Think about the attributes of Starbucks, Google, Apple, Amazon, Chick-Fil-A, Southwest, Nordstrom and The Ritz. What do these outstanding companies share in common?
The answer: A well defined ethos, a commitment to excellence through training, and relatively simple decision making procedures, says industry insider Don Trone of 3ethos.
In his regular column in the latest issue of NAPA Net the Magazine, Trone offers plan advisors a valuable tool: simple decisionmaking framework they can share with clients. Intended for anyone who has legal, financial, moral or professional responsibility for their company’s decisionmaking process, says Trone, “It doesn’t require a mastery of the fiduciary or portfolio management lexicon. It’s a framework that is essential to inspiring and engaging others.”
The framework has five steps and 17 dimensions. (The dimensions provide the details of each step.) “Think of the framework as a checklist,” notes Trone. “The liability most key decisionmakers face is a result of omission, as opposed to commission — it’s not what the decisionmaker did, but rather what the decisionmaker failed to do. Having a defined framework helps to ensure that the key elements of a strategy or plan are not omitted.”
Whenever there is a need to assess a critical decision, or to demonstrate the details of a prudent process, he writes, the following framework can be utilized.
Step 1: Analyze
- State goals and objectives
- Define roles and responsibilities of decisionmakers
- Brief decisionmakers on objectives, standards, policies and regulations
Step 2: Strategize (“RATE”)
- R – Identify sources and levels of risk
- A – Identify assets
- T – Identify time horizons
- E – Identify expected outcomes
Step 3: Formalize
- Define the strategy that is consistent with RATE
- Ensure the strategy is consistent with implementation and monitoring constraints
- Formalize the strategy in detail and communicate
Step 4: Implement
- Define the process for selecting key personnel to implement
- Define the process for selecting tools, methodologies and budgets to implement the strategy
- Ensure that service agreements and contracts do not contain provisions which conflicts with objectives
Step 5: Monitor
- Prepare periodic reports that compare performance with objectives
- Prepare periodic reports that analyze costs, or ROI, with objectives
- Conduct periodic examinations for conflicts of interest and self-dealing, and breaches of a code of ethics
- Prepare periodic qualitative reviews or performance reviews of decisionmakers
In addition to Trone’s regular “Inside the Stewardship Movement” column, the Fall 2015 issue of NAPA Net the Magazine inaugurates NAPA’s lists of the top women advisors in the industry in four separate categories. Judy Ward also discusses the potential pitfalls of managed accounts, while Nevin Adams debuts his new “Polling Places” column highlighting some readers who shared their experiences with the client firing process. The issue also features insights from contributors Jerry Bramlett, Warren Cormier, David Levine, Brian Graff, Staff Chalk, Joseph DeNoyior, Jania Stout and Fred Barstein, along with the debut of columnist Lisa Greenwald Schneider.
To view Trone’s column, click here and select “A Decisionmaking Framework Your Clients Can Use Every Day.” And to view a pdf of the full 52-page issue, click here.
