I've long been interested in how businesses outside of financial services make decisions and execute strategies. Keeping an outside perspective has helped me to think more critically about choices, and not rely solely on the best practices of those in our own industry–who, in many cases, are still trying to figure things out.
One of the insights I have gained by observing other businesses is that selecting the right people in the first place is crucial to minimizing expensive employee turnover.
I always look forward to a regular feature in The New York Times Sunday Business section called "Corner Office," by Adam Bryant (http://projects.nytimes.com/corner-office). Each week, he features company CEOs, with particular emphasis on how they hire, lead, and motivate their people.
In a recent issue, Bryant featured Jeffrey Swartz, president /CEO of the Timberland Company, the outdoor apparel and footwear manufacturer, who related an unconventional practice. When interviewing an apparel person, he asks them to wear their favorite pair of shoes to the appointment; by contrast, he asks footwear people to wear their favorite outfit. Then, when they arrive for the interview, he asks them to explain (or defend) their choices.
Swartz also asks candidates "What makes you want to howl at the moon? What makes you really mad so that you feel your pulse in your throat and you want to puke?"
What is interesting about this interviewing technique is that Swartz does not focus on the skills people bring because candidates have been prequalified for the role by submitting a resume listing their education and experience. He wants to know what makes them tick, how they think about things they are not experts in–what they have a passion for and what gets them riled.
Obviously, interviewers must be careful not to intrude on certain personal interests or characteristics lest they run afoul of labor laws, but the concept of probing for traits that expose how individuals think and behave, and reveal what they value, can often be the key to a successful hire.
The Advisor's Perspective
How managers and owners of financial advisory firms go through the hiring process is critically important because the demand for staff is increasing while the talent pool is not. Further, most advisory firms are relatively small enterprises that cannot afford too many missteps in the hiring process. I've heard human resources specialists say the cost of turnover is about 150% of the individual's compensation (250% for senior people), when you include lost productivity, the burden on others, the cost of searching for and finding a replacement, and the impact on the company's momentum (see www.isquare.com/turnover.cfm for an analysis).
Yet the process of hiring, developing, and rewarding an individual while training them in your organization's culture is tough. It isn't a linear process, or something that lends itself well to objective benchmarks like picking an investment (though the odds of success or failure may be comparable). The selection process is almost as much art as science.
Unfortunately, when talking to advisors about their hiring practices, I have noticed a tendency to put a greater emphasis on where prospective employees went to school, which degrees they obtained, and where they worked before. There is a certain comfort in looking at the ostensible accomplishments of individuals with impressive resumes.
While a person's background is interesting and relevant, it does little to describe why that individual is an especially good hire, or what might help him or her to fit into the company. How can a resume define the experience you are attempting to deliver to your clients or fulfill your expectations about the people you want on your team?
Imagine, for a moment, your introduction of a new associate to clients and prospects. Currently, you might say something like, "I want you to meet our newest relationship manager, Alphonse. He has a double major in accounting and engineering, and a master's degree in finance, and worked at JPMorgan before joining us." This summary would demonstrate that you hired a very intelligent person who was employed by one of the country's premier financial institutions.
But what if you introduced your new associate to a client by saying something like, "This is Tiffany. She has a bachelor's degree in social work, a master's degree in personal financial planning, is a competitive swimmer and, as you will discover, a very empathetic individual." Or, "This is Justin. He joined us last year after practicing law for seven years. Not only is he an excellent conceptual thinker as you will see, but he is also a committed and compassionate volunteer for an organization that helps children with AIDS."
The point is not that a community activist is a better employee then a committed capitalist, but that how your clients view your employees or partners is part of your corporate brand. What image are you trying to create? What culture are you attempting to develop? What values do you seek from the people who work with you?
The Evaluation Process
By imagining how you would like to introduce a new colleague, you can begin framing questions that will better inform your choices about the people you hire.
