When it comes to running a business, it’s not only about you. It’s about teamwork and fostering an environment where employees feel happy, motivated and want to work hard toward a common goal of bettering the business. But how exactly do you motivate employees and get them to function more cohesively? In this issue, we talk to Christopher P. Van Slyke, co-owner of TROVENA, LLC, a fee-only RIA in La Jolla, Calif., for some pointers.
Q: Why is it so important to motivate employees?
Van Slyke: Great wealth is usually created by people working together. When you function as a team, people can focus on the things they’re really good at. If everything depends on you, you’re going to wear yourself out. And you don’t have all the answers.
The most effective way to run a business is to partner with your employees and help them develop. That’s a win-win deal. You make more as the owner and they make more as the employee, and they enjoy their job more.
Q: What types of things has your firm done to motivate employees?
Van Slyke: I think our compensation program is unique, in that I have an open-book policy with respect to revenue, expenses and salaries. That is, I share all of the firm’s financial information. Everyone, including me, is paid a market rate salary and we all work toward producing a firm profit. The profit is then divided among owners and employees each year, so employees are empowered to make decisions that drive revenue up and costs down.
Because they get to participate in the process like owners, I think our employees act like owners.
Encouraging professional development is also important. For example, we have one employee who started at the firm right out of college. The firm reimbursed him for his coursework and exams related to the CFP license. We also pay for employees to attend conferences and join organizations that can help provide networking opportunities to further the interests of the firm as well as their own careers.
Q: How can I create an environment where employees feel motivated?
Van Slyke: I think it starts with compensation. I think you have to reward them with profit. I think you also have to encourage them to do their job their own way as long as the objectives of the company are being achieved.
I read a book several years ago titled, “The One Minute Manager,” which I found so profound, I used to hand it out to employees on their first day at work. A lot of bosses want to micromanage everyone else’s job and in the process they get burned out. And employees hate that.
It turns out that when people aren’t told how to do their jobs but are evaluated based on results, they like their jobs much better, work much harder, stay longer and are more effective.
Following this mantra allows me to step back and create opportunities for the firm. This firm will make more money with me furthering institutional partnerships than it will with me in the office — it frees me up to focus on what I need to do. And employees feel empowered to do what they do best.
You also need to determine what employees want. Do they want to be owners? Do they want more free time? Do they want more money? Or is it recognition? Everybody’s a little different, but pretty much everybody wants money or recognition. I think a lot of business owners make the mistake of offering only one or the other.
Q: Is there a large cost associated with motivating employees?
Van Slyke: There’s always a cost to doing good business. For example, if you’re currently micromanaging, there will be some costs associated with reengineering the way you do business.
If you start sharing the profit, technically that’s a cost, but you’re going to have a business that is able to deliver the service from some source other than the owner and you’re going to produce a larger profit. It’s all about a smaller piece of a bigger pie.
Business owners tend to think that it’s all about them. But that’s very limiting. You’re going to limit your growth and you’re going to limit your possibilities because you’re only one person.
Q: Have your motivational techniques resulted in better employee productivity?
Van Slyke: Absolutely. I am amazed at how well this works. I’ve always had a tough time in the old command-and-control model where you keep everything secret. When I read the “The One Minute Manager” about how not to micromanage, it was an “ah ha moment” for me. I think it contributed greatly to the success of the firm—both in terms of my happiness and the firm’s financial results.
I’m not a manager; I’m an entrepreneur. I like to work with clients. I enjoy client relationships, but that has nothing to do with managing people. So for me, it would have been very hard to be successful if I didn’t learn from the book that managing isn’t an active pastime. Managing is actually a strategic act of hiring the right people, of helping them define their roles and responsibilities and finally evaluating their results. But it’s not ever about: How do I work this piece of software? How do I do this trade?
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