is feeling the effects of lower firm revenues, both directly and indirectly? And finally, what's the psychological impact of all this on your staff? Whose mood, moral, and/or performance has noticeably changed?

A good manager has a feel for the pulse of her business, especially during challenging times. It's the first step to effectively managing those challenges.

Have a plan. One you've taken a hard look at what your firm is facing, you need to decide what to do about it. Sometimes the best response is no response at all, but that conclusion has to come from a clear understanding of the situation, not from ignorance of it. More often, down markets require that advisory firms make some adjustments.

You've probably already cut back on your variable expenses, or at least on additional ones like upgrading your hardware and software, moving offices, a new phone system, or hiring a young professional. But you need to consider the increased workload, too. Can you shift staff off some current projects–say scanning client documents into your new paperless system–in favor of helping with increased client communications, or setting up new client files? Perhaps you need to add some temporary or part time help to leverage your existing staff. Or earmark some funds for increased overtime, for employees who want the work. Sometimes, increased costs, even while revenues are falling, are a good investment: especially when they enable you to better help your existing and new clients when they need it most.

Communicate with your employees the same as you do your clients. Most of the time, fear is the result of not knowing what to expect. Usually, no matter how bad an experience is, if you've gone through it once, the next time isn't nearly as bad (that's what mothers tell me about childbirth, for instance). Your job is to tell your staff what to expect from this down market, and what you expect from them. Of course, you can't call the bottom of the market, but you can tell them what it will be like on the way down: How clients will react, what the effects will be on the firm, what they'll likely see on TV and the Internet, how a down market is typically a good thing for independent practices, what your plan is to handle these effects, and of course, that markets tend to go back up again, sooner or later.

This kind of communication will have a number of positive effects on your staff: first, by telling them what to expect, you'll greatly reduce their trepidation; then, by sharing your experience, you'll reinforce your position as leader ("So this is why he makes the big bucks…"); and by offering them a plan of action, you'll help them focus on doing their jobs rather than worrying about the future; and finally, with less stress and more focus, your employees will be far better able to help the firm's clients through this difficult time, which is what you're really all about.

Here's an e-mail I wrote for one of my clients to send to their staff. Doing something similar can't hurt, and it just might help your staff serve your clients better: "I just want to send out an e-mail to thank all of you for all your work in the past quarter. I know that it has been a little overwhelming with client requests, growth, and the volatile market. I want you to know that if any of you have concerns or thoughts on how to relieve some of the stress, I would be glad to listen. Please know that you are the heart of our client service and being at your best helps our clients feel comfortable in interesting times. If any of you are feeling burned out or overwhelmed, please come see me and we can talk about your needs. Keep up the good work!"

It's amazing what a big difference a word of acknowledgement can make. When your staff knows that you, the firm's owner, understand and appreciate what they're going through and that the stress is only temporary, they're more likely to make the extra effort, and just as important, hang around to reap the benefits when conditions stabilize.

Angela Herbers is a virtual business manager and consultant for independent financial planning firms. She can be reached at [email protected].