Are your people smart enough?

The following is based on one of The Covenant Group’s clients. All of the names and telling details have been changed.

Sarah Blaine possessed all the keys for immense success as a financial advisor, all except one: the right team to reach her potential.

Sarah built up over twenty-three years, a business with 3200 clients and a staff of five, including a group specialist, a life specialist, and a marketing manager.

When we sat down with Sarah she outlined a compelling vision for her business. In five years she would have the leading financial advisory firm in her region servicing the business market, the professional market, and the family market. She would spend most of her time speaking, writing, and servicing a select group of high-end clients. The rest of the business would be managed and serviced by others in her organization.

We commended Sarah on her planning and asked her how realistic she thought it was.

Sarah: “A couple of years ago, I would have banked on it,” she said, “but since then I’ve become discouraged.”

Coach: “How come?”

Sarah: “I’m not where I should be at this stage. In fact, I think I’m probably a year behind my plan and that disturbs me.”

We asked for an example of where she felt she was behind schedule.

Sarah: “The professional market for one. My business is situated in the heart of a professional’s community. There are literally thousands of doctors, lawyers and accountants in the west-end here. It’s a market I started making inroads in a few years ago, but I want to be the dominant player. By now, I had expected to have 500 clients match our professional profile, but we’re not even at 300.”

We asked why she was off target.

Sarah: “I spent a lot of time putting together a sound strategy for this market. I wanted my sub-producers and my marketing manager to work together on executing the plan, but they just haven’t delivered.”

We asked Sarah to be more specific.

Sarah: “My strategy called for us to do a series of twelve seminars over the course of last year, sponsored by various associations and firms. We only managed to do five, and the quality of most of the seminars was not what I had expected. In fact, in the first two I was embarrassed. A lot the people in the audience didn’t fit our profile, the attendance was poor, there were logistical hiccups…”

Coach: “Doesn’t sound good.”

Sarah: “No, but they’ve gotten better. The last one was more to my liking, and I think, judging by the quality of the leads, we’ll discover we’ll be over target on both the number of new clients and first-year revenue.”

We asked what the difference was between the first couple and the last seminar.

Sarah: “Me,” Sarah said.

Coach: “I don’t doubt it,” We said. “You found yourself getting involved in the management and the coordination of the seminars. And I’m sure it took up lots of your time.”

Sarah: “It was grueling. I was working way too hard on it, and the truth is, it hurt other areas of my business. I had to skip my monthly article and my radio interview. And I had to postpone a couple of client meetings. But I really wanted to get these seminars going to keep my business on track.”

Coach: “So now what’s your plan?” 

Sarah: “Well, considering I found myself doing the job of Rich, my marketing manager, I’m going to fire him. I don’t think I have much choice.”

Coach: “And replace him?”

Sarah: “Yes, but I’m discouraged. He’s the third marketing manager I’ve hired in four years. I’m going through them like crazy. I’m beginning to believe there isn’t a good one out there.”

Coach: “Sarah,” we said. “There are a few possible problems. And I want to make sure you solve the right one. Sometimes when our employees don’t meet our expectations, it’s our fault. We’re not managing them well enough, we’re not assigning tasks properly, we haven’t given them the necessary resources… these or any number of management issues could be in play. But, I’m going to give you the benefit of the doubt, because I believe there’s something else going on.”

Sarah: "What."

Coach: “Stratum capability.”

Sarah asked what that was.

Coach: “This concept, developed by Elliott Jacques, a leading thinker on organizational effectiveness, is one that I’ve found to be immensely powerful, particularly with financial advisors who want to grow their business by building a team. It can be a complex concept, but I’ll try to make it simple.

“Stratum capability defines the level at which a person can work. Bill Gates who runs Microsoft is a high stratum person, at least stratum eight, which is at the top of the scale. The person that wipes down your windshield at the carwash is probably stratum one, the lowest. Of course, this latter person may have the capability of being a Bill Gates but chooses not to realize their potential, but let’s assume they’re working at the level they are capable of.

“One way to define stratum is to look at the length of the longest task the person is working on. In your case, you’re working on a five-year plan. That would likely make you stratum five. People at stratum one are only capable of working on tasks three months or less. Problems arise in any organization when there are large gaps in the structure; when, for example, someone at stratum five is managing someone at stratum one. When that happens, the stratum five person gets dragged down and has to perform all the tasks that fall between stratum five and stratum one.

“In your case, the role of marketing manager in your firm is likely a stratum two role, where the longest task would range from three to twelve months, and Rich sounds to me like he’s only stratum one capable. You can’t ask someone who’s only stratum one to work at a stratum-two level. They can’t. So, as you already described, you end up doing their job, which takes you away from the stratum-five level tasks that drive your business.”

Sarah: “So what should I do?” 

Coach: “You have two choices. If you believe that Rich is stratum two capable, then you can train him on the skills he’ll need for the role. But if you believe that skills training and motivation aren’t going to make a difference, then you’ll need to replace him with someone capable of performing the role you expect. But be prepared to pay for it. You can pay a stratum-one person thirty grand or so and they’ll be happy. But you can’t get away with that kind of salary for a stratum-two person. You’ll be looking more at something in the bottom range of sixty and probably closer to seventy or eighty eventually.”

Sarah: “Wow,” “I hadn’t budgeted for that.”

Coach: “If you want to realize your vision, you’ll have to account for this. Too many advisors want a marketing manager but hire a marketing assistant for cheap. It never works. It’s a recipe for disaster.”

Sarah agreed. When we saw her later in the year she was beaming. She didn’t fire Rich. Instead she redefined his role and made him an office assistant, a role, she realized she needed, so her specialists weren’t dragged down like she’d been. And she hired a graduate with a marketing degree to fill the marketing manager role. “He’s brilliant,” she told us. “He’s young, so I can get away with paying him on the lower end, but he’s eager and full of amazing ideas. I’ve been able to let him run with the ball on the professional-market strategy and the rollout of our seminars. We’ve done one a month since I hired him and my plan is back on track.”

Lessons Learned

Sarah learned four important lessons about hiring the right person for the role:

• Building a successful team depends as much on proper management as on hiring people who are capable of performing the roles you demand of them.
• Many advisors make the mistake of hiring a low-stratum marketing assistant when what they really expect and need is someone capable of managing and executing a complex marketing strategy.
• If you hire a low-stratum person for a higher stratum role, you end up doing all the tasks they are incapable of doing.
• Be prepared to pay a higher salary for a more capable person.

________________________________

The Covenant Group is referred to by many as where entrepreneurs go to become Business Builders. They are considered to be thought leaders and authors of the best-selling books, The 8 Best Practices of High-Performing Salespeople, The Entrepreneurial Journey, and The Business Builder.