Historically, reward and motivation in Financial Services and to a lesser extent Financial Planning was easy. Pay them next to nothing to come to work but give them more money the more they sell and possibly a fancy trip somewhere nice for those that sell the most. This, I would argue, was the perfect alignment of purpose and profit i.e. the purpose of the business was to make as much money as possible therefore it was perfectly aligned with the profit driver and what better solution than to reward staff with money, lots of it.
The purpose in most, if not all, quality Financial Planning businesses is not profit. Clearly without it we wither and die but it is not the destination. Most business will expect to make profit as a by product of their purpose so how do we make sure that we motivate and reward our people to deliver on our purpose?
In Smart we believe that
1. Even if we wanted to use money, money in itself isn’t always a successful motivator. 2. Money on its own as a motivator can actually damage performance , 3. If you want to improve performance you need to take away money as an issue in its own right, i.e. pay someone enough to make more money not a motivating factor 4. That autonomy (giving someone the chance to do it their way), mastery (wanting to get better because its fun) and purpose are the biggest motivators
If you accept these tenants our collective challenge therefore is to look to encourage the above behaviours alongside, or maybe instead of, just incentivising through bonuses.
How could we do that?
Pay all of your team the correct salary so that no one looks to their bonus to make up their income. Give each team member the space to do their jobs to the best of their ability and their way without micro management? Support their personal and professional development financially and collectively? Talk about the firms purpose / why?
(If anyone is interested, our Why is covered here)
The most challenging element is to define the non financial bonuses that you provide to your team that they attribute most value to. It could be holidays, freedom to work on other projects, opportunity for further study (I don’t mean more CII exams) but understand your staff properly will make this easier. Do you know your staff as well as your clients?
Assuming the business has long term financial targets in addition to its purpose vision mission etc I would advocate a sensible bonus pool for the team to reflect the attainment of those figures. This would be on company wide financial performance not individual income targets therefore everyone is ‘in it together’. I would suggest that the distribution of bonus should be effected by their individual contribution to improving the business, service to clients and their own mastery NOT on their personal financial contribution to those targets.
There will always be room for improvement but this feels to me like a more aligned incentive programme than those historically offered and likely to produce less unintended consequences.