DeVoe’s Annual Talent Study Points to Pandemic Harms to Employee Engagement, Workplace Culture and Succession Planning, Offers Steps to Overcome Setbacks
DeVoe & Company released its 2022 RIA Talent Management Survey, “Culture and Engagement in a Post-Covid World,” exploring the culture, employee retention, succession planning and talent development of the RIA workplace in the wake of the pandemic.
Stating that COVID took its toll on the workplace across all these areas, DeVoe advises a series of steps for companies to overcome current setbacks and move forward into a new post-pandemic normal.
Culture and Attrition
One quarter of firms surveyed say their culture has suffered negative effects from the pandemic, a statistic which varied greatly by firm size: Though only 11% of firms under $1 billion in assets under management reported negative effects, 37% of firms over that amount did.
The negative cultural implications carried over to attrition rates, where 37% of firms reported higher attrition than normal, while only 9% reported lower attrition in the past 12 months versus prior periods, a statistic that also varied significantly by firm size. Forty-five percent of firms with over $1 billion in assets reported higher attrition, while only 29% of smaller firms reported the same.
The report states, “Clearly, firms with over a $1B in AUM are challenged by key post-COVID issues more than their smaller peers … The reasons for the differences are not quantifiably clear. Smaller firms, perhaps, have been more effective in maintaining closer connections with employees through Covid.”
Succession Plans and the Next Generation
DeVoe notes that the industry lags in succession planning. “Whether it’s a natural resistance to change, the challenge of ‘where to start’, or good old-fashioned procrastination, there are still too many firms that lack clearly defined succession plans.”
Noting that almost half the industry either implemented or is in the process of implementing succession plans, DeVoe points out that, considering the number of advisors close to retirement, the number of firms in implementation should be higher.
Intertwined with succession plan difficulties, the preparedness of the next generation of leadership deteriorated since 2019, with 68% of firms in 2022 reporting low confidence that the next generation is ready for a smooth transition to assume leadership, compared with 57% in 2019.
DeVoe links succession and next generation issues with a lack of performance reviews, as only 42% of firms conduct performance reviews more than once a year, as well as inadequate training opportunities: “Half of the firms we surveyed (50%) have no structure or only lightly structured training programs for junior employees, and 70% do not have formal mentorship programs.”
Steps to Improvement
In addition, DeVoe found that 43% of firms do not have a clear compensation plan, and advises firms to develop a plan that incentivizes employees and ensures that their compensation plans reward the desired behaviors.
DeVoe states that firms should not rely on compensation and financial incentives alone, which is extrinsic motivation, but take steps to motivate employees with “the why behind the work they do every day,” stating that “it’s clear that a strong engagement strategy based on intrinsic motivation delivers competitive advantage in today’s uncertain labor market.”
The firm advises several steps to improve employee engagement, culture and talent development by including career path transparency and development, a strong recruiting and onboarding experience, enhanced training programs and robust performance enhancement.
The report states that firms improved the structure of their hiring programs. “Just over 10 percent of advisors indicated they have an unstructured hiring approach in 2022 as compared with 23% of firms in 2021.”
DeVoe found that 26% of respondents hire constantly while another 36% hire ahead of need based on projections.
While 70% of respondents considered hiring to increase diversity a key or important initiative, “the recruiting pool does not always support their efforts.”
“There are many ways to actively work on seeking more diverse candidates,” the firm suggests. “For firms offering hybrid or fully remote work opportunities, expanding the geographic area for candidate searches may support a more diverse candidate pool.”
Janeesa Hollingshead, Executive Editor at Wealth Solutions Report, can be reached at firstname.lastname@example.org