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Current news and trending topics for sales and financial industry professionals


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Simple Steps to Create an Effective Compensation Plan

falling dollarsHow do you create a compensation structure that is fair to all employees, attractive to new hires, creates excitement and loyalty amongst your team and engages their learning development while increasing productivity? Reinventing the wheel is not necessary, but creativity, communication and evaluation of your existing plan are essential.

In my years of creating compensation plans for organizations, I have found the overall goals of the firm lack a link to a compensation process. For example, one of my clients would like to establish their firm as “the best place to work in town”. I love the goal but found that it doesn’t link to any current processes.    When employees read this statement every week in their staff meeting, it is fruitless, stands alone and has become meaningless. Linking the goal to various processes, specifically a compensation plan, would benefit this firm across the board.

Creating an Effective Compensation Plan

Follow these steps to create an effective compensation plan.  Communicating your compensation plan is extremely vital. Communication provides team members with a thirst to stretch themselves to reach higher levels within the compensation structure; therefore increasing engagement, productivity and development.

Compensation Analysis

  • Perform a SWOT analysis of your existing compensation plan by studying the strengths, weaknesses, opportunities and threats of your current structure.
  • Complete a cost analysis by focusing on your overhead and human capital costs. Determine the affordability of new hires if desired

Job Evaluations

  • Create an organizational flow chart or review and update your existing chart.
  • Review job descriptions and create, clean-up and re-align to match roles.
  • Determine roles for new hires if applicable.

Performance Management

  • Audit your current performance management system.
  • Establish goals expectations and incentives.
  • Collect and conduct 360 degree appraisals.
  • Analyze data.
  • Create professional development plans.

Compensation Plan

  • Integrate individual performance with compensation.
  • Base/Benefits/Incentives/Extras – If you haven’t read our blog  Compensation Conflict? What Employees Really Want, please do! You will find some great ideas on establishing your compensation plan.

Cost Analysis Update

  • Perform an overall cost analysis of your firm.

 When compensation plans are effectively communicated, morale and retention will improve significantly. DownloadIronstone’s Compensation Planning Checklist for use at your firm. 01.15.13IronstoneCompensationPlanningChecklist

 Question: What compensation challenges are you facing at your firm?

Let us know by leaving a comment! We want to hear from you!   

 

• Email us at info@ironstonehq.com
• Call our office at 800-917-8020
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PASSING THE TORCH – PART II Your Successful Succession Strategy  

Advisors specialize in helping clients prepare for life events such as retirement, and counsel them on the prerequisites for reaching their goals.  Having said that, why don’t the 42% of advisors who are within two years of transitioning, have their own financial plan in place?*  Align your succession plan with the long-term strategy of your firm, and , it will become an integral part of your business practice.  Part I of Succession Planning,  https://aeschlapia.wordpress.com/2012/09/17/passing-the-torch-succession-planning-part-i/, briefly outlined the succession strategy; below is an in depth review of the key factors.

EVALUATE THE PRACTICE, DEFINE YOUR GOALS, DESIGN A PLAN

There are multiple ways of passing your practice to others.  The ideal time to coordinate your transition is 10 years; strategy options will decline the longer you wait to implement your succession plan.  There will most likely be changes and adjustments along the way regardless of your time frame and pre-planning; stay flexible in the execution of your plan.

  • Start early as you see your business value increase
  • Use a SWOT analysis to define the structure and goals of your practice by outlining the strengths, weaknesses, opportunities and threats
  • Use Ironstone’s Fundamental 4™ to shape your business, ideas and solutions
  • Identify the reputation and legacy you want your practice to establish
  • Identify key roles that require continuity and are essential to your firm’s success
  • Establish a short-term/emergency and long-term succession time-line; initial planning to closing the sale
  • Outline 10, 5, and 1-year milestones to achieve, as well as potential milestones following the transition

You will also want to identify the nature of the sale

Internal

  • Sell your ownership to one or more partner(s) of the practice
  • Sell your ownership to a junior partner who was hired specifically for succession
  • Transfer your practice to a relative

External

  • Sell your practice to a strategic partner in exchange for ownership in the larger firm
  • Sell your practice to a wealth management firm e.g. bank

PREPARE THE PRACTICE FOR TRANSFER

Include your CPA and attorney in this process to council your decisions and efforts as you outline the formalities of the transfer.  Build a succession plan that incorporates events that occur in your practice.  Some areas of focus include:

  • Determine the value of your practice and cultivate these drivers of valuation:  Adequate time for succession, client retention, reliable earnings, normalized earnings and AUM/REV
  • Assess your client segmentations
  • Restructure your organization design if necessary
  • Review and prepare formal documents such as financial statements, business plan, marketing plan, etc.
  • Upgrade your technology platform
  • Hire potential successors or search for external buyers
  • Finalize legalities – non-disclosure/non-solicit agreements, negotiations, possible discounts on sales, corporate structure
  • Create equity participation plans for employees
  • Prepare for mergers, acquisitions, financing
  • Launch new market penetration initiatives
  • Organize transfer of assets

PREPARE YOURSELF FOR TRANSFER

In order to transition from your practice you need to solidify a sense of purpose beyond the transition.  This will eliminate your fears and will sustain your emotional commitment to the transition.

  • Define your role in the practice after the transition– e.g. short-term advisor role, ambassador role that provides emotional connections to long-term relationships
  • Define your personal goals, beyond the practice, by developing interests and securing financial resources independent of your business

PREPARE YOUR TEAM FOR TRANSFER

Communicate the changes to the entire team, as well as memorialize processes and systems that are repeatable and no longer require your supervision  This will create a seamless transition and increase the value of your practice.

  • Delegate your responsibilities to your entire team to reduce the burden on one or two people
  • Collaborate with your team and incorporate their contributions to secure their “buy-in” of the changes
  • Create and document processes, policies, procedures and systems to create confidence for your clients and future buyer(s)
  • Define and refine team roles, responsibilities and job descriptions

CHOOSE YOUR SUCCESSOR(S)

A common misconception is that a succession plan involves only finding a successor for the business owner; however, there is often more than just one role that requires continuity and is essential to the success and growth of your practice.  There is also much debate surrounding the topic of whether you should inform team members if they are in the talent pool for advancement to leadership positions.

In Ironstone’s research, we have found the answer to be quite clear…….Tell Them! This will not only motivate team members to aspire to be a part of the talent pool, it will safeguard you from prematurely losing your top performers to the competition.

  • Determine criteria for welcoming new leadership – e.g. leadership/management ability, cultural fit, shared firm vision
  • Assess personality types and preferences to understand your workforce potential and identify your high-potential employees
  • Be open to having multiple successors fill the shoes of a key role – e.g. changing from a single advisor to a board or committee

DEVELOPMENT, REFINEMENT AND PLANNING

The research is shocking – only 26% of firms have processes in place to develop internal talent.** Defining and designing career paths within your business are essential to combat unnecessary employee turnover.  This process involves mentoring and coaching to prepare high-potential team members for advancement.

  • Continuous evaluation of your current talent will help you recruit and promote from within
  • Develop pools of talent who are at various stages of readiness for promotion or new assignments
  • Support learning through relevant work experiences and daily assignments
  • Identify and develop pools of talent for all critical areas in your organization, not just leadership

PREPARE YOUR CLIENTS FOR TRANSFER

Preparing your clients for the transfer is critical.  You must create confidence for your clients with the new advisor(s) and that they believe their needs and interests are in good hands.  The key is to make your absence a farewell rather than a loss to the business to ensure clients will stay with you through your transition.

  • Develop deep relationships and a communication plan that reaches clients, stakeholders and business partners
  • Inform clients of the succession plan, introduce them to the successors, transfer the relationship
  • Communicate any changes in client account structure, point person, etc.
  • Encourage and ensure that all interaction gravitates to the new leadership before your transition is complete.

IN CONCLUSION

Your successors are at the heart of your achievement!  Groom your practice and invest in successors through realistic developmental expectations of high performing leaders.  At each interval of your plan and your transition, stay realistic and take time to make necessary modifications.  A refined process will secure the chances of exiting with a prosperous outcome for all parties involved.

Strategic business planning includes succession planning.  Creating value for your firm that you can later sell will require that you look at your core values, vision and mission.

Ironstone will assist you with each stage of succession planning and provide tactical approaches to strategic planning, operational and human capital fundamentals that are vital components of successful succession planning.

*2012 AdvisorOne, **2012 IN Adviser Solutions Succession Planning Study

• Email us at info@ironstonehq.com
• Call our office at 800-917-8020
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Performance Management vs Performance Reviews

It is that time of year when most of you are beginning to think about annual performance reviews. For most, it’s a dreaded process that is done only out of obligation or outdated processes in your firm.

In a recent Human Resources Forum poll, 16% of the people that responded have no performance appraisal system at all. Supervisory opinions, provided once a year, are the only appraisal process for 56% of the respondents. Another 16% described their appraisals as based solely on supervisor opinions, but administered more than once a year.*

Take your firm to higher levels of standards and accountability by burying performance reviews and adopting a performance management system. Effective leadership encompasses a continuous learning and development program with diminutive reviews throughout the year. Place focus on the goals of your firm.

Implement a performance management system that will:

  • Boost the success of your firm
  • Encourage personal development and advancement of your team members

Performance management will strengthen the foundation of your firm by:

  • Ensuring goals are consistently met
  • Provide focus on fundamental areas in your firm
  • Clarify job expectations and responsibilities
  • Improve communication
  • Compel employee behaviors that align with your firm’s mission, vision and goals
  • Enhance employee engagement and productivity

Performance management is an essential tool for top performing advisory firms.  It may be one of the more time consuming processes you implement, but will improve overall effectiveness in your firm and provide your firm with vast, positive outcomes.

Getting Started

The process of implementing a performance management system is extremely detailed.  Ironstone provides a series of steps to get you started.

  • Update job descriptions that include the purpose, duties and responsibilities
  • Set performance goals that are measurable
  • Prioritize each job responsibility and goal
  • Define performance standards for each component within the job description
  • Schedule meetings with employees to review performance and provide feedback
  • Document a record of performance
  • Implement a learning and development program readily available for employees
  • Incorporate the opportunity to gather feedback from the employee’s peers and/or clients

Encourage human resource departments, managers and supervisors to be accountable for performance improvement.  All components in your firm are part of a system that create value for your clients; the same holds true with a performance management system in that all components must be functioning to create value for your employees and the firm.

Ironstone can assist you in creating a new plan or evaluate your existing plan and collaborate and strategize with you to ensure a strong process with tactics that are cohesive with your firm goals.

We are curious!!  Does your firm hold annual performance reviews or do you have a performance management process in place?  Tell us about it!

 

Follow us as we explore each of Ironstone’s Fundamental 4™!

  • Strategic Planning
  • Business Development
  • Operational Effectiveness
  • The Human Element

Coming up next, learn about Strategic Planning and Your Firm’s Business Model

  * Step-by-step to a Performance Management System-Human Resources

 

• Email us at info@ironstonehq.com
• Call our office at 800-917-8020
• Connect with us:


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Using a Job Description as a Multifaceted Tool at Your Firm

Effectively developed employee job descriptions summarize the roles and responsibilities of each team member in your firm providing them with the foundation needed to reach desired goals and outcomes.

We outlined the components job descriptions should include in our blog, “Learn why Job Descriptions are Essential for Overall Effectiveness at Your Firm.” https://aeschlapia.wordpress.com/2012/03/30/learn-why-job-descriptions-are-essential-for-overall-effectiveness-at-your-firm/

Understanding each component and realizing their value will aide you in modifying and updating job descriptions by:

  • Establishing the role that each position plays in attaining overall firm goals
  • Determining how critical each job is
  • Deciding how positions in your firm interact with one another
  • Defining current employee roles and identifying the characteristics and skill base needed
  • Attracting qualified new candidates and aide in hiring
  • Evaluating performance accurately based on the expectations of the position

A job description needs to provide a positive impact fostering consistency and clarity for everyone involved.  Creating, reviewing and updating job descriptions should be included in your overall business strategy.

Using Job Descriptions as a Multifaceted Management Tool

Although job descriptions are utilized as a valuable hiring tool, a well-crafted job description should be used as a communication tool and a means to review other workplace functions such as:

  • Performance management:  Set measurable and attainable performance goals      based on the duties included in the job description.
  • Training and team development:  Review each job description      for areas that can be used in training and team development workshops.
  • Salary:Outline a compensation program that shows      minimums and maximums for each position in your firm.  Doing so will demonstrate growth      potential for your team member resulting in increased production, loyalty      and overall job satisfaction.    
  • Incentive Plans:  Use your job descriptions as      a baseline for salary;  include      incentives and rewards for employee’s performance levels that go above and      beyond.  
  • Discipline:  If an employee is not meeting      the requirements set forth in the job description, schedule a meeting to review      the requirements and focus on areas to aide them in      achieving goals effectively.

Flexibility is the key when it comes to creating and modifying job descriptions.  Consider creating broad-based descriptions utilizing attachments which delve into the specific tasks required of each employee.  A more generic job description is easier to maintain and won’t require a complete modification as minor changes that takes place.

How often do you use or refer to the job descriptions at your firm?  I’m curious?

Contact us for assistance in developing job descriptions that can be used as a multifaceted tool at your firm.

Follow us as we explore each of Ironstone’s Fundamental 4™!

  • Strategic Planning
  • Business Development
  • Operational Effectiveness
  • The Human Element

You won’t want to miss our next in the series:  Strategic Planning-Business Plan

• Email us at info@ironstonehq.com
• Call our office at 800-917-8020
• Connect with us: