Success depends on your definition
I’m not successful. Well, I’m not stellar, at least according to the metrics of many studies I’ve participated in. What’s a metric? It’s a standard of measurement. Take people. We might use several metrics in order to describe ourselves: education level, birth order, vocal accent, years employed, etc. Based on these metrics we judge each other’s worthiness.
What? Measuring someone and determining whether they are worthy? That doesn’t seem right. Yet we all do it. We just don’t all use the same metrics nor do we come to the same conclusion about “worthiness.” The same in business. Though in business we don’t seem to mind judging quite as much, we should still ask ourselves whether what we are measuring really equates to what we value.
Take profit. Most folks who want to judge whether a company is successful use profit as one of the metrics, often the main one. But is that the end-all in a company’s mission? Would you rate a company as successful if it was extremely profitable, but caused massive pollution, ruined its employees’ lives, and poisoned its customers? No, I think not.
Throughout the 20-year history of Personal Money Planning (reminder, this is a series of lessons learned throughout the years), I have never really asked if the firm was “successful.” However, I was and am interested in knowing where we stand, as a company. In my industry, we measure this via AUM (assets under management) and income per advisor.
The industry line bases success on how many dollars I’ve convinced people to let me manage for them, and how much of that money ends up in my pockets at the end of the day. Bigger is better and profit is king.
I kinda think my industry is nuts. Fortunately many of my peers do as well. Now, I do need to make a profit; and making a profit is clearly tied to the amount of money I am managing for people. But I think that basing success on only these narrow variables is limiting.
Are my clients more likely to be able to meet their financial goals than before we met? Have my clients succeeded in personal goals based on their time with our firm? Do my employees want to come to work each day? Do I want to come to work each day? Is there balance in our lives? Those are the metrics I’d rather strive to improve, though they are not quite as easy to measure.
In the end, I think those metrics will lead to AUM and income. But there will be trade-offs and it is likely I will not be heralded by my industry as a company to emulate. We’re not in league with the biggest firms, the fastest growing ones, or those with the highest profitability. No, based on those metrics, I’m not a “standout” firm.
But I do like going into work each day.
This article was published under the title "Success depends on how it is defined" in the Wichita Falls Times Record News on October 5, 2014.