Wednesday, September 30, 2009

Hiring Talent: Networks Beyond Networks

Finance professionals don't need to be reminded of the importance of networking, nurturing contacts and keeping up with what's going on in the marketplace.

Lawrence Kellner, Continental Airlines CEO, explains when he hires someone into a senior role, he relies less on conventional processes--recruiting, interviewing and putting candidates on the spot in two-hour one-on-one sessions. He says he succeeds in hiring the best candidate by tapping his own network of people he knows, people he's worked with, and people he know are good.

Kellner plans to leave Continental in December to run a private-equity firm, Emerald Creek, in Houston. He explained his methods for sourcing talent to the New York Times last week: "Have I worked with somebody who could fill this job who's really good?"

He explained he then "widen(s) the net to people I trust...people I've worked with." Or he says he tries to "find somebody we know and trust who knows the person we're thinking of hiring." He minimizes the importance of interviewing, claiming it is superceded by the value of "somebody who's got even a couple of months work experience with a (possible candidate)."

In other words, who knows whom? Who can trust whom? And who knows the person beyond the staged session of a formal interview or a well-credentialed resume'?

He's right. The correlation isn't always perfect--that he/she who performs well in interviews will not necessarily become top performers in the role. Hence, good managers look for other clues for exceptional talent or top performance when hiring. Often that means tapping into the hiring manager's own network to find talent or to seek guidance and recommendations from people who have worked side by side for a long time with a candidate. The power of the network.

He's right, but what if the best talent lies outside his own network, outside his club of senior managers and contacts--especially if that talent comes from under-represented minority groups, who haven't had years of a chance to benefit from the power of networks?

The best leaders and managers know how to tap talent beyond a closed network. They know how to broaden their connections, extend their closed networks, and reach out to networks beyond their networks to find people who have worked with other talented people. And they don't have to be persuaded to look for talent beyond a circle of close friends, classmates and fraternity brothers.

If only we could have asked Kellner how does he ensure his network for tapping talent encompasses all.

His new firm, Emerald Creek, will specialize in commercial real-estate investments.

Tracy Williams

Sunday, September 27, 2009

Business as usual for B-Schools?

Now that we are at the tail end of the financial crisis, pundits, analysts, and economists get to point fingers toward those they think are responsible. In its latest issue, the Economist magazine points a finger at prominent graduate business schools--some of which provided a pipeline of graduates to Wall Street to engage in behavior that might have had an direct impact on the collapse of markets last year.

"Business schools have done too little to reform themselves in the light of the credit crunch," says its sub-headline in its Sept. 26 issue. The article (in its new "Schumpeter" business column) claims b-schools have done "precious little" to respond to the crisis beyond introducing a few new courses. "Business schooling, as usual," it claims. (See
Strong claims. Perhaps b-school deans will get to rebut or at least show how they didn't stand still. They are hurriedly evolving, changing or tweaking their programs in the aftermath. That's not unusual, since top b-schools have always raced out front to make sure they remain relevant to its constituents--companies, prospective students, graduates, and the global business community. (CFN previously outlined how Consortium schools Virginia, New York Univ., and Yale introduced new courses, written new cases, and prepared book-length analyses of what happened and how and why.)

Some professors and deans might argue that it is too soon to teach the crisis or give it proper perspective. Its end might be near, but there is still widespread uncertainty about its recovery and the impact on new financial regulation. Professors are still polishing up work that might recommend novel changes in market structure, financial instruments, and accounting methods.

Some might argue, too, that more than all other professional schools, top b-schools in the past two decades have an admirable history of change. They transform themselves continually--when necessary and when they feel they need to update themselves to be more relevant. Frequently b-schools revamp curricula, introduce new courses, aggressively promote globalization and technology programs, and implement ethics course requirements. Often these transformations occurred after a crisis, market collapse, or business scandal.

At some schools, the core courses a student takes today are hardly similar to those a student would have taken in the early 1980's or even 1990's.

The Economist fortunately advises how it would change b-schools today, although the advice would be "tweaks," not major transformational changes. It suggests graduates will be able to manage or confront future crises, if they were taught history courses of past crises. It didn't offer details. However, that might include studying such topics as the dot-com crash, the collapse of Long Term Capital in 1998, the allure and then scandal of Enron, the insider-trading scandals of the late 1980's, and the late 1990's crises of Asia and Russia.

Not a bad idea. Understanding past crises reminds professionals they can occur again, prepares them for business cycles, asset bubbles and possible market collapse and affords them an appreciation for risk management and strong balance-sheet management.

To its credit, the magazine continues to proclaim the relevance of rigorous graduate instruction in finance and management.

Business as usual? Not likely, since schools know change makes them relevant and change is as much a part of the b-school experience as basic core courses in economics, finance and accounting.

Tracy Williams

Tuesday, September 22, 2009

Which way--investment or private banking?

Students and finance professionals often grapple with tough decisions about what's next in their careers. One common decision: In which direction do I go, private banking or corporate/investment banking? Many Consortium alumni and students in finance confront this question every year.

Private banking (PB) encompasses an array of services for high net-worth individuals. That might mean personal banking, but might also entail sophisticated services: currency hedging, asset disposition, tax advice, portfolio management, and mergers and acquisitions on a smaller scall.

Investment banking/corporate banking (IB) provides services, advice and products to large corporations around the world. That, too, might mean basic corporate banking, but might entail complex debt or equity financings, takeover defense, project finance, convertible-bond offerings, or equity share repurchases.

But sometimes the two intersect. The owner of a thriving, growing private company decides to go public. Private bankers and investment bankers will be involved--to advise the company on its IPO and to advise the owner and other shareholders how to manage its ownership of new public shares or newfound wealth.

Students and other finance professionals in transition will knock their heads evaluating which direction to lean. Some have asked whether it's possible to transition from one to the other--whether investment bankers can become private bankers, and vice versa. Recently some CFN members reviewed factors that can help people decide what's best for them. Some are summarized below.

Private Banking (or "private wealth management")

Important factors to consider:

1. You'll establish close relationships with clients who are senior industry leaders or established entrepreneurs (who might seek you to join them in the long term one day). You'll be valued for the important contacts you've made and the long-term relationship you maintain.

2. Wealth management is a targeted growth area in many big firms, especially those which seek to avoid the erratic revenue streams from trading and investment banking.

3. Wealth management, among other objectives, focuses on accumulating assets and generating stable fees from those assets. By design, banks manage the business to be less cyclical and less susceptible to economic downturns.

4. You will learn and become exposured to a large number of banking products and services (from estate planning to private-equity investing, from portfolio management to funds transfer and securities custody.

5. There is often flexibility in moving from private banking to other banking units or other companies, because of that product/service exposure.

6. If you are good and stand out among others, will there be opportunities and encouragement to advance rapidly? Or would you be stifled by a "wait your turn" approach to advancement?

Investment banking/corporate banking

1. There is continued emphasis on innovation, new products, and novel financial techniques (many of which evolve and mature over time, many of which are eventually "shared" with private banking clients).

2. When deal flow peaks, the environment is intellectually challenging, adrenaline-building, and stimulating. When deal flow dwindles, the same day-to-day challenges can appear as "busy work" or "going through motions."

3. The learning curve accelerates, even for experienced, senior bankers. Banks differentiate themselves by offering something new, something that can boost shareholder value substantially, or something that can radically change the corporate face or product set of a client.
4. Those who are designated as "stars" are allowed to advance rapidly and get paid well.

5. The business is cyclical, no matter how much firms have tried to stabilize it by offering counter-cyclical services (restructuring advice, e.g.). In downturns, dismissals are rapid and sometimes rash.

6. Heretofore, the compensation pie has been large. (Time will tell whether that will continue, or continue at levels in recent years.) That pie must be divided among all those who contributed to and participated in deals. And often, that division process is undermined by anxiety and internal politics.

7. Teams are responsible for doing deals or managing corporate relationships. Subjectivity sometimes decides who plays the most important role, although in recent years banks have tried to implement objective, quantifiable methods to assess the importance of your contribution.
Yet in the end, subjectivity will influence how you are evaluated and appraised (and paid).

Investment and private bankers at large firms often work together. An older entrepreneur wants to retire and sell his/her firm. A wealthy investor wants to purchase a large stake in a blue chip company. The senior management of a large corporate client wants to understand the impact of a merger on its top leaders' wealth. These situations bring investment and private bankers together to advise the client.

It's not unusual for investment bankers to transition into private banking. It's rare, but private bankers sometimes transfer into investment banking, especially if they bring deep, rich relationships with important people within an industry.

For younger finance professionals, which way to go? Both will require special financial skills and a thorough knowledge of finance. Both will involve extensive client contact. Weigh the factors carefully, while being mindful of your own objectives. And keep an open eye.

Tracy Williams

Tuesday, September 15, 2009

CFN On Campus: Gearing up for Recruiting

It's back to the books for almost all Consortium students. Classes have started, and the crunch of case studies, problem sets, and group meetings is under way. At b-schools, students have to manage a back-breaking work load and then gear up for a long, sometimes tortuous recruiting season.

CFN School Champions have sent updates from campus. Not all schools are the same, so experiences and impressions differ. The curriculum and core requirements at Yale differ from those at Indiana or Tuck. There are more "finance types" at NYU than there might be at USC. But some themes are common:

1. Few worry, as they did last year, about the collapse of the financial system. However, b-schools are warning students to be cautious and prepare for a tough recruiting season. There will be opportunities, but we haven't returned to the happy days of pre-2008. Some students have observed erratic scheduling of presentations by a handful of firms. They had planned to come, but changed their minds suddenly. Or many companies are hesitant to specify hiring numbers right now; there is still some uncertainty about summer, 2010.

2. Despite the financial crisis, students continue to be interested in corporate finance and investment banking--perhaps not in the same overwhelming numbers. Yet there is still a solid core of students who want to pursue such careers.

3. Sales & trading opportunities are fleeting. Many top banks and firms are not hiring MBA's into formal trading programs, although they are interested in MBA's on a case-by-case basis (based on the specific needs of a particular "trading desk.") Private-equity and hedge funds, if they recruit formally and strategically, like MBA talent and will consider hiring them because of their experiences and specific academic training in capital markets (foreign currencies, options trading, equity markets, derivatives trading, etc.). Nonetheless, hiring tends to be ad hoc.

4. Banks (JPMorgan, Citi, Barclays, Deutsche, BoA, Goldman Sachs, etc.) are making presentations on campuses coast to coast, but are promoting other sectors with similar vigor as investment banking--private banking, asset management, risk management, and commercial banking. Many banks, students notice, have reduced their core MBA schools substantially--by half, in some cases.

5. Corporations, knowing that some students may be reluctant to go the banking route, are taking advantage of such ambivalence and continue to recruit eagerly on campus (although they, too, plan to be cautious to avoid over-hiring).

6. In past years, many schools (Dartmouth and Michigan, e.g.) planned a "Wall Street Week" in New York for finance students. That tradition will likely continue this fall, and the numbers who flood New York for a week of presentations and networking with firms and actual traders and deal-doers will not have declined much.

At Carnegie Mellon, it's not surprising Heinz--headquartered nearby--has a major presence on campus, where it will recruit for corporate-finance slots. Union Pacific and BNP Paribas have also made presentations on campus. Finance students there try to stay ahead by joining the Graduate Finance Association.

At Michigan, finance students join the Finance Club, which helps guide students in the recruiting process. About 80-plus students are involved. The number is reportedly down from years ago, but is still significant. Students in the club are those pursuing careers in investment banking, sales & trading, private banking, and corporate finance.

Yale students spent part of orientation in New York. That permitted many of them to meet directly with major banks and firms and establish important contacts, even before classes started.

Indiana's directors of its investment-management academy advised students to get ready for a tough recruiting season, but encouraged them to gear up to get ahead by traveling to key cities (Chicago, New York, e.g.) to network, meet contacts and plan information interviews. BoA/Merrill has already made enthusiastic presentations on campus.

At UNC, CFN students convened early on to discuss strategies, opportunities, and upcoming course obligations.

All is not hopeless. Just a measure of caution from deans, recruiting directors and professors. Firms, companies, banks, and funds don't want to be caught off guard by over-hiring.

CFN will track progress among Consortium schools throughout the recruiting season with hopes that good planning, wise strategizing and discrete sharing of information will yield offer letters for all.

Tracy Williams

Wednesday, September 9, 2009

Career Management for the Long Haul

It's no longer just about job search and resume' submission. Nowadays, to get ahead and stay ahead, it's about non-stop planning, long-term career management, networking and "relationship management."

That was Jason Alba's prominent theme Wednesday night in the CFN's first webinar for Consortium students, alumni and friends. Over 115 registered to participate in the webinar.

Alba, CEO of, hosted the session and provided tools and clues on how best to use online professional and social networks to your advantage--especially Alba is the author of "I'm on Facebook, Now What?" and produced the DVD "Linkedin for Job Seekers."

Alba was once a victim of corporate downsizing; years later, he's used the expertise and experience from exhaustive job searches to develop useful strategies for career management. In a 90-minute presentation, special for the Consortium, he touched on many topics and offered dozens of helpful hints. Some are summarized below.

1. Job search should no longer be about just that. Transform "job search" into "career management." And do that by always growing your networks--in your geography, in your profession and in your industry, he said.

2. In networking, assess "who you know": family, professors, friends, colleagues, friends of friends. There are important people and power people, but there are, he pointed out, "power connectors," people who can connect you to other power people, sometimes just from the roles they play or the positions they hold. ("Accountants," for example, he said, "know everybody," because of their contacts with many key people in corporations.)

Nurture relationships; go beyond the superficial. E-mail, follow up, send thank-you notes, and personal greetings. Make people remember you.

3. Alba suggested sending out a monthly newsletter or communique to selected people in your network, but "keep it short." In it, tell people what you want, what companies you have seen, what companies you want to see, what job titles you are interested in. When people know what you are up to and what you want, they can help you, connect you or tell you exactly what you need to know.

4. The Linkedin Profile. Abla stressed the importance of the profile: "This is how people find you." Fix it up, make sure it's updated, include a professional picture, and be precise in the summary. Attach links (detailed resume', other information, etc.), as well.

Use the new features of Linkedin: "Answers," "Companies." He showed how they can be used in searches, in helping networks sprout, and in figuring out who's who at the places you want to be. The features, he demonstrated, can prove you already have a far more extended reach into certain firms than you thought.

5. Powerpoint Presentations of yourself. Alba thought it wise to prepare a presentation of yourself, particularly helpful in establishing your personal brand and pinpointing who you are and what you want.

6. Elevator pitches. Alba urged people to prepare not just one, but many: a 30-second pitch, a 5-second pitch, and pitches for different audiences and different purposes.

7. JibberJobber. Because Linkedin doesn't have a useful, intricate relationship-management tool, his site can fill that role. Alba showed how to manage networks and people contacts for the long term. The tool helps you classify, rate, and assess your contacts and keep tabs of those you haven't been in touch with for years. Yes, he suggested you rank or rate your contacts.

8. Alba, a constant blogger himself, is a big believer of blogging--making it easy for others to find you, allowing you to deliver your message, and polishing your personal brand. He gave an example of a law student, whose network is now so extensive he has over 70,000 following him on Twitter. Alba hinted that it would be impossible for him not to find the perfect position when he decides he wants to practice law.

For those who also participated in the webinar, share your feedback and insight. For those interested in more, visit and reach out to Alba directly.

Tracy Williams

Tuesday, September 8, 2009

Off the Beaten Path

MBA's from top b-schools spend two frenetic, intense years shaping and carving out an ideal career path. Those in finance will likely have their eyes on prominent, well-paying positions. Positions, where the deals will be big; the stakes will be high, the risks mind-boggling and the clients large and familiar to those who read the Wall Street Journal.

The prize they covet is often a role in equity research, corporate finance, commercial and investment banking, mergers & acquitions, derivatives, fixed-income trading hedge funds, public finance, insurance, private equity, financial analyis, corporate treassury, or investment management. That's a typical, respectable route. Top firms, corporation and banks seek talent and parade to top schools to fill the prized roles.

But what about non-traditional routes for the MBA in finance or for the finance professional early in his/her career? Not everybody wants to be or should become an investment banker or hedge-fund trader. Not everybody is interested in the "big deal," "big IPO," or "big trade." What are the opportunities off the beaten path?

First, the traditional route is not an undesirable path. Students and professionals shouldn't be discouraged from heading into the direction of their interests and passions. MBA's are mature professionals who have thought long and hard about what they want to do.

The traditional route has advantages. Handsome compensation packages is one. Top firms, funds, or banks (such as Goldman, Blackstone, BoA, or Citigroup) value the MBA and look for people who have extensive knowledge, can handle significant responsibility and can contribute right away.

B-schools prepare graduates well for those roles--with tailored courses, varied concentrations and in-depth academic preparation. Opporutnies are broad; career progresion is explicitly defined. Often training programs are at the doorstep. Networking and connecting with alumni are possible just by tapping a shoulder.

But what if the early-career professional wants something different? What are alternatives, and what can they do to design a different career path?

Non-traditional roles can encompass almost anything. MBA's and finance professionals occasionally reject what's familiar and venture elsewhere, still using their skills, coursework, experiences and contacts.

They bypass investment banking for community banking or microfinance-preferring to do business with individuals, small businesses, or mom-and-pop enterprises. They have become financial managers at museums, art galleries, opera companies or West Coast start-ups.

They have assumed senior finance roles in not-for-profit organizations--at charities, foundations, social-responsibility and civil-rights groups. They have assumed roles in government as financial managers at municipalities or treasury officials of states. In microfinance, they focus on helping fund one-person shops in emerging markets.

Also, off the beaten path may mean exploring less flamboyant or less known roles in traditional banks or firms. That might mean responsibilities in risk management (credit risk or market risk), cash management (funds transfer, short-term investments), custody (securities holding), securities processing, credit cards, and community reinvestment (CRA). Opportunities abound in these areas, but they aren't always well publicized or well recruited. MBA's thrive in these areas, even when some schools may not teach related courses or professors don't specialize in the same.

The financial crisis didn't discourage MBA's from banking and corporate--at least not as much as expected. But it spurred them to be fair to themselves and ponder the non-traditional realm.

Amid such opportunities, there are challenges. Non-traditional employers may not have histories of recruiting MBA's or deep-rooted relationships with schools. Thus, they may not already have large numbers of MBA's in management and may prefer to groom from within. Or they aren't familiar with the value of MBA hiring or aren't familiar with the process.

Do b-schools prepare MBAs for these roles? Many seek to do so. They offer courses in non-profit management, introduce students to public finance, public policy and social responsibility, and require finance students to be adept in operations and general management. Some professors specialize in these topics. And schools gladly help students and alumni connect with alumni in these roles.

Are the opportunities real? Yes, if they are pursed or hunted carefully. They may require the seeker to convince the non-traditional employer to take a chance with finance types, their skills and special experience.

At CFN, some members say they want to explore non-traditional activity more. CFN is considering a special event or webinar on the topic. Students, alumni in transition and even experienced professionals want to learn more about MBA's who understand what it takes to garner a specific, ideal role at an organization that doesn't recruit MBA's in finance traditionally.

They want finance, but perhaps want to fund a neighborhood barbershop or finance accessible housing. They want finance, but may want to fund a community park or a waste-management facility in a developing country. Or they may want to manage investments of a local college or manage the expenses and cash flow of a jazz club.

And the "deal" or "trade" need not be highlighted or headlined in the Wall Street Journal.

Tracy Williams