Identifying talent is key to moving forward

Succession planning, talent assessment and long-term compensation were the topics that dominated industry conferences and discussions among managing partners

Dec 20, 2012 @ 12:09 pm

By Scott Feraro

Succession planning, practice management
+ Zoom

It was November, 2008, when former White House Chief of Staff, Rahm Emanuel gave his mantra the presidential stamp as he told a conference of business leaders organized by the Wall Street Journal: "You never want a serious crisis to go to waste”. Four years later, and as I look back on the events of 2012, it is this idea that I believe best captures the most significant human capital trends of the past 12 months.

It was topics like succession planning, talent assessment and long-term compensation that dominated our industry conferences and discussions among managing partners. High performing teams have been taking a hard look at their talent, taking action and beginning to build the human capital infrastructures required to propel them into 2013 and beyond.

This year’s emphasis on succession planning is an acknowledgement of an increasing population of mid-to-late career founders who are now looking at the next generation of leaders to step up and take hold of the reins. Executive teams are realizing that the process of designing, implementing and executing an effective succession plan requires a multi-phased approach and an acceptance of the idea that what got you here may not be what’s going to get you where you want to go. Whether it’s compensation, performance management, talent acquisition or team development, the highest performing firms of the New Year will be those who can quickly identify their most critical needs and immediately begin executing elements of their plan.

Another popular trend of the past 12 months was the increasingly common perception of the talent required to develop new business. It takes a specific set of skills to be effective at growing business through the servicing of existing client relationships. It takes something else, entirely, to be consistently successful in prospecting and closing business from new clients. Talent assessment is an emerging trend among high performing firms who desire to grow their business through the development of new relationships. This approach requires objectivity when evaluating existing talent and certainty when designing the compensation and development infrastructure required to attracting and motivating new rainmakers. Looking directly at the skill sets required to execute your growth strategy, building profiles of the “right” talent, and committing to a culture of regular talent assessment and continuous improvement are the pillars of sustained success in this area.

Compensation is a perpetual hot topic in our industry. It is the increasing emphasis on the long-term incentive that differentiates 2012 from prior years. Hand-in-glove with the succession plan is the multi-year cash or equity opportunity that facilitates a path to increased ownership for the next generation of leaders. More and more firms are taking the time to look at their long-term reward structures and performing the work required to align them with both the strategy of the business and the needs of the plan participants. Leaders are realizing that the single decision to select cash or units as a long-term compensation vehicle, rather than real equity when designing your plan, can completely change the level of risk to the firm while preserving the perception of value by plan participants. The flexibility offered within today’s long-term compensation plans is significant and should continue to increase in 2013.

Each of these human capital trends point to a similar idea. A comprehensive approach to talent management will be the key factor in successfully executing the strategies of the New Year. Strategic planning conversations will need to more consistently include these talent-specific topics, as firms continue to find ways to differentiate themselves within increasingly saturated markets. Human resources professionals will continue to validate their place in strategic conversations. Their success and that of the firm, however, will be based on how effectively strategy can be moved to execution. Next year should prove to be a continued climb out of crisis and an exciting year of identifying top talent and maximizing the effectiveness of our teams.

Scott Feraro is founder and managing director of Pepin Consulting, a talent services provider focused exclusively on the financial management industry. Scott is a frequent contributor to publications and events relating to talent and compensation related issues facing the wealth management industry.

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