When should family offices begin onboarding new hires? At AUA Capital Management, the process begins before the candidate officially joins.
“Our onboarding process is straightforward. It begins with recruiting and hiring, where we utilize various strategies to identify potential team members,” says Michael Salerno of AUA Capital Management. “During our selection process we try to determine basic skill levels, potential and cultural fit.”
Onboarding — which involves training a new hire on everything from the specifics of the job to the values of the family — works best with a structured process.
“As you look at best practices that may help accelerate onboarding and knowledge transfer, you’d want to create a structured onboarding process supported by partial on-the-job training and documented roles and responsibilities, decision matrices, and standard operating procedures,” says Christopher Dickson, national family office advisory leader for RSM U.S. LLP. “All of this also must include the informal ways of working with the family: the family culture, its values, its dynamics. Who has authority versus who has influence? What are the personalities in the room?”
One common challenge is that family offices often have significant institutional knowledge that has never been written down. This makes on-the-job training even more important.
That is how Salerno’s team handles it.
“We have a small team, so the onboarding process is hands-on and principally managed by a staff member in the new employee’s area of responsibility. The employee is given meaningful work early on, with appropriate oversight. Onboarding focuses not only on our systems and procedures but also on cultural issues, including our approach to client service and decision-making,” Salerno says.
At larger family offices, the process for onboarding employees may be more formal.
“Our HR manager has been managing this for years and has refined it into a very effective process. It includes training sessions with the entire office,” says Matthew Espinosa, investment operations director at Ford Estates, LLC. “We have also introduced ‘Shadow Sessions,’ where new employees join a subject matter expert for sessions tailored to the specific responsibilities of their role.”
While the size and structure of the family office can play a role in how onboarding works, the role can make a difference as well.
“Especially for people in the C-suite, an employment contract is important,” says Maxwell Youngquist, tax partner with RSM U.S. and the firm’s family office structuring and governance leader. “Sometimes those people end up as trustees. An employment contract can lay out what happens if they leave, including the legal post-employment fiduciary obligations if the person was a trustee or a signer. It can also outline the exit process and consequences for people whose compensation is tied to profits and profits interests.”
Just as it’s important to have responsibilities documented for onboarding new employees, family offices should set up offboarding processes to capture the knowledge of employees when they leave.
“If processes and responsibilities are documented, it can help with succession planning. Often, you have a CFO, a CIO or a CEO with knowledge of the family because they moved over from the operating company or been at the family office for a very long time. They’re often not replaced one for one. They’re often replaced with many individuals, because of the loss of that institutional knowledge,” Dickson says. “If you can document everyone’s roles and responsibilities, it can help mitigate some key person risks.”