MBA Students: An Eye on Summer '14

CFN hosted its annual webinar to launch interview season

Most MBA students today, including Consortium students across the country, will argue there is no one segmented part of the calendar for "recruiting season."  Every aspect and experience of business school is "recruiting season," from the time students declare their intentions to attend a certain school until graduation. Every day, not just a few weeks in the fall, MBA students contemplate where they want to be and what they should do to secure the right job.

Students today, and their career-advisory specialists on campus, say there is seldom a time when an MBA student is not absorbed in thought about information interviews, mentors, alumni connections, career choices, or a specific post that awaits after graduation. Nonetheless, late fall usually signals the formal start of interviews:  information interviews,  first rounds, lottery interviews, interviews earned from being selected by companies, second rounds, technical interviews, and follow-up sessions to decide whether to accept an offer or go elsewhere.

The Consortium Finance Network hosted its third MBA recruiting webinar Nov. 13 for Consortium first-year MBA students to launch interview season for those interested in finance and financial services.  Panelists included Consortium graduates in a variety of finance roles, working for financial institutions and industrial, entertainment, and consumer-products companies. CFN steering-committee members, D-Lori Newsome-Pitts, Camilo Sandoval and Tracy Williams, moderated the presentation and subsequent discussion. Consortium students logged into the webinar from schools around the nation.

Panelists included Consortium alumni Abijah Nyong from Dow Chemical (Indiana-Kelley business school), Christina Guevara from Goldman Sachs (NYU-Stern), Stephanie Rosenkranz  from ESPN-Disney (USC-Marshall), and Brace Clement from Starbucks (Wisconsin). Some were recent graduates, fresh from the experience of going through the process. 

Nyong from Dow Chemical set the tone for the evening.  "When it comes to talent," he said, "good talent comes off the shelf.  Even if the business prognosis is not good, we take good talent."

To guide students, CFN presented a general recruiting outlook in several segments of finance. Opportunities in finance fluctuate and take assorted, unexpected turns from year to year.  In 2013-14, the outlook is generally upbeat, as banks, investment firms, and companies have become confident enough to open their doors for more MBAs.

But as most experienced finance professionals know well, it helps to be cautious, careful, and forewarned.  In finance, the tide and sentiment of recruiting can turn on a dime. Some years, companies hire more than they need. In other years, companies are sour on economic prospects and hire fewer than they should.  More than ever, however, financial institutions and companies are serious in hiring summer interns, since most hire interns with hopes of offering them full-time employment when the summer is over.

In corporate finance and corporate treasury, as the economy grows and improves, companies are growing and expanding and will, therefore, have financing needs and investment opportunities.

Nyong said companies like his employer are looking for outstanding candidates and are increasing hiring. "We want to ramp up to try to make sure good employees are in the pipeline."

In investment banking, whether it's M&A, FIG, real estate, energy or health care, all depends on the industry segment, expectations within that industry and general business trends. M&A, for example, had shown signs of starting to soar this summer, but experts now can't figure out why it stalls from time to time.

FIG investment banking has benefited from the capital requirements and restructuring initiatives of banks everywhere, in the wake new regulation and reforms. Equity finance is patting itself on the back after renewed confidence from IPOs (think Twitter) and investors' comfort in stocks.  Debt finance has been bolstered by low interest rates.

In private banking and wealth management, banks will continue to emphasize growth, because they like the fee-based businesses without having to build up their balance sheets.

"Banks have pushed to build out (in private banking) because of the sticky assets," Guevara said. "They are focused on growth."

In corporate banking, opportunities exist because big banks, which had swooned toward the high returns and headlines of investment banking, have learned to appreciate the stable returns and bread-and-butter benefits of corporate lending and cash management.

Sales & trading opportunities at financial institutions are limited, because regulation and reform will restrict what they can do--if not now, then over the next few years, as SEC and Dodd-Frank rules are written and become clear.

Banks everywhere have restructured trading desks and trading roles. The best opportunities, if any, for MBAs interested in trading will be at asset managers, boutiques, specialty trading firms and hedge funds. Others will remind us, however, how significant aspects of trading are now directed by computers, algorithm, client flow, and trading schemes--not requiring as many desk traders (or people).

For years, MBAs overlooked opportunities in risk management and didn't know much about the role. Financial institutions seldom tapped business schools for risk managers. After the crisis, financial institutions have learned lessons or have been forced to beef up emphasis, add professionals and become more attuned to all forms of risks. Regulators, too, in these times are always in the vicinity and insist that banks devote resources and attention to risk management in the way they may not have done so in years before the crisis.

Clement from Starbucks said, "I wish I took more classes in risk management (while in business school) and learned more how to manage (market) risks."  He described ways in which his company must hedge the complex risks of costs of commodity products. Business schools have responded in recent years to offer courses in risk management (for credit and market risks). 

Opportunities in venture capital, private equity and hedge funds are fleeting or uncertain, partly because these firms often recruit beyond the eyesight of business schools and tend to have opaque recruiting procedures. There exists, also, possible fall-out from recent insider-trading scandals (think SAC) and industry-wide hedge-fund shake-out.  Hedge-fund returns, believe it or not, trail that of equity markets in the past year or two, and more than a few hedge funds have closed their doors in the last year.

In venture capital and private equity, some industry observers say too much money might be chasing too few good deals.

Sandoval presented CFN's framework for approaching interviews.  The framework encourages students to examine and polish themselves in five areas:

(a) personal background,
(b) personal interest in the industry and company,
(c) personal drive and motivation,
(d) capability (expertise, knowledge, understanding of industry) and
(e) insight.

Nyong said, "I did a lot of informational interviews to find out what (industry segment) felt natural to me." He instructed students, "Look at the spectrum of positions available.  Seek out alumni."

Panelists emphasized the importance of being aware of current events, topics and issues, because interviewers will refer to them and being informed can help students make decisions about what they want to do. Guevara advised that students should make sure to "study markets and current events and have a sense of what's going on."

Rosenkranz recommended that students register and subscribe to www.smartbrief.com, a website that aggregates news stories and headlines, based on specific business areas (finance, accounting, marketing, etc.) or specific topics (derivatives, currencies, digital advertising, etc.). A student can tailor the website aggregation to his specific interests and can see the updates he needs to see.

Panelists emphasized frequently the importance of conveying interest, drive and enthusiasm in finance-oriented interviews. In interviews, Sandoval explained, "We forget to talk about our general interest and passion for finance."

Clement summed up, "You want them (the companies) to believe you can do this job."

"You have to know who you are and where you want to go," Nyong said. "If you can't buy it yourself, you can't sell it."

As panelists presented the CFN framework, Sandoval reminded students, "You are in the driver seat.  You design the framework that works for you. You control the questions."  

Year after year, finance students fear the technical interview, where financial institutions try to gauge what candidates know and how they describe finance scenarios on their feet. To prepare for what they perceive as stressful exercises, students study market trends and refresh themselves in principles of finance, markets and accounting. Beyond that, candidates seldom know how that interview will evolve.

Investment banks may require candidates to present a detailed deal strategy or advise in valuing a stock offering.  Hedge funds or asset managers may require candidates to  explain trends in interest rates or derivatives pricing. Corporate-finance managers may require candidates to evaluate a balance sheet.

Nyong advised, "Read the company's 10-K to prepare.  It offers a vision of their market and shows contrasts with competition."

Rosenkranz said, "Listen to the (company's) investor calls to see how management responds.  Listen to the kinds of questions (analysts) ask during the calls."  She added that for technical interviews, companies want to "see if you have intellectual curiosity." And she suggested that candidates can learn much about the company's structure, management and culture by referring to the website www.glassdoor.com.

"How does the company make money?" Rosenkranz asked, recommending candidates study closely the company's business model.

Clement saw the benefits of understanding thoroughly a company's income statement.  "You'll want to understand the P&L from top to bottom, understand the balance sheet," he said, because interviewers will be familiar with this financial information and will want candidates to show familiarity, as well.

CFN panelists, now experienced and entrenched in finance positions, shared other observations and advice.  However, while satisfied with their efforts to get from the classroom and case study to roles in finance, is there something they would have done differently in the recruiting process?

"I would have gotten a better sense of other roles (in the company)," Nyong said. They would include roles in operations, marketing, manufacturing and other functions, because finance touches so many important activities in an industrial company.  "I would have gotten a better understanding."

"I would have found somebody to act as a blueprint," Clement said, explaining the importance of connecting with a school alumnus, an experienced mentor,  or a senior manager to learn more about the recruiting process, the industry, and the ropes for converting dreams into strategies into meaningful job offers.

Rosenkranz said she understood the importance of showing intellect, expertise and general knowledge about the industry, but wished she examined more carefully companies' work environment and culture.

Panelists concluded that most MBAs, especially ambitious Consortium students at top schools, will find opportunities and take advantage of some of them.

"You want to be intentional," Clement offered. "You shouldn't just want to find any place to land. You shouldn't be fishing for just any place."

Tracy Williams

(A recording of the webinar and the accompanying written presentation will be available to CFN members in Linkedin.)

See also:

CFN: MBAs and the Summer of 2013
CFN:  Is the MBA Under Attack? 2013
CFN:  MBA:  Remaining Relevant, 2011
CFN:  Mastering Technical Skills, 2010
CFN:  Who's Headed into Finance? 2013
CFN:  How Mentors Help, 2009

Knocking Down Doors in Venture Capital

Jenn Wei, a Stanford MBA who once worked in investment banking, is now researching, chasing and negotiating deals in technology as a venture capitalist at Bloomberg Capital.  Last week, in postings that appeared widely in business media, including VentureBeat.com, she wrote about the startling, but not surprising lack of women in venture capital--in Silicon Valley (California), in Silicon Alley (New York) and at other pivotal venture spots around the country.

She reminded us of the glaring scarcity of females at negotiating tables, within network huddles when ideas are bantered about, and in closed-door meetings where entrepreneurs, deal-doers and investors decide the right amounts for an early-round investment to support the next new thing.


She offered a few reasons why women are not prominent in the industry and dared to propose solutions. She said women desperately need role models in the industry and industry participants need to take time to understand the likes, interests, and proclivities of women.

Her observations won't knock down doors, nor will they force those who run the best-known venture-capital firms to change the look, face and appeal of the industry overnight.  As much they should be, they aren't focused on demographics of who's who and who's where as much as they desperately chase the next "disruptive" technology enterprise.

But gosh, she makes a point that is obvious to anybody who takes a moment to survey who is in the industry--from those at entry levels to those who sign off on the big angel investments. Who's exactly roaming the corridors at top venture-capital firms? What did they do to prepare to be in the right place and the right time? Whom did they know?

CFN examined the statistics of the industry last year. See CFN-Venture Capital and Diversity.  Women comprise about 11% of the venture-capital professionals (based on industry surveys last year), while blacks and Latinos are virtually invisible at the major firms (firms such as Accel, Greylock, Sequoia, and Kleiner Perkins).  (Asians and Asian-American comprise about 9%.)

Wei pointed to the Midas List, a Forbes-magazine list of the top 100 in venture capital, those responsible for making the most lucrative investments in technology, those who have had successful track records in sniffing out the next Facebook or Zynga and getting in early, while accumulating board seats and significant numbers of pre-IPO shares. She had trouble finding women on the list. And she wondered why.

In the list's top 20, there are no women. Women have had modest success in leading technology firms (e.g., at eBay, H&P, Facebook, Yahoo, etc.). So why haven't they been leaders in venture capital? (Or why, for that matter, are blacks and Latinos still invisible in the industry?)

The top 20 on Forbes' list includes familiar names, including those who would likely be in a Venture Capital Hall of Fame, if such existed. It includes Marc Andreessen, Jim Breyer, John Doerr, Reid Hoffman, and Peter Thiel--not necessarily household names, but wealthy investors (a billionaire here and there) and legendary leaders of venture funds.

What typifies this top 20 among the top 100, beyond the fact that a little luck here and there certainly counted for some of their success and wealth?

1.  While some like Thiel and Andreessen became venture investors after their blockbuster successes from a start-up they founded (PayPal, Netscape, etc.), most of the others started out working in investor funds and worked their way up because of investment-related experiences, contacts, opportunities they took advantage of, and solid track records. Many of the same--without a doubt--joined the right venture firms and fell into the arms of sympathetic mentors willing to help someone follow their paths.

2. Many of them, plugged into technology updates and gifted with insight about technology trends or market behavior, hit more than a few home runs by getting in early in recent years with investments in Groupon, Facebook, Twitter, Linkedin, NetFlix, Pandora and Zynga.  One or two home runs helped build a reputation, which helped establish more contacts, funding, or entrees into whatever niche of the industry they needed or wanted to be in.

3.  Many have science, math, and engineering undergraduate degrees, permitting them to exist comfortably among professional engineers, computer scientists, or 22-year-old coding geeks.

4.  But most of this group are financiers at their core, competent in evaluating investments over 3-, 5- 7-year horizons, able to comprehend balance sheets and funding needs of start-up companies, expert at assessing growth prospects of a new company, sensitive to the tweaked structures of the capital structure of a young company, and experienced in deciphering board-room behavior.

So it's not a surprise that most in this group of 20 and a substantial number in the top 100 have MBAs in finance from top schools (Harvard, Stanford, and Wharton, being prominent in the top 20, and Consortium schools Berkeley and Michigan also being prominent in the top 100).

Basically qualities, characteristics and experiences many women (and others from under-represented groups) possess.  The doors are slightly ajar, and they might have to be knocked down in order for everybody to get in.

Tracy Williams

When Mentoring Relationships Falter

Something often plagues MBA students and many young professionals in finance. Why don't mentoring relationships always work as they were envisioned or designed? Why do mentoring relationships often get off to exciting, hopeful, ambitious starts, but flicker, whimper and die out? Why do they start with promise and then meander into nowhere?

Not all mentoring relationships, we know, falter.  Some thrive. Some lead to life-long relationships and friendships.  Some lead to opportunities, new jobs, promotions and even new careers, activities, and hobbies.  Note the themes of thriving relationships. They suggest something refreshing, new, opportunistic, and different.

But what about those that falter, the life of which oozes out and dwindles to nothing?

What happens when the eager first-year MBA student at Virginia, Emory or Berkeley links up with a principal at a private-equity firm. They meet, greet, exchange business cards and discuss respective backgrounds. They deduce they have much in common--shared backgrounds, shared acquaintances, and shared interests in finance.

There is an intersection, where they bond and which spawns "a relationship."  Because of the bond, the mentor offers an insider's list of suggestions for how the Emory MBA can pursue a career in private equity or venture capital. The mentor visualizes happily the student following in her path. The student expresses his good fortune; he has found the toolkit or treasurer's chest that can lead him to an associate position at Blackstone, Goldman Sachs, Jefferies, Citadel, Kleiner Perkins or Morgan Stanley.

They go their separate ways, exchange e-mail messages of gratitude, arrange a follow-up phone conference call, and then meet for coffee in New York weeks later. All of a sudden, the student detects diminished enthusiasm from the mentor. The mentor, distracted by other worries and pressing demands, is not attentive and even forgets some personal details about the student. The student stumbles, uncertain in how to respond, how to take advantage of the moment, how to push the relationship along, or how to seize the day.

Worse of all, the student hesitates afterward to reach out again to the mentor.  Or (in some cases) the mentor, noticing how unprepared or clumsy the student seemed to have been, is suddenly less interested in "grabbing a cup of coffee" the next time he is in New York.  

Dozens of reasons exist for why some relationships don't work. Time pressures loom large. Students, young professionals, and experienced leaders in the industry all have deadlines, immediate priorities, meetings to attend, and projects to complete.  The values and promises of a mentoring relationship suddenly appear too vague when the student has final exams and the mentor has a billion-dollar deal to execute. Inevitably, the relationship slips to a spot near the bottom of the priority list.

Other times, relationships falter because the student or young professional expects too much too quickly, having planned to exploit the relationship to achieve a concrete objective.  He pursues the relationship because he wants a job, a promotion, a raise, or a transition to a new group. When he realizes the relationship may not lead to quick benefits, no matter how engaged, connected or powerful the mentor is, he loses interest and eagerness. He is less likely to maintain touch, less likely to call or send the occasional e-mail greeting.

The relationship loses its buzz, its special bond, because specific objectives aren't being accomplished. These relationships falter because they are pegged too often to personal objectives.

The best relationships, experienced mentors say, are those where the relationship proceeds on a natural course. Both sides, because they are comfortable, share experiences, opinions, and histories. Both sides, because they are comfortable, offer constructive feedback and enjoy the give and take of fun, fruitful conversation. 

In finance, mentoring relationships continue to be critical--especially in certain industry segments. To get hired in or to advance in private equity, venture capital, hedge funds and boutique investment banking, relationships and ties to experienced people often count more than formal recruiting processes.

Some mentors, of course, are more active, more interested in the relationship, and more successful at it than others. The onus, however, continues to fall on the younger professional to launch the ties, to cultivate and to maintain them. Some mentors complain that students and entry-level professionals make it complex when they often approach them unprepared, always seeking quick solutions and answers.

Still, some mentors know relationships thrive, even when the student isn't always prepared when they meet, partly because the two understand the motives, interests, dreams and styles of each other. Many relationships indeed have concrete benefits, even if they are reached years later. A mentor can provide guidance to a student, who uses it years later as an associate making presentations to clients, handling the pressure of long work hours, or being promoted to Vice President.

CFN, over the past three years, has explored mentoring relationships in finance frequently. Based on experiences from mentors, students and entry-level professionals, the posts below share success stories and provide some guidelines on how to sustain relationships, how to keep conversations and sessions relevant, and vibrant, and how relationships eventually lead to wonderful benefits.

A few relationships will inevitably fall flat, but they don't always have to.

Tracy Williams


See also:

How Mentors Can Help MBA Students

How Mentors Are Invaluable in Recruiting 

Mentors:  Still Critical, Useful, Important

How Affinity Groups Help in Mentoring

Something Different: A Special NFL Documentary

From Emory MBA to Film Production

Now and then MBA graduates depart from business school with aspirations to succeed in a conventional career: Consulting, banking, investing, marketing, or start-ups.  Somewhere along the way, they  re-discover themselves or  re-kindle other passions and head into other directions.  They find new interests and opportunities. And off they go.  Sometimes they transition into another conventional pursuit. Or sometimes pursue something off the beaten paths.

Theresa Moore, a Harvard athlete and graduate, earned an MBA from Emory (now a Consortium school) and started out conventionally in marketing at Coca-Cola.  However, along the way, she switched courses, while  taking advantage of her business education and experiences.  Today she runs her own film-production company and directs and produces her own documentary projects.

Her most recent project aired on CBS-TV in December and the NFL Network in February. She directed and produced "Third and Long," a history of African-Americans in pro football. (See  Third and Long for excerpts.)

 It was critical, she says, to go back and go beyond mere black-and-white footage of the stalwarts from the 1960s or 1970s. She wanted to capture the essence of those experiences by interviewing many of the stars first hand, grabbing their impressions, their stories, their feelings, and other anecdotes of blacks in pro football during the days before it peaked in popularity. She wanted them to tell their own stories of how they contributed to pro football's rapid rise in popularity.

In the documentary, Moore, who is president of T-Time Productions, interviews such former stars as Deacon Jones, Jim Brown and Rosey Grier. They share locker-room stories, analyze their own performances vs. today's players, and recall days when blacks comprised only a handful of players on a team. They discuss how they hurdled barriers to earn a team spot or win general acceptance. Moore worked with the NFL to use stock footage of game film, but her project comes to life with engaging, colorful interviews. The players open up and share their stories, their reflections of the game back then, and the parts the play in the NFL's evolution.

With this project wrapped up, Moore is involved in other activities and wants to do similar projects.  She says in other sports, there are black or female athletes who were courageous pioneers in their pursuits and who, too, have stories and reflections. She wants to capture their impressions, anecdotes and memories--perhaps before it's too late or before the elapse of time dismisses their contributions or roles.

Her project "License to Kill: Title IX at 35," a history of Title IX that includes interviews with college women athletes over the past decades, will be distributed for education purposes.

Her projects have themes, purpose, storylines and ties to history. However,  Moore says they have yet another important objective:  She wants to document thoroughly the commentary and accounts of black and female athletes from previous decades to have an accurate account for archival purposes.  A vast pursuit, but essential for sports historians, as they track the evolution and impact of sports and study the contributions of major participants--including black and female athletes.

The long-term project is ambitious, so she is using her business experiences and contacts to plan a way to accomplish it.  For more about her production company and its agenda or for those interested in learning more about her pathway from Harvard to Emory to the NFL, see T-Time.

Tracy Williams

For the Fortunate Few: Comp Packages

Bonus season at financial institutions has come and gone. Yet for the month or two afterwards, there is the inevitable aftermath, the ruminating over what happened and the pondering over whether lucrative payouts in years past will ever reappear.

In the post-crisis financial industry, where many just feel fortunate to be employed, there will still be some degree of anger, frustration, or disappointment in payouts. Many yearn for the times of the 1990s or the early 2000s.  Most know the industry is still enduring a shake-out or a re-engineering of sorts, and compensation is a candidate for shake-out, too. 

Handsome compensation packages still exist in certain segments, perhaps most prominently at venture-capital firms, private-equity companies and hedge funds.  Even in 2012, you can read about insane, mind-boggling bonuses, likely because someone made an insane, mind-boggling hedge-fund trade.  Payouts at banks, investment managers and other financial institutions (or in general finance roles) still appear to be attractive to some, even if they have slipped to pre-2000 levels.

Financial institutions, however, are trying to be more creative. More than ever, they are tweaking the structure of compensation packages--more stock, less cash, some options, and even some distressed debt or arrangements with "claw back" features (where employees are required to return promised payouts if individual or institutional performance reverses itself).

In this post-bonus season in 2012, reports are widespread about the reduction in payouts or the clever structures of packages.  Morgan Stanley, for example, capped cash payments at $125,000. Credit Suisse and others transferred certain structured bonds or mortgage securities from their spruced-up balance sheets into the pockets of some senior managers.


The structure of comp packages depend on market and peer practice and institutional performance, but they also depend on experience levels and individual performance.  Accounting rules, impact on overall ROE and long-term corporate issues are also factors.

Senior bankers and traders are more likely to be awarded packages that include restricted stock, deferred compensation and/or options.  More junior personnel (analysts and MBA associates, e.g.), still with little leverage, will have less say-so and may be awarded all cash or some stock--whatever is rationalized by senior management at the time.

If you are a finance professional and if you are lucky enough to receive a comp package, what would you prefer? From the list below, what is the optimal structure for the firm and for you, no matter whether times are good, bad or so-so?

1.  Cash
2.  Cash and options
3.  Cash, options, and restricted stock
4.  Cash and deferred compensation
5.  Cash and debt securities

 Over the past two decades, there have been variations.  Recall the dot-com era, the explosion of Internet businesses and stocks.  In the late 1990s and early 2000s, some financial institutions awarded bankers and traders stakes in venture funds, start-up companies or leveraged investments.  More firms today are exploring debt compensation.

Two Wharton researchers argue comp packages should include debt securities issued by employees' companies. (See Wharton Research:  Alex Edmans, Qi Liu)  They argue that senior managers should behave like owners to maximize returns, but also behave like debt-holders who, because they aren't promised high returns, are more careful about managing and controlling risk.

As debt-holders, managers at financial institutions will be more apt to manage businesses within more comfortable risk bands. A payout, for example, of 80-percent stock and 20-percent debt makes sense.

Younger professionals usually prefer cash, partly because they need it.  Experienced bankers, traders and managers sometimes prefer cash, because they contend they can manage the cash better and more suitably for themselves than the employer.

In the dot-com era, younger professionals (including analysts and MBA associates at prominent firms) actually demanded it, or they threatened to leave finance for opportunities in technology.  And the bulge-bracket firms at the time obliged.  This same segment has less leverage today, but will likely still be paid minimally in stock holdings.

All the world knows, if the company is expanding and growing and has a bright horizon, then packages adorned with options and stock are welcome.  If the company has stumbled or is struggling, employees will shirk equity that will likely decline, although a cash-strapped company will tend to award just that because cash is necessary to stay viable.

Deferred compensation and options are unattractive when the company's prospects are failing. Options over time can expire worthless. And institutions sometimes go bankrupt (Lehman, e.g.), at which time deferred comp becomes just another debt claim.

For the newer MBA associate or first-year vice president at stable institutions in stable industry segments, non-cash compensation is not as bad as it sounds when managers hand over the envelope with "the number."  Non-cash comp comes with restrictions and requires patience, but there are advantages (although sometimes hard to see when you are just starting out):

(a) The upside tends to be greater in the long term.
(b) And yes, it can be a disciplined savings plan for those who haven't yet begun to appreciate the values of long-term investing.

Tracy Williams

"What Have You Done for Me Lately?"

Remember days of yore--when an MBA in finance accepted an offer from an investment bank, commercial bank, brokerage house, trading firm or insurance company in the spring of second year and thereafter embarked on a long career with one firm, one employer?  Shortly after arriving at the firm, the MBA started a training program or entry position--with the expectations of earning promotions every few years and with sights on becoming a senior manager (at the same firm) at the apex of a productive, memorable career.

In those days, you had the luxury of failing or slipping up in performance (a few times, not often), as long as you showed drive, loyalty, commitment and some promise. Now and then, you could fail to win a deal, could lose a major client, or could report a decline in revenues. You were reprimanded slightly, gently coached, and learned from experience. You were confident you would get a second chance, and you envisioned a career lasting, oh, 15, 20 or more years.

What happened to those days? Times changed. The environment changed.  Competition among financial institutions grew fierce. Regulation loosened some of the rules and guidelines. Commercial banks infringed on the turfs of investment banks. Insurance companies, boutique firms, and hedge funds butted heads among themselves and with bankers. Shareholders, boards of directors and investors, accustomed to 10-15% returns, suddenly sought 20-25% returns, even with dwindling opportunities. They demanded revenue increases, soaring earnings and steady upticks in share prices.

And they demanded it from quarter to quarter every year. From the chairman of the firm to the sector managing director to the vice president in a client unit or on a trading desk all the way to the newly hired MBA only a few months out of Stern, Darden, Haas, or Tuck, the mantra became:  "What have you done for me lately?"

How can and how do MBAs, including those from Consortium schools, confront such daily pressures? How should they and how can they handle a culture where you are only as good as the last deal you've done, the last client you brought to the firm, the last trade you put on the books or the last investment you analyzed and endorsed?

The topsy-turvy environment of 2011 makes matters worse. While financial institutions of all kinds scramble to win business, keep clients and cut costs to remain profitable, uncertainty about markets, global issues in Europe, and a start-stop recovery in the U.S. heightens the pressure. Banks, in particular, still sit in frustrating meetings brainstorming on how to make money with Dodd-Frank and Basel III regulation whipping them from behind. In the midst of all this uncertainty and week-to-week chaos, somebody is always peering over everybody's shoulder to ask: What have you done lately to justify your existence here?

Will this be the norm going forward?  Will this be common practice to manage professional talent? Will bankers, traders, researchers, salespersons and managers be evaluated from quarter to quarter based on their current contributions to earnings (and not based on a long-term value to the firm)? Will employees at financial institutions approach each work day as one to confront threats, hardships and enormous pressures to perform and achieve?

Or when market stability turns, along with some certainty of a sustained recovery, will financial institutions settle down and nurture long-term career paths for those who truly want to be around for a long time? There is risk in not doing so.

In unsettled markets and high-pressure situations (where compensation is too uncertain to offset daily anxiety and turmoil), talented professionals seek solace elsewhere. If the environment is unsatisfying and too threatening, they move on. They flee to smaller firms or more specialized outfits. They contemplate going on their own, setting up their own shops, boutiques or funds. Many bring their clients, strategies, and colleagues with them.

Others shop around for more comfortable roles or environments. If they go to work plastered with  constant rumors of lay-offs or spin-offs of business units they work in or if they are subject to harsh demands to meet extraordinary business targets, they reach out to peer firms. They go where expectations are reasonable and where pressures are tolerable (or compensated for). They go across the street to the "other bank."

Younger professionals and newly minted MBAs may not have networks or contacts to pursue other opportunities yet. Many also want to stay put, because they want to spend the first few years learning and getting experience--in doing deals, in negotiating with clients, in tackling financial models, in managing people and in making tough business decisions.

Yet in an environment where some will tap them on shoulders and ask what have they done lately, it helps to have a survival plan. What can they do?

1.  Keep, maintain and update a personal scorecard of accomplishments, achievements, deals, business wins, and successful projects. Be ready to present and explain it at any time, because, yes, in these times, your value to the firm is always under review.

As others assess your value (whether formally in appraisal meetings or informally in chatter during a coffee break), you want the review to be fair, objective, and up to date.

2.  Understand what your weaknesses are and how they are perceived by others. Develop a short- and long-term plan to address them, and be ready to share the plan with supervisors and mentors. As others evaluate you, they may overlook what might be regarded as a glaring weakness, if they know you have plan to improve.

3.  Always assess "what you bring to the table."  Make sure to the table, you bring something important, useful, possibly money-generating, or valued highly in the short- and long-term. That may be access to clients, people and contacts. It may be specialized knowledge, new ideas, or an astounding understanding of financial models, markets, products, or regulation. For many recent MBA graduates, it may also be an intense, consistent work ethic, a willingness to get the job done no matter the obstacles (and of course during all hours of the night or weekend).

There is no fail-safe response to the question:  What have you done for me lately? Sometimes a 20% increase in revenues won't do. Or winning the mandate from a new client to do a big, headline-garnering deal won't create a buzz among senior managers. Or creating a new product that clients will swarm toward may still be insufficient for those who ask these types of value questions.

But it still helps to be prepared and be ready to present your case.

Tracy Williams

Affinity Groups: To Join or Not to Join

To join or not to join. To get involved or not.  The New York Times Sunday posed the query to Consortium CEO Peter Aranda in its July 3 edition:  Should members of under-represented groups join the "affinity groups" that exist in certain business settings?  They are special-purpose groups within a company that attract a membership of women, Hispanics, or Asian- or African-Americans. Or they may be groups that attract others with shared interests or backgrounds:  LGBTs, Native Americans,  Arab-Americans, or South Asians.

They may include--within the institution--groups of African-American investment bankers, an Asian society of traders, researchers and analysts, or women in risk management. They could include Latinos in private banking or financial consulting.

The Times posed a challenging question, one that many within these groups grapple with from time to time. Is there an advantage or disadvantage if you choose to affiliate with affinity groups while you are ambitiously trying to advance within the company? Is there a negative stigma in the eyes of those who appraise and promote you? (See http://www.nytimes.com/2011/07/03/jobs

Aranda suggested affinity-group involvement is beneficial if the primary purpose is not social. "Affinity groups can operate like focus groups," he told the Times.  The affinity group should have a purpose consistent with the business objectives of the company. Aranda suggested you should join  groups that have senior-executive sponsors and that are directly tied to business functions like recruiting, marketing, or product development.

Or you should join if the group has a mentor program.  "From a minority perspective, you should have mentors, so if you are a Hispanic junior executive and you hope to rise through the ranks, you can talk to someone who has been down that path ahead of you," Aranda said. "What you need to be careful about with affinity groups is that you aren't creating segregation by being exclusive."

Many major financial institutions, such as Citi, JPMorgan Chase, and BofA endorse the formation of affinity groups and support them in many ways.  Most such groups were formed to help in professional recruiting and evolved into networks that assist in retention and career development. They work with recruiting units to top identify candidates and escort prospects through the recruiting process. 

It's not unusual, however, for a woman, African-American or Asian-American to assess whether being associated with such groups slow down progress to get promoted or win an opportunity to transfer overseas. In financial services, performance, commitment and productivity count during appraisals. But impressions do, too, whether or not they are conveyed fairly. So inevitably, women and minorities ask themselves about the possible stigma of being associated with groups that might be regarded by outsiders as separate or exclusive.

Often, however, affinity groups offer broad advantages and institutional assistance. Big banks, firms and institutions in recent years have not shunned their formation and have not frowned on them.

How then can affinity groups be formed "without guilt" and with pride and enthusiasm, while conforming to overall business objectives?

1.  Affinity groups can assist in recruiting. They can participate by visiting campuses and identifying candidates. They can help institutions formulate firm-wide recruiting strategy, establish relationships with diversity pipelines (such as the Consortium, of course), improve relationships with professors and career advisers at colleges and business schools, and assist recruiters as they comb through long lists of candidates.

Members of affinity groups are usually committed, experienced business professionals. They will know better than corporate recruiters the special talents and strengths necessary to excel on the job. They will be able to pinpoint outstanding women and minority candidates more quickly. They will, also, be more familiar with the sources, pipelines and places to find that talent. They will know HBCUs, understand the value of such groups as National Black MBA Association, the Consortium, or Toigo, or have ties to social and professional organizations within these communities.


2.  Affinity groups can assist in the institution's efforts to hire experienced or lateral talent.  How often have we heard banks, funds or companies say they want desperately to hire experienced vice presidents from under-represented groups, but "can't find them"?  Affinity groups usually know who they are, where they can be found, and whether they might be interested in a lateral move.


3.  Affinity groups can assist in the development of entry-level professionals, including recent MBA graduates.  And they can do this in formal or informal ways.  Most large institutions have structured professional tracks (for analysts, associates, etc.) and care about the development of all who join. Often, however, some junior professionals get more attention and support than others. Others are deserving of support and encouragement, but get lost among the throngs of new people. 

Affinity groups, therefore, can step in to ensure that everybody is advised, guided and encouraged to progress. They can do this via mentor programs, special seminars or career-development sessions. Or they can encourage senior managers, bankers and traders (including those who are part of the affinity groups) to reach out to junior professionals.

4.  In finance, topics, markets, and business can be complex and always changing. The learning curve is always upward. Keeping up can be difficult. Affinity groups can (and should do more to) be a source for members to reach out to each other for information, knowledge and understanding.  The affinity group may act as a "clearinghouse" for questions about products, markets, clients, and technical analysis.


For example, a junior banker may need a refresher on equity derivatives or foreign currencies.  The affinity group can match the banker with another member who is an expert on the topic and will gladly take the time to explain the product.  A recent MBA graduate may want more information about tax-related accounting, financial models, or corporate valuations.  The affinity group can find a member expert who will gladly help.

Once formed, how can affinity groups be effective and self-sustaining? How can they exist long beyond the initial enthusiasm of the early days of formation?

1.  As mentioned above, they should have business-related purposes and specific objectives aligned with the business objectives of the institution, the sector, or business unit. If so, the group will likely provide ongoing institutional support.

As Aranda said, affinity groups should have senior-management presence or senior sponsors.  A senior manager should agree to be more than an in-name-only sponsor and should agree to be involved and act as a champion for the group in business-unit meetings, corporate strategy sessions or even board meetings.

2.  To ensure it transcends being a social outfit, the group should define objectives and strategies clearly, should share them with the broad corporate population, and should meet routinely.  The group should show that it is serious about its intentions and it plans to be around.

3.  The group should reach out early to new professionals, solicit their ideas, absorb their energy and accept them as equals in the group.

What then makes affinity groups vulnerable and ineffective or perceived negatively?

1.  Petty issues and politics suffocate affinity groups.  Sometimes they get bogged down in non-essential issues or caught up in broad corporate politics. The groups sometimes risk spending too much time on the wrong issues. Members lose interest, when they think the time is better spent going back to the office to tackle the in-box.

Affinity groups should, therefore, be attentive to and conscious of how members use their time.  Most members must weigh the time involved vs. the time involved in daily job responsibility. But most are willing to take the time, because they see the long-term benefits. Affinity groups must strive to avoid unnecessary work or projects.


2.  Sometimes they smother themselves with power struggles within the groups. Sometimes members become more impressed by their being heads of their organization than by the mission at hand.  Members risk wasting time figuring out what the titles or name of the group should be or who will represent the group in its meeting with the CEO.

3.  Vague and inconsistent communication sometimes hampers such groups. A group's steering committee might fail to inform all members about what the objectives, programs, strategies and updates are.  Members then feel isolated or disillusioned and become less interested to support the overall cause.

Affinity groups are effective when they are inclusive and are fierce in their efforts to keep everybody informed.

4.  Sometimes affinity groups trip when their objectives are vague, confusing or cumbersome because of corporate-speak.  Some outsiders are already not sure why they have been formed or why they exist; hence, members shouldn't be confused about the real purpose.

The objectives should be crisp, simple, straightforward.

5.  Affinity groups shouldn't be exclusive. They shouldn't try to define membership qualifications and should, in fact, encourage those of different ethnic backgrounds or sex to join and participate. Sometimes groups have stumbled over themselves trying to stipulate who can join or not or who can become leaders or not.

To join or not to join?

If the objective is proper, if the ultimate aim is consistent with institutional mission, if the passion is there, and if the time involved is productive, then why not? There will be long-term benefits for members--and for the institution.

Tracy Williams

Finance Rumblings: Here We Go Again?

Just when we thought all had turned around and we sensed the corner had been turned, we hear banter about financial institutions pondering lay-offs and staff reductions. Haven't we heard these rumblings before?

As big banks and other financial institutions stumble toward the end of the second quarter, 2011, published reports say lay-offs are looming. Senior managers have begun to panic over whether they will be able to generate returns that will match those of 2010, especially with deal flow, trading activity, and the economy sputtering.  Historically, the first response of financial institutions (from trading desks and deal teams to operations groups and compliance functions) is to reduce personnel numbers to brace for rougher waters.  And always, the method that comes to mind to reduce is "LIFO" outplacement--the last in are the first out. Critics say the first reaction is to protect compensation among the elders when the industry must weather a brief storm.

This time around, some financial institutions say they will manage a hint of a slow-down in intelligent, efficient ways.  Banks, funds, dealers and other financial institutions in the past often reduced staff too quickly. Once markets signaled a decline, institutions marshaled out the door the young, ambitious talent it had just hired with effusive enthusiasm.  When markets turned bright months later, firms with swiveled heads rushed to replace the talent it just let flee.

Financial institutions promise they will manage staff numbers better the next time. So at midyear, 2011, when banks and firms sense turbulence heading into the second half (not a crash, not a collapse, not a double-dip recession, but a pause or a correction of some kind), they must restrain themselves to avoid rampant lay-offs in areas where they will be desperate for analysts, team leaders, MBAs and finance experts once markets and activity surge again.

Still, the professionals in these roles must be prepared--from managing director, senior vice president to analyst intern. In fact, this could be an opportune time for self-assessment, the time to ask introspective questions about what's next or the time to make sure you are in sturdy spot if there is commotion around and about:

1.  Are you in a group, unit or business area that could be vulnerable?

2.  How would you expect business-unit leaders to respond, behave or react if there is a prolonged slow-down in the business? How have they reacted or behaved in the past?

3.  Do you understand the positioning, the strategy or the vulnerabilities of your group or area?  Are you aware of the profits and losses (or expense burdens) of your group?

4.  Have you performed as best as possible, given the circumstances? Have you done something recently (managed a project, done a deal, generated new business, or developed staff) that can separate you from the rest?

5.  Are there other opportunities worth exploring? Could this be the right time to move to a new area, new role or a position with greater responsibility and visibility?

Often finance professionals, from those at entry-level to those in privileged perches at the top, will say they are too mired in current problems, deadlines, and group turmoil to address career-related questions.  "We are just trying to survive," everybody says. 

Pausing and assessing what's going, nevertheless, might be worth the time and attention--even if you are exhausted from trying to develop new business in shaky markets, taking on extra projects to prove you can still contribute, or existing in an environment of uncertainty and worry.

Whether they are Consortium MBAs or others with extensive experience, there are many stories of how people thrived when the ground was shaking beneath them, when they took advantage of tenuous circumstances or when they used them to springboard to a better position. This is the time when equity analysts might decide to transition into private banking, when a derivatives expert might consider being a foreign-currency risk-manager, when a top client-relationship executive moves into corporate staff management. Or when a senior manager agrees to take on more responsibility--more groups or more clients reporting into her. Or when the 10-year corporate citizen decides to pursue an opening at a smaller boutique.

It could be the right time, too, to reach out to networks, peers, and colleagues to share ideas, perspectives and concerns.  Not gossip, not hot leads to a new job, but information or insight about what's going on and where the industry is headed. Ideas about next steps and appropriate ways to manage uncertainty. What better time, say, than for Consortium MBAs in finance to reach out to share thoughts about where markets are headed from here, what the hiring trends are in certain areas of the U.S., what opportunities exist in foreign locations, and what the best ways are to confront uncertainty.

Tracy Williams

The Dreaded Performance Review

Here is the scenario. You are a fourth-year associate at a major financial institution. It's late December, or early January. Your supervising manager summons you to his (or her) office. You know the meeting topic has nothing to do with a client, deal, financial model, or presentation. You discern the uneasiness of your manager. The calendar hints at the nature of the meeting. It's time for the dreaded performance review.

You dread it because you had no meaningful review of performance during the course of the year. You dread it because you have no clue in which direction the evaluation will swing: Outstanding? Superb? Above-average? Insufficient? Below par? Didn't meet expectations? Your manager decides.

You prepare yourself for the worst of assessments and hope for the best--good or bad, fair or unfair, subjective or objective, misleading or straightforward. If you are inexperienced, you may approach it with too much confidence, because if the boss hasn't critiqued your work in severe, traumatizing ways, you assume must doing fine.

If you have been around long enough and you understand the "game" of performance reviews, you arm yourself with statistics, lists of accomplishments, any summary output from long hours of toil, and examples of where you had a notable impact on the bottom line--all matters of record that will deflect the slings of unfair observations of what you've done the past year.

Some managers handle the performance review well. It's not a rushed, one-hour session late on New Year's Eve.  The best managers provide ongoing feedback, focus on constructive commentary, start the year with goals and objectives, and revise or update them as the year unfurls.  The best managers use metrics or objective standards to measure progress with goals and are sticklers for making the process as fair as possible. They minimize bias and try for an uplifting, forward-looking experience when giving feedback.

But some managers fail at it. Many managers, especially those in a deal-doing, trading-oriented, client-focused environments at financial institutions, will say they can't find time, energy or attention span to do this for all who report directly to them. They don't hold regular review sessions, because there are other pressures to tend to--responding to clients, boosting revenues, or preparing reports for senior managers.

So they skimp. They skip quarterly feedback sessions, or provide critiques in the form of hollow, unknowing comments or in emotional outbursts. Or they whisper their assessments to colleagues, not directly to employees.  Manager and employee during the year have countless conversations in business settings, when they plot strategies to ward off competitors, make plans to win a client over, or review details of a major presentation to senior business leaders.  But they avoid the uneasiness of having regular dialogue about how both are performing--employee and the manager. They put it off, and the manager always promises there will be an in-depth performance review at year end.

For the best managers, because they have meaningful exchange throughout the year with employees, the dreaded performance reviews are welcome, lively meetings. There is less tension. The year-end  meetings are more about setting goals and objectives for the next year.

For others, these sessions often turn out to be clumsy and difficult. The employee comes away with a superficial or unfair evaluation, or sometimes the employee emerges so scathed that he or she decides "it's time to leave the insitution." That's why some experts have a radical solution:  The formal, year-end performance review ought to be done away with. 

Samuel Culbert, a professor at Consortium school UCLA-Anderson, says performance reviews--the way they are customarily conducted--ought to be abolished. He wrote the book on it:  "Get Rid of the Performance Review! How Companies Stop Intimidating, Start Managing--and Focus on What Really Matters."  The title is a mouthful, but Culbert might be on to something.

This week he wrote about it in an Op-Ed piece in the New York Times. The essay was intended to prove the error in the ways of state politicians, who favor performance reviews of state workers vs. the restrictive review standards of unions. However, he used the Times platform to say that performance reviews, in general, whether among public-school teachers in Wisconsin or engineers at IBM or fourth-year associates at Morgan Stanley, don't work well. And he explained why.

"I've learned that they are subjective evaluations that measure how 'comfortable' a boss is with an employee," Culbert said in the Times.  "Not how much an employee contributes to overall results. they are an intimidating tool that makes employees too scared to speak their minds, lest their criticsm come back to haunt them in their annual evaluations.

"Performance reviews corrupt the system," he wrote, "by getting employees to focus on pleasing the boss, rather than on achieving desired results." (See http://www.performancereview.com/ for more about Culbert's ideas and the book.)

Culbert recommends "top-down reviews," where managers and employees together set goals and objectives, measure the progress of both parties achieving those goals, and hold both accountable. In this way, it's not about the employee messing up or trying to please the boss; it's about the manager-employee in unison making accomplishments or assessing together why they may have fallen short. In this setting, the review of performance is objective, measurable, and mutual.

He also recommends a "pre-performance review."  Those sessions are comfortable for participants, revolve around honest, open discussion of goals and accountability, and often prove to be more beneficial to employee, manager and the business group.  It eliminates the one-sidedness of performance reviews.

It does, however, require time and priority. Managers must set aside time to help employees set goals and review them throughout the year. And managers' managers must similarly provide goals and objectives and incentives to make sure they do.

Many financial institutions assess employees based on forced ranking and rating systems--arguably the primary reason why performance reviews are dreaded. Ranking and ratings make it easy for business groups to carve out pieces of the bonus pie as quickly and efficiently as possible.  For most finance professionals, a year's worth of work, projects, business trips, research, revenue generation, presentations, modeling, strategizing, risk assessment, and tough client negotiations come down to a single ranking or rating. That ranking or rating contributes to holiday stress and tension among employees. They worry and wonder about it; they can't interpret what it implies.

Often managers are pleased with the work, progress and contributions of most employees.  They may say so throughout the year in passing comments and summarize this well in performance write-ups. Some are rarely critical in written evaluations and worry that criticism will discourage the best employee and cause them to leave. But a ranking-rating system requires that they "grade on a curve."

Managers are forced to assign a rating or ranking for most employees that says bluntly they are "middle of the pack," "just getting by," or "no longer essential"--even if managers don't feel it or mean it. The ranking system requires that most employees in a group must be deemed "average," even if in a group, division or sector, a large number of them are truly outstanding.

Knowing there is such a system, the fourth-year associate above dreads performance-review day. And for all the 60-80-hour work-weeks and missed vacations and enormous output (in projects, presentations, decks, models, and travel all over the country), he or she knows the ranking may likely suggest "just average" or "just getting by."

If young professionals or MBAs early in their careers cannot squash the system or are too junior to try to overhaul it for something fair and better or something that emphasizes development and improvement, what can they do?

1.  If your manager doesn't present or articulate goals and objectives, prepare your own. This doesn't require much time; it may, nonetheless, require thought and contemplation.  Show them to the manager at the beginning of the year and schedule meetings to discuss progress during the year.

2.  Scheduling meetings with managers to discuss clients, business, revenue trends and deals is not hard. Scheduling meetings to discuss performance and solicit constructive feedback is downright difficult. Many managers put them off. Some don't like this part of management. So find ways to have informal, ongoing discussions with managers about priorities, workload, working agenda, and progress. Informal dialogue will be more comfortable and often more productive. This permits you and the manager to understand better your contributions and the factors that might affect performance.

3. Prepare your own self-assessment about twice a year. This also doesn't require much time, if you keep notes during the year of what you have done and the impact you have on a team or larger group. Include contributions, strengths, accomplishments, and measured impact on the bottom line. Include areas of improvement, new interests and activities related to recruiting and development of yourself and others. Include, too, current career plans--what you hope to do five years from now.

4. Throughout the year, show initiative and insight; be creative and helpful. Find a way to show that you are thinking three or four steps ahead of everybody else. This helps you stand out among others.

Some financial institutions endorse and implement some of these procedures. But they do so primarily to ease the burden of managers who may not be familiar with employees' specific contributions during the year. At the end of the year, be prepared to present your self-assessment, if only because it helps to create a comfortable session and will spur an immediate discussion of upcoming goals and objectives.  In this way, you manage the review of performance and minimize subjectivity, biases and emotions.

These aren't solutions to Culbert's problems with performance reviews. But they are ways for that fourth-year associate or any other recent MBA to take control and present the best side of him- or herself.

Tracy Williams

The "Science" of Networking

Networking is an art, most experienced professionals in finance and other business activities might assert. They value the benefits and have seen them; they acknowledge how it takes time, years, and frequent relationships and connections to get good at it.

They might say the best, most meaningful results are achieved by those who aren't desperate for immediate results, those who aren't expecting the job or promotion next week or don't expect to win the new client business based on one phone call. The best at networking and relationship-building, they might say, are those who do it all the time, who see an assortment of value in people of different backgrounds, talents and experiences. The best, they say, are those who do it naturally.

Networking could be a science, so say two business-school professors, who have done research recently in how professionals manage networks, business relationships, personal contacts and business dealing. They contend scientific experiments or methods can be used to determine the best approaches to networking and developing professional relationships.

The two professors, Ko Kuwabara of Columbia and Oliver Sheldon of Rutgers, performed studies using techniques from "game theory."  They used participants ("players") and observed and monitored "business relationships" in hypothetical business situations, especially where participants were not familiar with each other socially or professionally. They monitored activities that involved "exchanges in value" among participants.

They conducted experiments and assessed situations where participants saw each other frequently (frequent, measured interactions over a short period of time) and where participants had contact that involved in-depth interaction or negotiation or required a certain amount of trust and confidence in others.

(At Columbia Business School, Prof. Kuwabara specializes in negotiation and social capital. This spring, he is teaching social networks and social capital to MBA students. At Rutgers, Prof. Sheldon specializes in negotiation and organization behavior. Both have Ph.D. degrees from Consortium school Cornell-Johnson.)

The project and research are ongoing and will likely be enhanced, fine-tuned and updated over time.  But they are ready to share early observations and a few useful conclusions that might benefit many MBAs in finance, especially those early in their careers. Some of the useful recommendations from the initial research are summarized.

1.  In the beginning of a relationship, whether it's one defined by mentoring, business interaction, buyer-seller relations, or adviser-client relations, frequent contact, they say, is important. They see value in establishing relationship momentum and allowing a relationship to evolve and develop from frequency of contact. Their experiments, they say, show that relationships that are "disrupted," curtailed, or stifled will be relationships that wither or dissipate. Relationship disruptions, distractions or interruptions are relationship-killers.

This advice is important for young MBAs or MBA students who wonder whether too much contact with a senior mentor or professional will overwhelm ties to a more experienced person or give an impression that the younger person is a bother or a nag. Young professionals are often hesitant to initiate frequent contact lest they be a burden.

The professors say frequent contact is crucial. The young MBA or student, however, can offset a concern of too much contact by approaching meetings with senior professionals by being focused, natural, at ease, and purposeful.

For more senior professionals in their own circles, frequent contacts and consistent networking become opportunities to explore others' talents and experiences, to tap others for insight and ideas, and even to learn something new about a topic, issue, financial instrument, business strategy or corporate client.

2. While the professors recommend frequent contact, they recommend a "slow build-up" of trust. In other words, they suggest people should "test the waters" with each other. Start slowly and deliberately to build trust and confidence. This might be called "investing in the relationship." You establish frequent contact, but allow time to build trust. When trust comes, both sides know it. The professors say that the "most robust" relationships are those where people "earned (that) trust" over time.

To get to a point of earned trust, of course, professionals had to have frequent interaction and relationship momentum from steady, consistent contact.

What might all this mean for young MBAs, MBA students, and finance professionals early in their careers, especially those who are called upon to establish meaningful (and, yes, profitable, fruitful and lucrative) relationships with clients, colleagues, senior managers, and staffers?

The professors' research suggests they, too, work at ensuring they maintain frequent, consistent contacts. Touch bases regularly, they would recommend. Keep in touch. Don't let important contacts forget who you are, what you can do, and what you might be striving for in the long term. Relationships reach a momentum, and the momentum must be tended to; otherwise, it dims or evaporates.

But they suggest, too, that you must give relationships time to build trust. Don't rush them along, or don't force results, conclusions or an immediate, tangible impact. Often in the beginning, you never know what that long-term benefit can be. It might be the job, role, position, or promotion you initially looked for. But it might also be a new idea, a new introduction, a new contact, a useful opinion, a point of view, or good, old-fashioned advice.

Or it might be a new way of doing old things. Allow for give-and-take, and allow for trust and confidence to grow. The professors contend relationships soar once trust takes hold.

Tracy Williams

Where Would You Want to Work?

Everybody is attracted to lists, including corporate lists that rank the size of top corporations, the best places for diversity, and the places that offer the best opportunities. Lists provide a quick snapshot of voluminous information, of interesting statistics, or of a trend, issue, or phenomenon--no matter whether the lists are sometimes subjectively and unfairly compiled.
Fortune magazine may have started it all with its well-known Fortune 500. Few people may comb through the list line by line and in depth, but all business leaders, managers and students know what it implies--corporate size, influence, strength and global expansiveness.
Forbes owns the Forbes 400, the popular list that ranks the wealthiest people in the world. Other business media have popular lists that attract a following or at least spawn water-cooler and Internet chatter: BusinessWeek, Black Enterprise, and Institutional Investor.
Fortune may have the most abundant of lists. Beyond its list of the largest 500, it owns such lists as the most powerful women in business, the most influential business people and the most important (in its view) business people under 40.
Its latest list is out this week. It's the 100 Best Companies to Work For. (See http://www.fortune.com/.) Fortune has researched, compiled and presented this list for years. Year after year, it strives to present something as objectively as possible, although the list is based on surveys completed by the companies themselves, impressions from those who have worked there, and a handful of performance statistics. In general, the list is likely fair to those that make it. Companies on the list are likely justified. Perks, performance, and pay are what they are. The list might be unfair to dozens (if not hundreds) of small companies that are overlooked or out of sight when the lists are prepared.
Financial institutions, for various reasons, have not fared well on the "Best Companies to Work For" list. But a few appear year after year. They may legitimately be attractive companies to work for. Or they may have human-resources departments and employees who religiously take the time to complete surveys and provide data on benefits, perks and compensation (variables that rank high on the list).
Diversity, inclusion and employee satisfaction are important variables, so it shouldn't be a surprise that many on the list are Consortium sponsors (past and present): American Express, Goldman Sachs, General Mills, KPMG, and Deloitte, to name a few.
Fortune's 2011 list hardly differs from its 2010 list. Notable is the unusual number of consulting, accounting and law firms on the list: BCG, a dream target for many MBAs, is no. 2. Booz Allen, Accenture and Ernst & Young also make the list. These firms make the lists for various reasons. That new employees can aspire to be well-compensated partners one day might be a factor. Another could be their flat organizations and business models that minimize bureaucracy, processes and procedures.
A scattering of financial institutions made the list. There is no discernible pattern. Big global institutions like American Express and Goldman Sachs made it. Goldman would make most lists of the toughest companies to work for, as well, but its perks, compensation and long-term career paths may make the painstaking efforts to be employed their worth it. American Express was noted for promoting and retaining women in senior roles.
Oddly there are a few discount broker/dealers and investment managers on the list. One explanation could be the opportunity for day-to-day independence and business accountability for brokers and financial consultants. Edward Jones, Scottrade and Robert Baird made the 2011 list. In a strange way, Jones made the list despite, as Fortune says, a workforce of 93% white. But the firm was applauded for its recent efforts to do something about that. The company says it wants to be more than a "firm of middle-aged white men." Certainly an example where it gets an "A" for effort, although its past grade in diversity might have been a "D."
Familiar names make the list, as they do each year: Google, Dreamworks, Cisco, Genentech, Intel, and Starbucks--often because of the perks that have come in working at young, dynamic firms or firms with technology, project-oriented cultures. Those perks, of course, include flexible work hours, minimum (if any) dress codes, cafeteria privileges, stock options, and day-care arrangements--all sufficient enough for any employee to rank their company as high as possible on a Fortune survey.
Tracy Williams

CFN: Inbox Follow-up

The Consortium Finance Network has encountered or addressed several issues, topics and opportunities over the past two years. There have been events, webinars, conference calls, e-mail exchanges, blog postings, discussions, and guidebooks. Some topics deserve follow-up: What are next steps? What are implications of events or discussions from the past year? What is the aftermath of an issue, problem, or question CFN may have tried to manage? In other words, where is Part 2, 3 or 4?


Microfinance: Growing Pains


CFN hosted two webinars on microfinance in 2010 to introduce members and participants to the sector and to possible opportunities. The first webinar offered a primer and history. The second was a case study of a successful, growing microfinance project in the Philippines. (See links below to blog summaries of the webinars).


Since then, there has been widespread reporting of scandals and problems in selected areas in microfinance around the globe. Reports indicate activities where micro-lenders have over-charged on loans and where borrowers have defaulted in greater numbers than expected. Some have blamed the problems on new industry participants who seek to maximize profits before achieving developmental objectives. Some argue that microfinance reaches development goals best when non-profit institutions are the predominant lenders.


The isolated problems will not likely deter efforts from some established institutions who have seen progress and success. But there may be calls to regulate or oversee certain activities to protect borrowers or discourage those who participate solely to maximize financial interests. The current issues likely mean the global microfinance model needs some tweaking.

http://www.consortiumfinancenetwork.blogspot.com/2010/01/microfinance-101-basics-issues.html

http://www.consortiumfinancenetwork.blogspot.com/2010/02/microfinance-ii-on-ground-in.html

Volcker Rule: Step Two


CFN blogged about the impact of a possible Volcker Rule in mid-2010: http://www.consortiumfinancenetwork.blogspot.com/2010/06/volckerized.html.


This is the rule that would prohibit banks from engaging in proprietary trading and would likely have significant impact on the profits, balance sheets, and roles of many familiar institutions (JPMorgan Chase, Citi, and Bank of Amercia; but also, Goldman Sachs and Morgan Stanley, now bank holding companies).


Banks will need to revamp their trading desks, refocus trading to client-driven activities exclusively, and risk losing talented traders and entire trading desks to hedge funds and trading and dealing firms.


Since then, the rule has now become law. But the roll-out will be slow. The law gives regulators ample time to rewrite rules and present new definitions of proprietary and client-driven trading. And as expected, regulators (or whoever will be the designated group to draft specific rules) have been deliberate and cautious. Banks now have time to (a) continue some forms of prop-trading until rules change, (b) wind down some activities without having to endure sell-offs, and (c) restructure trading departments in a way they can retain talent.

The CFA: To Pursue or Not to Pursue

CFN presided over lively debates over the value of the CFA--especially for MBAs in finance, who have already been exposed to many elements of the CFA (corporate finance, investment analysis, accounting, security analysis, etc.) in business school. To help CFN members, Consortium alumni and other MBAs decide for themselves what is right, CFN hosted a webinar on the pros, cons, costs, value and time of the CFA in Oct., 2010: http://www.consortiumfinancenetwork.blogspot.com/2010/10/cfa-where-it-makes-sense.html.

All sides of the argument have validity. In the end, it is a personal decision. Many Consortium students in finance (not necessarily influenced by the viewpoints or the webinar) continue to pursue the first levels of the CFA. Some current students have pursued Levels 1 and 2 with no intention of pursuing Level 3 or the complete designation. This group won't be able to add the full CFA onto a resume', but will be able to get what they want from the effort: polished knowledge in certain finance topics and a slightly enhanced resume' without the costs and time required to get through Level 3 and further.

Mentoring: Keeping the Relationship Alive

CFN the past two years has encouraged, embraced and facilitated mentor relationships between Consortium students and alumni. Mentorships open doors for students. Mentors guide students, boost morale, introduce them to other important contacts and even tutor them to get ready for technical interviews.

(See http://www.consortiumfinancenetwork.blogspot.com/2010/08/mentoring-still-critical-still.html.)

Thriving, long-term relationships, however, are few, scarce. Many mentor relationships start with energy and ambitions, but drift afterward. Students get busy, preoccupied with what needs to get done that day, and may not always see the value of long-term relationships. Mentors get busy, too, or may not have the interest to do what's necessary to keep the relationship alive. CFN has tried to address these phenomena and has often assessed the role the Consortium and CFN can play to keep mentor relationships going.

The long-term value of a student or young professional in having one or more mentor relationships is critical for Consortium members and makes all efforts to help students and mentors strengthen their ties worthwhile.

Delicate Balance: Long Hours at Work

One of CFN's most popular discussions or blog postings addressed the long, near-tortuous hours involved in certain jobs in finance: http://www.consortiumfinancenetwork.blogspot.com/2010/01/delicate-balance-long-hours-and.html.

MBAs in finance know the story. The hours are unending, the schedule is unpredictable. Senior managers are demanding, often unrealistic. Weekends are seized by more work, new projects, new demands and Sunday afternoons in the office. The pace is physically draining; emotions peak and ebb. Sometimes it's debilitating.

MBAs dig deep to figure out how to cope. Most scrutinize and weigh the advantages (compensation, responsibility and finance experience) with the costs (time away from family and friends and physical and emotional costs).

The crisis of 2007-08, nonetheless, led to much soul searching for just about anybody who survived the events. It encouraged people to address the delicate work-life balance more carefully--especially if the end result from all the hours was the collapse of an employer, a job loss, or a dip in compensation.

For many, the costs exceeded the advantages, and they fled to other sectors or fields that at least permit a handsome, tolerable balance. Others didn't have a say and were victims of staff reductions. Many were in transition, and while in transition had the opportunity to decide (away from the pressures and not influenced by lucrative compensation) objectively if they wanted to return to a similar environment.

Some Consortium MBAs know the score, bear down and manage the grueling pace as well as possible--especially if they feel the experience will lead to a greater goal.

Other Consortium MBAs--in a new, post-crisis era--have courageously stepped up to put work-life balance as a top priority and have pursued opportunities that permit such. That means a few have actually rejected high-paying New York finance jobs for satisfying positions (with slightly less compensation) in other regions. And they feel good about it.

Which Way to Go? Investment Banking or Private Banking

CFN in Sept., 2009, offered advice to many Consortium students and other MBA alumni in transition on how to decide between investment banking and private banking, when presented with opportunities. The two areas offer different career paths, although activities and functions overlap in some ways. Many agree, too, that the cultures of the two differ.

Most MBAs in finance have skills and aptitude to go in either direction. But they struggle to decide which way to go. Some simply go where there is opportunity. Some of CFN's advice is summarized in http://www.consortiumfinancenetwork.blogspot.com/2009/09/which-way-investment-or-private-banking.html

MBAs often"feel guilty" when they forego opportunities related to the relative high-paying world of investment banking. In recent years, many Consortium MBAs have comfortably decided to go the private-banking route. Part of the reason is due to the more professional, organized approach to recruiting MBAs in recent years. Private-banking units, which used to recruit MBAs on a one-off basis or in an unstructured way, now seek out MBAs in the aggressive, focused way investment banks do.

Another reason is that MBAs like the greater client responsibility that comes with many entry-level roles in private-banking. The so-called "apprenticeship" period is shorter. They get to have bottom-line accountability as soon as they are ready. Some who have opted for private banking know what they are talking about; they are former investment bankers.

Tracy Williams

Where Do We Go From Here?

The times are peculiar. Here we are, two years beyond the collapse of Lehman Brothers and the near collapse of the financial system of the fall of 2008. The system--thanks in part to bailouts and quick marriages of top firms--picked itself up, and a slow recovery ensued.


Yet we haven't returned to the euphoria of pre-2007, where deals proliferated, trading indices surged steadily and bankers could be choosy about what they wanted to work on and which clients they wanted to work with. Two years after the tumultuous fall, 2008, everybody acknowledges the end of the crisis. But few will admit times are booming in finance (or in certain sectors of the economy). And if there are faint signs of a sharp upturn or a flurry of new deals, transactions, and upward-moving markets, everybody treads carefully, as if to always prepare for the worst.


MBA recruiters in finance continue to knock on the doors of business schools, make elaborate, impressive presentations to first-year students. They try to lure students and impress them. But they recruit and hire with caution--with a steady peek at markets and business in the year ahead to assure themselves they won't stockpile their banking teams with associates only to be forced to downsize shortly afterward.


Still, post-crisis, there are deals to be done, investments to be analyzed, portfolios to managed, clients to be wooed, and business objectives to be met. New bankers, associates, and analysts are necessary to get it all done. Nonetheless, in the back of the minds of senior management at banks, insurance companies, investment firms, and funds is a lingering question: Has the tide turned for sure? The dark memories of 2008 continue to haunt.


Because of financial reform (including recent legislation and Basel III guidance), banks are treading most carefully. They must restructure vast parts of their businesses and are deeply entrenched in strategy sessions figuring out how to do it--how to conduct business, do trades, and make investments with a constrained balance sheet, with increased capital requirements and with rules that don't permit them to trade for their own accounts.


They must respond to questions: What do we do with our proprietary-trading desks? What do we with businesses that invest in new ventures and hedge funds? How do we make loans, underwrite securities, or trade derivatives when new rules that limit how much we can do or what we can do? And who will do it? How many are necessary to do it? For new MBA graduates or more junior finance professionals, what career paths will there be? And how do we attract top talent into a profession besieged by much uncertainty?


Meanwhile, financial institutions are pressured to show stable profits, revenue growth and business expansion. They ask: In the new environment, where will revenue growth come from? From a renewed focus on retail activities? From international expansion? From new products? From investing in businesses and products to boost market share?
Some have begun to take those first steps. JPMorgan announced expansion in international sectors earlier this year. Other big banks (including BoA-Merrill, JPMorgan and Credit Suisse) have begun to emphasize corporate banking more. Just about everybody wants to grow their private-banking and investment-management groups.

Because they must graple with these tough, strategic questions, financial institutions become hesitant about hiring too swiftly and too much. They are careful about making lateral hires, adding experienced talent or opening their doors to large numbers of new MBA graduates until they are sure the business opportunity is there or the returns on capital are sufficiently achievable. And until some of them figure out how to weave through the regulatory requirements.


Some are being forced to shed parts of their businesses (proprietary trading, hedge-fund-like activities, etc.). But even that's not easy, as they tenderly extract the parts (assets, people, systems, software, etc.) and then sell them or spin them off. That will take time, while they figure how to do it and to whom to sell. Some must decide what they want to be and do (Be a regulated bank? Be a pure brokerage outfit? Be a prop-trading fund?). That, too, will take time, as they weigh input from various stakeholders (shareholders, employees, the board, senior managers, etc.).


And some have decided that the best strategy is to become what they once were: a commercial bank with basic deposit and lending businesses, a brokerage firm without trading or banking units, an investment bank with no brokerage and lending units, an insurance company with no ties to banking and brokerage, etc.

Many, too, must patch up their reputations post-crisis and determine how to present themselves to the mass market--to consumers, to corporate clients, to trading counterparties, to regulators, and to the media and politicians. That hasn't been easy, because 2008's near collapse can is tied to--among many factors--behavior and activities from some financial institutions.

Financial institutions, too, continue to try to figure out the compensation puzzle--how to pay people handsomely, how to attract smart people to the profession, but how to do it in a way that will not irk shareholders and the public or draw gnawing attention from the media. How do they assure themselves they can show up at top business schools and attract eager, motivated students to join their institutions? What can they do to ensure that top mid-level talent (the deal-doers, the traders, the investors, the salespeople, the researchers, the operations experts) will not flee for other options?

With so much to figure out, so much soul-searching and so much trying to visualize what they want, can and need to be, they proceed or plod with caution. So instead of hiring 100 new MBA associates as they might have done in 2005, they settle for 50 or 75. Instead of bring aboard 20 new experts or professionals to take on a new product, new venture or new client base, they show restraint and start out with just 5 or 10--just in case the new business doesn't take off or regulation and balance-sheet constraints force them to grow slowly.

Most will contend current times are better than crisis times--that financial institutions are hiring, not reducing staff significantly; that they are doing business, not tending to emergencies or trying to save themselves, and that they are generating profits and satisfactory returns, not hunkered down to pare down losses. Nevertheless, there is still a feeling we're on the hump, just not yet far over it.
Tracy Williams