Attending the recent Conexus Financial Business Practice Forum in Sydney recently gave me further insight into the the operation of many businesses. I was given the opportunity to share some of the findings from our study conducted with Griffith University.
So what did we share that was the challenge with scale (or lack thereof?)
Attraction of Quality Staff
We will see a greater emphasis on career transition and graduate recruitment in the years ahead. The eventual release of the findings from the December 2014 PJC inquiry report and subsequent proposals will potentially drive this with increased minimum education standards being at the core of future entry levels to the industry/profession.
An undergraduate degree alone will not determine the success of a staff member within financial planning. Attitude, desire, continuous learning and engagement skills will.
Small businesses find it is difficult to grow their own staff (Graduate or career transition) without it having an impact on the performance of their service to clients, and potentially on the balance of the team.
Graduate recruitment is an extremely difficult task, especially for firms of less than five staff.
Forward planning of recruitment is particularly important for small to medium businesses, where a lack of scale often also creates time and experience constraints around finding the right candidate.
By example, a small business with only one Client Service Officer loses that individual through resignation. In this circumstance, the business has four weeks notice and 100% of that resource to fill!
As a result, even businesses with a desire to develop graduates in order to create a sustainable model will instead focus on hiring only experienced staff in order to meet immediate workload demands.
You need to build a talent pool of people. Do not wait until someone leaves, throw your hands up in the air, and say ‘I’ve got to replace them in four weeks!
Otherwise, hiring decisions can be compromised, and you may end up with the wrong person in your business. Get in front of people today, start conversations with potential future employees in every role category. Have a read of this article to give further insight on how to do it.
Retention of Quality Staff
Having segmented the data from our national remuneration study in collaboration with Griffith University, we found that on average, businesses with greater than $1m of turnover paid their staff more than business with less than $1m turnover.
When analysing employed advisers, the difference in total employment package (including short term incentive, education entitlements, professional membership fees and where provided, profit share) was significant.
Those with >$1m turnover paid their staff between 29% and 60% more in total financial entitlements!!
So what does this mean for small business?
We all compete for the best talent in the open market. Financial incentive alone will not be the only driver albeit an important one. Quality leadership, management and continuous learning and development are all part of the equation. Some small businesses believe they can attract quality productive individuals but expect to only hold onto them for 3 years.
For a business that does have the scale to grow their own, a recent study of the alumni by Grad Mentor (They connect business with graduates) found that remuneration came in 6th on the rating of importance behind:
- Training opportunities
- Interesting work
- Quality of leadership
- Culture of company and
- promotional opportunities
It’s difficult to succeed without a program in place to build a talent pool whether it be recruiting experienced, career transition or graduates.
The same forward planning is required in preparing for business succession. One small Brisbane-based financial planning practice we consulted with made the comment,
‘I have a 40 year old successor in the business. A succession plan is in place, I think this person is right, but they have a mortgage, two kids at private school and we are not vendor financing ’
He used the term ‘succession hope’ to describe how he felt about whether this would proceed.
The attraction and retention of the right talent is only the starting point for the success of any internal succession plan.