the future of the firm than the relationship with any single client. A good professional will typically manage $1 million or more in revenue, lead a team, and contribute to growth. Very few clients can have the same impact. This is not to suggest that firms should sacrifice client service or experiment on clients. It simply means that firms should systematically give their best G2 people the chance to shine in front of clients. It also means that firms should prepare clients for these coming changes so that they are supportive and encouraging of the process.
G2s Need to Become Better Business Developers
Business development (i.e., sales) is the Achilles' heel of independent advisory firms. Built on a foundation of client service and retention, firms are often concerned that a sales focus will undermine the culture of the firm and focus professionals on the wrong agenda. Giving in to these fears results in a firm that is overdependent on the founders or a few select rainmakers. Younger professionals in these firms never receive training in business development and are often quickly labeled as “not entrepreneurial.” In the 2016 Financial Performance Study, only 25 percent of firms report that they provide any business development training to their professionals.
As with most of the challenges faced by G2s, often all that is needed to overcome the obstacle is some training, some encouragement, and some patience. Behind the success story of every good business developer is usually a patient mentor who helped frame sales in the right way: meeting needs and creating solutions rather than pushing unnecessary and unwanted products. Mentors serve as an example and explicitly or implicitly provide young professionals with a process for identifying needs and communicating solutions.
G2 professionals are usually the victims of this cultural dysfunction: They are trained to focus only on service and stay away from sales, and then they are blamed for not contributing to growth. Every professional can learn to be a competent business developer. Firms simply need to incorporate growth into their values, provide the training, and coach patiently.
G2s Need to Learn to Manage People
There was a dark saying in my first firm that “for every new manager we promote, we lose one analyst” (i.e., an entry‐level employee supervised by the new manager). Unfortunately, there was a lot of truth to that. The same phenomenon occurs in advisory firms. As young professionals advance in the early stages of their careers, they usually do so on the strength of their knowledge and professional experience. Then, suddenly, the moment arrives when they begin to manage other people and become responsible for the performance of others. This first experience can be uncomfortable and shocking. For many, it ends in disappointment and the determination to never manage again. Some professionals also get labeled as difficult to work with, when all they needed was more experience and guidance on how to manage.
Lee Iacocca, the former CEO of Chrysler, put it best: “A major reason capable people fail to advance is that they don't work well with their colleagues.”6 Managing people effectively requires a change of mentality and a skillset that is rarely included in professional programs. Even if someone has the theoretical knowledge of management, the practical reality is something else entirely. Behavior is often unpredictable, and theory can be limited in its application to the many situations that occur in real life. Managers need training and experience on how to handle the people on their teams. This experience can only come with time and exposure to situations and people.
Given opportunity and time, most G2 professionals can become competent managers. However, one of the biggest mistakes firms make is to panic at the first sign of trouble and pull their professionals away from management. In fact, while most professional service firms manage service teams from within (i.e., professionals manage other professionals), advisory firms continue to search for some kind of elusive HR department that will deal with management and shelter advisors from having to train and supervise their junior colleagues. This notion is not only naïve (it does not work), but it also damages the careers of all involved. Early management struggles are normal, and G2 professionals need training, guidance, and mentoring on how to be good managers of people.
G2s Need an Ownership and Governance Structure
Advisory firms have very high expectations of their professionals. They expect them to achieve the highest levels of professional expertise, excel at building client relationships, and dedicate the rest of their professional careers to their firms. For this commitment to be mutual, professionals traditionally receive the opportunity to become owners. This financial investment is material but also symbolic. It signifies that the firm highly values the professional, and that the professional agrees that her career and capital will rise and fall with the firm.
Ownership is a necessary part of the strong mutual commitment between a professional and the firm, and firms should not seek to replace it with compensation mechanisms and synthetic technicalities. For ownership in the firm to have meaning and significance, however, firms need to create an ownership structure and governance process that allows G2 professionals to thrive.
The key to a thriving firm is stability. Stability allows the next generation to form expectations and to invest in the long‐term future of their careers and the firm. Governance should be built around a careful balance between executive function in the hands of dedicated managers and the broad representation of the partner group. Clear criteria for professional advancement, including criteria for who becomes an owner, will bring the values of the firm to bear. There is no better way to put values into action than to tie them to the criteria for who is successful in a firm and who benefits financially and career‐wise from the success of the firm.
A firm that combines the training of future managers and business developers with a balanced governance and ownership model will always have a bright future. No matter how much the industry consolidates or how the business models change, the experience of every other professional services industry clearly shows that there is always room for the success and growth of a firm with a dedicated, motivated, and talented team of professionals. That rule especially applies to a firm with a depth of next‐generation talent.
G2s Are the Future
As the Dalai Lama says, “There are only two days in the year when nothing can be done. One is called yesterday, and the other is called tomorrow.” G2 professionals are the future of the advisory industry, and that future depends on the decisions you make and the steps you take today. It is never too soon or too late to begin developing the next generation.
If you are a founder and have made it past this first chapter, chances are that somewhere in your firm there are one or more professionals for whom you have high hopes. Perhaps this text will help you develop them into the colleagues and partners that you want them to be.
If you are a G2 professional and have made it past this first chapter, perhaps you are wondering where your career will take you and what your firm will do in the future. We hope that this book gives you a path to follow and some practical advice to make that path easier.
Think of G2s as “going to…” Where would you like to go? Whether you are a founder or a G2 member, experienced or just starting out, this is an exciting time to be in this industry. Your career can give you all the professional challenges and personal satisfaction that you seek. Invest in yourself, invest in your people, invest in your team, and invest in your firm, and chances are good that you will see a return on your investments.
CHAPTER 2
The Career Track
The most critical factor for the success of an advisory firm is its ability to attract and retain talented people. As business management expert David Maister writes in one of his books: “Given both the scarcity and the power of good coaching, it is entirely possible that a firm's competitive success can be built on a superior ability to get
Lee Iacocca,
