Hi, I'm Nikolee Turner with Schwab Advisor Services. As the leader of our business consulting team, I spend my days working with advisors like you on how to overcome business challenges and seize opportunities.
Today, we're going to talk about mentorship and coaching, and why developing or enhancing a program in your firm is essential to the future success of your business.
At Schwab, we believe that talent is what sets companies apart. In fact, we believe this so strongly that it's represented in one of our five Guiding Principles for Advisory Firm Success. The principle states, 'Your People Are Your Most Important Asset.'
Now, of course, no one disagrees with this principle on face value. However, advisors are not always sure if the extra investment of time and resources is really worth it, or even possible given how busy we all are.
Considering that human capital costs typically make up over 70% of a firm's expenses, it's essential to focus time and attention on talent, investing in employees and their future. That focus can create a cycle of opportunity that helps to not only to recruit the highest quality talent, but to also retain that talent.
Let's talk about the top 4 reasons why mentoring and coaching your employees is critical for business success.
The first one is about meaning-making. Really great leaders, they create meaning-making, hand in hand with money-making.
And we know that highly engaged employees report finding meaning in their work, and it is those same employees who tend to be more productive, more creative, and stay longer. So meaningful work and making sure that as leaders we're providing meaning-making within our firms creates not only inherent value, but it also creates market value.
Let's explore that idea of creating market value, or growth. I recently read a Harvard Business article that referenced a 28-year longitudinal study of 100 Best Companies to Work for in America. The study revealed a link between employee satisfaction and long-term value.
Firms with high employee satisfaction outperformed their peers by 2.3- to 3.8% per year in long-run stock returns. This translated to between 89- and 184% cumulative gains, even after controlling for other factors that drove those returns. This is really phenomenal in the sense that when you invest in your people to ensure they're highly satisfied it can actually have market value, or create that growth we desire.
The third reason why mentorship is so important is retention. We've been facing a very tight labor market, and specifically in our industry we have a huge talent shortage. Advisors consistently tell me how difficult it is to attract and hire, which makes retaining the employees you have all the more important.
A recent study performed by Deloitte, found that Millennials who intended to stay at their organization for more than five years were twice as likely to have a mentor as those who didn't intend to stay. Mentorship was the game-changer, the crucial retention piece.
And, finally, the importance of succession and sustainability as it relates to mentorship and coaching. Year after year in our Benchmarking Study, advisors indicate internal succession as their number one transition choice. Often in succession planning we're talking about the equity, giving up control, and the transaction. But the truth is internal succession doesn't happen without mentoring and coaching successors. I see it as succession development, not succession planning. We have to invest in the growth of your future leaders.
Case in point, one of my favorite questions to ask advisors is, 'How much of your time do you spend mentoring your star employees?' The usual response is, 'Well, not much… I mean, not formally.' They don't have a great answer because the reality is they're not spending much, if any, time mentoring the very people they say will someday take the reins.
I always advise them to spend at least 20% of their time coaching those leaders. And while it may sound like a lot, the ROI makes it worth it.
I know this impact is possible from my own experience. More than 20 years ago, I was fortunate enough to have a mentor by the name of Marie. Marie cared about me, guided me, and challenged me. She taught me how to look beyond my job, and see the whole organization, to look for the traditions, the values, and to seek to understand the culture. She empowered me to think more strategically, and, as a result, she changed the trajectory of my professional life. I'd like to help you create this kind of success story, one where your employees feel supported by your leadership and connected to your firm.
I've shared some compelling reasons that highlight the benefits and results of formal mentoring and coaching. I hope that it contributes to your efforts to positively impact the professional lives of the people at your firm and helps propel your business forward.
Thank you for watching.