by Jonathan Henschen, CFS and featured in Broker Dealer Journal
When put to the test in your Business Development Plan, the Ten Steps towards Recruiting Efficiency described in this article can help your broker/dealer reap accelerated success. Neglecting some or all of these issues, however, can result in conflict, discontent, and inefficiency among your recruiters and staff, as well as prevent your firm from reaching its full potential.
Note: The following insights are a combination of personal experience gained from before I became an independent recruiter, feedback from broker/dealer recruiters I work with every day, as well as from those who, for various reasons, contact me about leaving their current firms. Though we don’t name names, the examples used here are real—the better to illustrate these key issues from a recruiter’s perspective.
Ten Steps to Recruiting Efficiency
1. Fairness & Equity – This comes first because it’s the most common complaint we hear, and the most discouraging. Prominent among the types of unfairness recruiters typically confront are:
- Disproportionate lead flow.
- Unequal territory assignment.
- Large leads assigned to senior recruiters.
- Allowing leads in one territory to go to another territory.
- Favoritism toward certain recruiters.
2. Fewer Meetings – Invariably, when recruiters talk about weekly meetings, the overwhelming response is: “They have more to do with justifying management’s existence than helping me to place business.” Death-by-Meeting is a common expression among recruiters, since much of the time spent in meetings could be more constructively used doing something else—anything else! Specifically though, top-down management-style meetings are much less effective than bottom-up style meetings, where all opinions are important. Recruiting meetings that add value are those promoting open discussions among participants about:
- What’s working for them?
- Firms successfully targeted.
- Marketing ideas the firm should be exploring.
3. Trust – A recent conversation I had with a recruiter reflected his frustration with his broker/dealer’s overly detailed tracking of his day-to-day activities. “Makes me feel they don’t trust us!”, he said.
Many broker/dealer recruiters are now working from home in “satellite offices” and visiting the home office only as needed. Best- Buy ©, the electronics giant head- quartered in Minneapolis, has most of their employees working from home -or from Starbucks, for all they care! This is called a “Results-Only Work Environment,” and it is intended to reverse the old management model that equates sitting at a desk in an office with productivity. This new approach assesses performance based on output and productivity rather than on hours. At first, Best Buy’s © management felt employees working off site would slack off, but now they’re true converts. Before this revolution, these same employees often suffered from stress and burnout, and had high turnover rates. Now their morale is high, turnover is much lower, and productivity is up 35% on average.
With an informal work environment, with no schedules and few meetings, employees can hold conference calls from their lakeside cabins while fishing for Walleye (it’s a Minnesota thing).
Bottom Line: Don’t micro-manage your recruiters. Trust that they’ll use their time (that is, your time) in ways that are effective for you both.
4. Encouragement – My wife teaches fourth and fifth graders. Much of her teaching success comes from setting high expectations for her students, and patiently encouraging them to meet those expectations. My early years in recruiting were often discouraging. While I loved the job and thoroughly enjoyed conversing with financial advisors, my manager was sucking the life out of me by constantly second-guessing, lacking the ability to encourage, and having a very negative attitude.
Recruiting managers must realize that what they say to the recruiters, and how they say it, can affect the firm’s recruiting efforts—for better or worse. To put that in elementary school terms: “If you don’t have anything nice to say, don’t say anything!”
5. Pay Well – The wonderful book, The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value, by Frederick F. Reichheld and Thomas Teal, (Harvard Business School Press, 2001) is recommended reading for broker/dealer managers. Reichheld, a director of Bain & Co., a Boston strategy-consulting firm, researched companies on the issue of company loyalty and its effect on profitability.
The authors provide examples of two property-casualty insurance companies: one that paid in the lower quartile for the industry, the other that paid in the upper quartile. The firm that paid in the lower quartile had high employee turnover and ranked in the industry’s bottom quartile for profitability, while the firm that paid in the upper quartile had very low turnover and was among the most profitable in the industry. The reason for the higher profitability was the extremely low turnover, which was a direct result of the higher pay. The point is that, ultimately, you get what you pay for. Most firms in our industry pay recruiters a base salary in the $50-100K range, with overrides on production. Recently, a large broker dealer’s recruiters have been actively looking to leave because their overrides were cut substantially, resulting in much lower earnings potential.
Big mistake! Recruiters don’t get into our business for the base pay potential they’re in it for the override potential!
6. Goals & Rewards – Most broker/dealers reward top advisors with pleasurable trips and other goodies. But those same rewards should also be extended to recruiters who meet or exceed their performance expectations.
No matter what it is, offering something tangible as a reward for performance is a big motivator. My favorite motivation story involves an advisor I’ve known for about five years. He’d been taking chemotherapy for brain cancer over much of the year, and when September came around, his production was way under what it normally would be. He’d never done under $100,000 in production, and was accustomed to being in the $250,000 range. At $100,000 of production, he would receive a plaque that he would hang on his office wall.
For him, plaques and trophies were highly motivating. Driven by the thought of that simple reward, the advisor scrambled and worked hard enough for the next four months to hit his $100,000 target, and then some. Among his criteria for new broker/dealers was: “Do they offer trophies or plaques for different production levels?”
Bottom Line: Reward your recruiters generously for a job well done. Performance goals should be based on your prior recruiting success levels. Be sure individual goals are realistic and attainable. Setting the bar too high can be a disincentive.
7. Advancement Goals – Though common in other departments and in other industries, clear advancement goals are rare in most broker/dealer recruiting departments. For some reason, broker/dealers seldom offer their recruiters performance-based career advancement incentives. Having senior positions to work toward—even if it’s as simple as “Senior Recruiter”—can be every bit as motivating as trips and bonuses.
8. Negotiation Power – I wonder if broker/dealer managers realize how frustrating it is for recruiters to have little or no room to negotiate with prospects. A recruiter takes the time to visit an advisor, and the advisor wants to get down to brass tacks about what the firm will offer in terms of payouts, transfer expenses, and so forth. If all the recruiter can do is sheepishly explain that he or she can’t make those decisions, but will talk it over with management “and get back to you on that,” the advisor will think, “Why am I talking to you? Put me in front of a decision-maker!” By giving recruiters real negotiation power, they’ll be more motivated and feel more firmly connected with your firm.
9. Promote Harmony Between the Back Office & Recruiters -No doubt the term “staff eater” applies to some of the recruiters working in our market. If you have recruiters who are rude, who bark orders, who lack manners, who demean those in lesser positions -or who just lack common courtesy- get rid of them! On the flip side, if people on your staff treat recruiters in a similar fashion, get rid of them! Trying to correct character flaws is an uphill fight. By dealing with these and other problems quickly and fairly you’ll keep everyone happy.
10. Establish Reasonable Timeline for Recruiters to Build & Work a Recruiting Pipeline – At times, recruiting can seem to move at a glacial pace, especially with larger groups. Broker/dealer management often unrealistically expects immediate results from newly hired recruiters. In some cases, recruiters are hired and then unjustly fired after only three or four months, when it actually takes about six months to build a respectable pipeline. Another example of injustice is the broker/dealer that hires recruiters for their connections with their prior firm, and then lets them go when those connections dry up. One particular firm has had a consistently high turnover of recruiters for years, and has amassed an army of former recruiters who have nothing but horror stories about that firm, and who don’t hesitate to tell them!
The lesson here is: never cause recruiters to become vindictively angry. They’ll get even in the long run, and their stories will circulate around our industry. When hiring recruiters, wait for at least a year to see how they do: you just might miss out on a diamond in the rough.