Many advisors recognize that they don't particularly like managing people, and they often ask how to hire people who don't need to be managed. That's really the wrong question. Teams that are highly invested in a business are not bought, they are bred. To do it right, you need to hire, train and manage team members, both advisors and staff, to drive a firm's success and profitability.

FORMALIZE IT

Given the competitive challenges that advisory firms face today, understanding how successful firms hire is an important step to creating a top-notch team. Quantuvis Consulting recently took an in-depth look at hiring as part of its Best Practices Study Series on Human Capital. The chart "Getting Formal," shows that a healthy number of firms have instituted hiring processes, although the degree to which the process is formalized varies significantly.

The most common approach is for a firm to have a hiring process that is informal, although similar, each time. Quantuvis' research compares the performance of the top 25% of financial advisors based on total owner income, as measured by all owner job compensation plus all ownership returns, with the remaining 75% of advisors. In this case, the data shows that a higher percentage of top-quartile firms have developed a formalized process than their lower-ranking peers.

The lack of a formalized hiring process is not surprising, given that a vast majority of firms review their process only when actually hiring or promoting someone. A needs-based review structure can be helpful, but processes are generally best built proactively rather than reactively, without the pressure of short-term business needs.

Quantuvis' research suggests that the best-practices model for hiring is a formalized, standardized process. Such a process allows firms to take a systematic, disciplined approach to hiring based on objective criteria designed to promote a higher probability that the right talent will be hired to fill each position within a firm.

THREE QUESTIONS

Even when a standardized process exists, a firm must consider three variables in putting it into effect: When, where and who.

When is defined by each firm's circumstances and goals. Having a clear organizational strategy that drives when a firm hires is helpful when planning, preparing for and capitalizing on new hires.

In addition, understanding the typical inflection points at which advisors hire, in terms of a firm's revenue level, can be equally helpful in assessing when to add team members. While each firm is different, understanding the hiring trends of others can provide insight into when it may make sense to add to an advisor's team. The "Body Count" chart, shows the production level at which advisory firms have hired for various positions.

Once a decision to hire is made, the next question is where to look for suitable candidates. While the options are numerous, and there is no one right answer for every firm, Quantuvis' research finds some general trends that can help advisors determine where to look, based on the success of other firms.

The chart "Help Wanted,", reveals that local or regional job search websites and schools or universities are the most successful posting methods, although participants were not limited to one resource. Interestingly, the 25% of advisors were more likely to use multiple resources when conducting their search. These firms seem inclined to cast a wider net in hopes of attracting a broader pool of candidates matched against the skills they are seeking. The added expense of posting on multiple sources may well be a reason that other firms use a smaller set of resources.

Advisors often ask where they should seek qualified candidates. The answer is it depends on the situation and on the hire. For example, Monster.com may be an appropriate place to search for a generalized position like an administrative assistant, but the site may pose challenges when seeking more specialized positions like portfolio administrators or experienced financial advisors.

WHOM TO CHOOSE?

Once advisors have determined when to hire and where to search, the next logical decision is determining whom to hire. In many cases, advisors make this decision in the heat of the moment, once they have reviewed résumés, conducted interviews and identified candidates from whom to choose. But without a clear view of the attitudes, behaviors, experience and attributes that the ideal candidate will possess, advisors are left to rely on instinct and intuition as they conduct interviews and make hiring decisions.