People are the building blocks of an organization. Great people help make a great office or a great company. Every manager or principal has to ask, “How do I get great people? How do I keep great people?” A conservative manager or principal will first ask, “What can go wrong?”

If you ever want to be convinced of how serious personnel decisions are for your firm, just ask an insurance agent. He will rattle off a litany of scenarios that have caused a firm to be turned upside down or inside out, and right out of business.

The liabilities associated with personnel affect any business regardless of industry and nation. Rogue traders, bad loan decisions, and corporate malfeasance are all related to bad personnel decisions. You can’t purchase integrity, honor, and care. Rather, you have to learn to manage the risks associated with every hire.

Being a litigious society, the United States is a dangerous field when it comes to hires. There are insurance policies one can purchase to protect against most employee liabilities, but in the securities industry you can only check references, train your staff, and pray you don’t have a bad apple, because in the securities industry a bad apple can ruin more than the crate.

Since the stakes are higher in the securities industry, the screening is a lot better. The NASD has already weeded out some of the more obvious trouble using tests and basic background checks. The final liability lies with the firm, however, and there is no such thing as checking too many references. Every member of the team can ruin you. The administrative assistants, accountants, cleaning crew and of course your producers all have chances to inadvertently or deliberately undermine your operation. You don’t want to go to the extent of paranoia, but good management usually has a hint of it in their blood. It is a defense mechanism that typically protects against con men, cheats, and thieves.

What a bad hire can do for you

Theft Staplers, pens, calculators, it may be pretty insignificant, but these “minor details” can lead to bigger problems, and you may want to get a handle on it before it gets out of control. It took six months for one office to realize that it was purchasing an average of 12 calculators a week for an office of 25 employees. Management hoped to find a drawer full of calculators one day just to put them at ease. One has to wonder why anyone would do that. There is no street value for $8 calculators, but when the rest of the staff recognized the game going on, it became clear that this was some form of mild protest that was upsetting the general chemistry of the office.

Harassment Be it sexual innuendos or physical contact, this is dangerous stuff. The potential lawsuits can be disastrous.Harassment occurs all the time, and very often can be avoided. A room full of aggressive sales professionals can quickly turn into a Hooter’s restaurant if you don’t manage the key instigators. They may be some of your best producers. You have to find a way to marginalize the risks or just get them out of the office. Bathroom humor will always exist and certainly has earned a place in most people’s hearts. Be more aware of that touchy feely guy who is one holiday party drink away from slapping the office vixen on the rump with a file folder. It could all spiral downwards from there.

Poor Hygiene Just as everyone considers himself a good driver, we all think we have good hygiene, but bear in mind that accidents still happen every day. In an office consisting of more than one person, it is inevitable that a fall from grace may occur from time to time. There is no need to despair. Sometimes, however there are some that have lower standards. In extreme circumstances poor hygiene can actually undermine office efficiency and attendance. If you are taking the long way to get to the storage room just to avoid a particular odor, you must realize your co-workers are doing the same. Only in rare circumstances can poor hygiene seize up an office, but you’re going to have to trust the first-hand experience of the writers when we say, “It can happen,” and who wouldn’t want to be a fly on the wall when management addresses that sensitive topic.

Damage to property Smashed keyboards, stained carpets, and unidentifiable machine parts are all signs of a destructive office-supply user lurking somewhere in your office. Sometimes they hide it well, others use the outwardly abusive sessions with the photo copier to take out their aggression. If it is manageable and covered in your maintenance contracts, maybe it is nothing to worry about, but typically this type of behavior causes more damage than you realize. That broken keyboard needs to be replaced. Not only does that cost money, but it takes time away from someone in the organization that must place the order and deal with the slain machine. Regular recurrences can lead to thousands of dollars in damages and lost man hours throughout the year. Furthermore, it lowers the bar for others who may address their own anger issues with co-workers named Xerox, Brother, or please, no, not that, Kohler.

Discrimination This one is pretty self-explanatory, and thus needs little in the way of anecdotal illustration. It is usually in one’s best interest to be a pure meritocracy. Admittedly, it is not always that simple to avoid situations that may on the surface seem discriminatory, but actually are based on merit. Nevertheless, discrimination is a liability in an office and must be avoided.

Bad customer service (probably worst of them all) It might be obvious but make sure your employees and candidates can treat your customers well. You already have a business to protect, so don’t hire someone who has the propensity to upset your customers. This mostly applies to administrative assistants and other support personnel. They may have a great attitude in person, but seem to be impatient and rude on the phone. If you are hiring someone who will have a lot of customer interaction on the phone, try to conduct at least one of your interviews on the phone rather than in person. You may very well form a different opinion of that candidate.

Ways of avoiding the fallout from bad personnel

1) Always get references and actually check them.

2) Don’t change your business model to accommodate a good producer. You can get into business that you can’t comfortably maneuver in and get into trouble you normally know how to avoid.

3) Be careful how you fire people, but not to the point where you keep someone who obviously needs to go.

4) Avoid trading ethics for sales.

5) Lead by example. If you are prone to being deceptive, keep that trait at home.

6) Try to put out little fires quickly and completely. Don’t be afraid to confront someone early on about a potentially hazardous problem.

7) Run a tight and clean ship and you will attract like-minded people.

Depending on the specialization, there is a variety of methods for finding good people. A common method is to find prospective employees through personal connections. This is usually the most cost effective way, and you often get a more detailed understanding of someone through the connection than through a resume. Placing help wanted ads in the local papers is often quite effective, and placement agencies that do a first round of screening can also be helpful.

For producing reps and other specialized personnel, you may need to go to recruiters. Commissions vary, but for producing reps the cost is usually approximately 5 to 6 percent of annual production. Some recruiters offer to take payment over several years. Hiring a recruiter involves some of the same key employment criteria: trust and chemistry. A recruiter who understands your goals, abilities, and requirements, and who will faithfully work to build your organization is an important find.

There are other methods for finding producers. You can do the work yourself or have someone in your organization do it for you. There are databases of registered representatives available for lease to which you can mail recruitment material or perform some telemarketing. You can also place ads in various trade publications, or use Internet-based matching services through which you can post help wanted ads.

Your Rep versus Your Rep

Watch you reputation. You actually have one, and it can come back to haunt you. Treat people well. That doesn’t mean you have to pay them more, you merely have to give them some respect and courtesy every once in a while. This can breed loyalty, which can lead to your having a good reputation.

As management, you represent your firm. The political aspect of the job means that every interaction you have has an affect on the outward appearance of the firm, and you never know who you are going to rub the wrong way. Every interview, every hire and every fire is an opportunity to increase or decrease your image and that of the firm. If you know you are not at your best on any particular day, try to wait for a better time to interview, hire, or fire someone. Be firm, but be cordial. Call candidates back and let them know in a nice way why you are not going to hire them. Be civil and professional; pretend that these are all voters in an election campaign and you want as many votes as possible. You don’t have to be phony or over-friendly (that can be sickening to both parties). Be yourself. You know, the person you are on a first date when trying to woo someone: you avoid being silly or seeming desperate, but you convincingly cover up any personality flaws that typically come out on a bad day.

Any rep you have working for you can help or hurt your reputation. Your management style is an important part of your reputation. The rest is based on gossip and myth. You can’t completely change your management style because it is part of your personality. You can identify what type of manager you are and recognize the potential strengths and weaknesses of your personal style. This knowledge will guide you in your hiring decisions and help you run a tighter ship.

The following basic management styles are usually defined by the amount of direction and support in the relationship:

Military/Delegating You are a great organizer and disciplinarian; you don’t adjust for personalities, they adjust for the office. Respect for your authority and officers is assumed and strictly enforced.

Folksy/Coaching You have an easy management style. You’re friendly, yet decisive when you need to be. You lead, but aim to lead by consensus.

Best Friend/Supporting You earn loyalty and respect through gaining trust and friendship from those on your staff. You try to be sensitive to their needs and expect and sometimes receive loyalty and respect as well.

Parent/Directing You dish out discipline, but truly care about the people you are managing. You learn about their lives, their hopes and dreams, and try to help them on their way.

Prodigy You employ inspirational leadership by example. You are a super producer with super results, which earns you respect by peers and employees just by virtue of your success. You may have trouble supporting producers who lack the raw talent you have.

Hybrid You exhibit a mix of two or more of the above styles. Most people fall into this category.

Knowing your personality type will help you define yourself to a potential hire. Giving candidates the opportunity to express concern about how their personality will fit in is helpful intelligence that can be used to make an educated decision. Eventually, you may develop a knack for knowing what personality types work best with you, and you can build your team around that.


You’ve invited them into your house, but remember to tell them the rules. The interviews went well. The references checked out. The numbers work and the process was a success. You are not out of the woods yet. Every office has some kind of orientation or training that proceeds after the hire. Some are intense and lengthy, others are fairly lax and short. The important point is that this is your last chance to set the rules before the new hire makes up his or her own. You can’t stray too far from what is currently allowed at your organization because they will eventually catch on, but you can incrementally raise the standard with each new hire. Be it dress code, protocol, or types of products sold, a good training program can protect you from employees that may get you into trouble later.

Once the honeymoon is over, you have to work with new hires, they have to work with the team, and in the eyes of the law you are responsible for the whole. Developing and maintaining training programs for some firms is standard practice and for others is a little more impromptu. You must remember to add specific house rules to your training program regardless of whether you’re a wire house or independent manager. Address weaknesses in your specific organization during the training process and you may eventually strengthen the organization.

With independent reps, service is very important. If they can’t get the service they want and it’s frustrating to send paperwork in or paperwork gets lost in a bureaucratic black hole, then they start looking elsewhere. If there is any one area you don’t want to mess up, it is paying your reps. There have been firms that have implemented new technologies, telling their reps the system will be seamless, but in the implementation some reps were not paid and others received money meant for another rep. Bad news.

How do you keep good people?

In many ways, this is the easiest of the questions. If you have defined employees as “good” then you have already begun creating conditions in which they will stay. Remuneration is rarely the reason that people leave. You are usually paying employees close enough to market wages that they won’t bolt without warning. Producing reps are often a different story. Given their desire to keep as many clients as they can, they may keep any dissatisfaction quiet until they’ve walked out the door. Even with producing reps, the main reason they give for leaving is poor office chemistry. If they don’t get along with their manager or coworkers, they are very likely to leave. Another key ingredient for both producing and non-producing employees is a sense of accomplishment. For producing reps, accomplishment is often tied to feeling that they are providing their clients with the proper service. They are keenly aware that lapses in products and services can adversely affect their relationships with clients. Poor office technology can also drain morale. If the phones don’t work, the payroll is messed up, the computers are down, etc., don’t expect everyone to cheerfully wait for you to get it right.

Fools rush in

It is crucial that you strengthen the your organization’s personnel processes. From hiring through training and management and firing make sure you have a good idea of how to handle situations when — and before — they arise. Don’t be complacent about personnel just because you think your system works. The people who feel they have designed something that is foolproof completely underestimate the creativity and willfulness of fools.