Waldemar Kohl, vice president of practice management of Fidelity Institutional Wealth Services, presented at the FPA Business Solutions 2011 conference in Boston on the topic of building a culture for employee engagement. He started out by saying, "There is more to rewarding employees than just paying them."
A Henry Ford quote was used to reinforce how much employees should mean to advisors: "You can take my business, burn up my building, but give me my people and I'll build the business right back again."
The Value Of Engagement
Employee engagement is a combination of commitment and line of sight. "Add those together and now you have engagement," said Waldemar. This engagement impacts staff work ethic and their retention, which can result in delivering an advisory firm a competitive advantage. Plus, it can avoid costs and add long-term value.
"M&A consultants say having engaged, collaborative employees and teams in place can significantly impacts the value of the business," said Waldemar. Engaged clients turnover less, which can provide a bigger savings than many would realize. He shared, "It takes 150% of the salary to replace a person that leaves." Plus, studies show that engaged employees put in a higher effort.
Waldemar explained a productive staff carrying out a firm's mission, combined with engaged clients (those that are highly satisfied and give referrals), results in increased profits and growth. Waldemar said that's because, "Engaged employees have a direct impact on clients." When a firm has both engaged staff and clients, a Gallup Consulting study showed company performance can be optimized by 240%.
Why Engaging Staff Needs To Be A Focus
"Only 20% of employees are fully engaged," said Waldemar. This is a big problem, because customer behavior is influenced by emotion more than reason, and interactions with staff is what can sway their emotions. It is the emotional connection that makes strong relationships with clients. Engaged staff are in a better position to make that connection.
Human engagement drives client engagement, which in turn drives financial performance, as Julie Littlechild, president of Advisor Impact, points out, "100% of engaged clients give referrals."
Where To Start The Engagement Process
Waldemar shared how important it is for advisors to identify strengths, make the right fit and be a great manager. To do that, he believes advisors should focus on helping employees:
understand their roles and responsibilities,
have passion and energy for their work, and
Top engagement drivers are when manager and company:
have sincere interest in the employee's well-being,
improve the employee's skills,
have a reputation for social responsibility,
allow employee input into decision making, and
quickly resolve customer concerns.
Five Leadership Principals
1.Know the employee. Waldemar said this could happen at the macro level, including demographics and trends. For example, do advisors understand differences between generations? He recommended checking out generationaldiversity.com. At the same time advisors need to know their employees at the micro level, understanding the individual employees and what specifically motivates them. Learn what their perceptions are about the organization, work experience and interpersonal relationships. Waldemar shared that tools like Myers-Briggs can be helpful.
2.Grow the employee. Waldemar said, "88% of those that left companies was not related to salary. Lack of opportunity for advancement is the #1 reason." A culture of learning needs to be purposely and clearly communicated. It should all be formal and informal in nature. Interestingly enough, he said that advisors can create career security for employees by improving their marketability, even if that does make them more attractive to other firms. All these growth efforts can be aligned to benefit the business.
3.Involve the employee. Communication is key--educate employees on business and challenges. Create a line of sight. Gather input and act on ideas. Waldemar asked, "What part of the mission are you contributing to?" Focus on creating a collaborative environment and grant authority to employees to improve the business.
4.Inspire the employee. Staff want to have a sense of pride in their work. "We have seen that giving company dollars to charities inspires our team to a heightened level of engagement and ultimately increased productivity. It's a powerful tool for our firm and it can be for others in the financial planning industry," said Robert Copeland III, director of charity development at Wealth Impact Partners
5.Reward the employee. Waldemar said, "Competitive compensation is the number one reason to join. It becomes #6 reason to stay. But it drops off the top 10 to engage them." What is needed is fair compensation and optimized benefits, delivering health and financial security. He thought that knowledge appreciation was also important, giving spot bonuses that are small and spontaneous as (e.g. movie tickets, taking a day off, etc.) Companies that engage employees successfully can use the extra profits to be more extravagant (e.g. taking staff to Hawaii).
The last trait of great managers is that they take away obstacles to let employees better do their jobs, because often it is the employees that drive the client engagement and company success. Just like a conductor makes no sound, it is up to advisors to get the best music out of their staff.
Mike Byrnes founded Byrnes Consulting to provide consulting services to help advisors become even more successful. His expertise is in business planning, marketing strategy, business development, client service and management effectiveness, along with several other areas. Read more at www.byrnesconsulting.com.