Aaron Klein is the CEO and cofounder of Riskalyze, a financial software company that helps advisors pinpoint an investor’s “Risk Number,” letting them custom-build a portfolio that contains just the right amount of risk for that particular client.
I asked Aaron how he was able to scale his company from three employees to over 100 in just five years. Aaron made it very clear that building a company is one of the hardest things he’s ever done, and success hasn’t come easy. He says that building a company is like “playing three-dimensional chess blindfolded.”
Need to Know: Scaling a Team
Here are three key takeaways from our conversation that have helped Riskalyze navigate the process of scaling its business at an incredible rate:
Scaling Tip 1: Hire “A Players”
Aaron got it right early by assembling a core of six employees who were all “A players,” and he maintained this commitment as the firm grew. Aaron explains that hiring the right people isn’t foolproof. Here’s his advice for hiring A players on a consistent basis:
- Put together a “mission and values training” around your core principles for new hires that teaches them what your company is about, where you’re going and how you’re going to get there.
- Riskalyze tends to go through a lot more candidates per hire than most companies. They don’t settle for just an “OK” hire.
- Riskalyze asks candidates questions focused on how they have specifically done a certain task in their past career, rather than simply asking if they know how to it. This helps separate the more experienced candidates from the pack and those who are “faking it.”
Scaling Tip Bonus Content: In the conversation, I asked Aaron if he’d ever seen "Steve Jobs: The Lost Interview," (he hadn’t, but added it to his list). Jobs shares the key insight into how he built the team that created the very first Mac. He speaks at length on the difference between an A player and everyone else!
Scaling Tip 2: Create a Culture of Direct and Open Communication
Riskalyze uses direct and open communication to save time and solve problems quickly. This can be a challenge for new hires, especially ones who came from a blame-based culture. If the open communication isn’t delivered delicately, Aaron warns that a new hire may think that nobody likes them.
At Riskalyze, employees get feedback all the time. There is no tiptoeing around issues, and ego-based communications are considered a waste of time.
Aaron encourages team members to challenge one another on ideas, which forces those ideas to become better. Note that this is very different than conflict between people. If interpersonal conflict occurs, Riskalyze team members are encouraged to use open and direct communication.
Scaling Tip 3: Create a Culture of Accountability, Teamwork and Ownership
The training for new hires focuses heavily on these core values.
The goal is to get everyone to “own” their part of the company and to think about their jobs in terms of inputs and outputs. Even the entry-level Riskalyzers see themselves as owners.
This accomplishes two main goals:
- It offers new employees a powerful example of teammates working together.
- It shows how open and direct communication works to achieve company goals.
Although few companies out there have grown as quickly as Riskalyze, the journey hasn’t been without some hurdles.
What Has Been Aaron’s Biggest Mistake Building the Team So Far?
Aaron’s hiring record is not 100 percent. There have been a few cases in the past when the wrong person was hired. Most times, Aaron says they know right away when this occurs. To help avoid these type of hires, Aaron put a system in place in which employees are paid based on:
- Skill set
- Market-level pay for their position
- Company budget
Riskalyze takes that info and determines a market-level rate they can pay for the job, and salaries are adjusted accordingly every December 1.
This lets everyone know they don’t have to do any political maneuvering to get a pay increase. Of course, sometimes this information is used to solicit offers from other companies.
At Riskalyze, if an employee says they have a competing offer, the company never matches it right away. If the employee is not willing to wait until December 1, then the employee is allowed to move on, as they’re clearly not right for Riskalyze.
Need to Do: Scaling Your Team
- Define the Role
- A common theme in financial services is hiring quickly, oftentimes before clearly defining the position. Don’t fall into this trap.
- Interview Multiple Candidates
- Another issue we hear frequently is that “no one is applying” for the position. If this is the case, signs often point to your starting salary. Remember that your ideal candidates already have a job, and offering 10 to 15 percent above market value often dramatically increases job applicant quantity and quality.
- Hire slowly
- As Aaron made clear in our conversation, having a clearly defined vision and process for new hires is key. In a previous episode with Ron Carson, Ron echoed this advice and laid out his 4-step approach.
Full show notes here: bradleyjohnson.com/aaron-klein-podcast/
Brad Johnson, vice president of advisor development for Advisors Excel, mentors a small group of the country’s most elite financial advisors. Find more episodes of The Elite Advisor Blueprint podcast at www.bradleyjohnson.com/podcast.