DALLAS - When interviewing, hiring, and onboarding recent college graduates, financial planning firm leaders should plan to ask tough and innovative questions, listen extensively, and spend much more time and energy offering the new employees honest compliments rather than just criticizing them. 

Those are tips Deena Katz, a principal of Evensky & Katz and also a professor of financial planning at Texas Tech University in Lubbock, and Cheryl Holland, a principal of Abacus Planning Group, told a group of financial advisors at a conference in Dallas, Texas sponsored by Bob Veres’ Insider’s Forum on Sept. 18.

Katz never asks prospective hires if they are organized and detail oriented. Their answers would shed little light, she says. Instead, she proposes asking them what they would do in a hypothetical scenario when a senior advisor makes “a materially incorrect statement” in front of a client. Their answers to that question would show how the prospect really thinks, Katz says.

For her part, Holland, as a lead partner in Abacus, makes sure that more subordinate colleagues participate more than she does in the interview and hiring process so the prospects, if they do start at the firm, get the impression from the get-go that they work for a company, not an individual.

Once new hires start, both Holland and Katz recommend commencing reviews and evaluations of the employees within weeks. In a first month evaluation, Holland will go over any surface or basic issues with the newbie, such as dress code errors. But by the third month review, Holland proposes asking new hires to conduct self-evaluations and to set goals for themselves. “There is a commitment to them,” if they create them, she says about the goals. 

For herself, Holland has established a target eight to one ratio for complimenting versus criticizing new hires. Recent studies about warmth being a more effective attribute of business leaders resonate for her, particularly when she considers her firm’s recent experience with young people.

But both Holland and Katz recognize that sometimes new hires don’t succeed. Holland recalls a colleague once wished for a magic pill that a new hire would swallow and then “turn green, if we should keep him, and red, if we should fire him.” Nothing of that ilk exists, she laughs; sometimes firing is necessary and Holland finds it hard to do.

Katz shares no qualms. If the wrong hire stays on, Katz says firms usually underestimate the consequences: “You have no idea what a toxic person can do” to a firm, Katz says. When she terminates a new hire, she thinks of it as “freeing up their future,” rather than decimating their present livelihood.

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