Getting Pushed Backed, While "Leaning In"

Applicable to all under-represented groups?

So the topic that has made a torrent splash in the early weeks of 2013 is a new catch-phrase:  "Lean In," taken, of course, from Facebook COO's Sheryl Sandberg's new book of the same name. The book raced to the top of best-seller lists. The subject--how women can push (or propel?) themselves into the top echelons of business--is relevant. The advice and guidance are useful, although Sandberg acknowledges there are no quick fixes, no one special way to progress along the path, and certainly no assurances that every woman who "leans in" will one day find herself chair of the board.

Nonetheless, Sandberg determined it was time to put the issue back on the table and force companies and business leaders to assess where we are.  She advises women to seize control of their destinies, bang on the door and avoid waiting for it to open.

So next question. Are her advice and guidance relevant to other under-represented segments (URM) in business--Asians, Latinos and blacks? Does her message, including her instructions and urgings, apply to minority professionals? What happens when members of those groups dare to "lean in," ask for what they want, aspire to become senior business leaders and push for opportunity, promotions and adequate compensation? What happens when they "lean in," assert themselves, but then get pushed back, get pummeled or--even worse--outright ignored?  What happens if they are pushed back for not being patient or for being too vocal, too ironclad specific about what they seek in the next 10 years?

Let's now narrow this to minority professionals in financial services.  What happens if those from  URM, who thrive in, say, corporate finance, banking, trading, funds management, or equity research lean in and get pushed back? Get punched and knocked down in their efforts to seize a seat at the leadership table?

Career paths in finance are often rough, brutal--marked by periods of overwhelming workloads, evolving deadlines, demanding clients, mountainous risks, complex deals, blockbuster trades, tough decisions, and severe competition from other firms and from the colleague down the corridor. Many associates or vice presidents are aware it takes more than superior technical skills to get promoted, be rated highly, and win hard-fought pieces of the bonus pie. It takes stamina, perseverance, contacts, mentors, a thick skin, and bits of chance (lucky markets, lucky opportunities, and being in the right group or on the right team in good times).

So how do under-represented minorities in finance put themselves in settings where they can--more often than not--be in the right place in pivotal career moments?  How do they "lean in" to make sure they contribute to important client meetings, deals and projects--the deals and projects that get people noticed and put them on go-to lists of those who get to do bigger deals, manage bigger projects and oversee larger clients? 

Many minority professionals in finance and consulting already know the game; they have already seized half of it by enduring grueling recruiting processes and have earned treasured spots at firms like Goldman Sachs, McKinsey, Morgan Stanley or any of the notable private-equity firms, investment managers or hedge funds. Like many women in the same roles, they understand what it takes "lean in." They plotted ways to gain entrance into top schools.  They managed rigorous course loads in business schools and successfully navigated through numbing rounds of interviews.  They know what it takes to be aggressive, stand out, and grab opportunity when the doors open ever so slightly and briefly. 


Those who survive the pressures of doing deals, booking big trades, making investment decisions and meeting budget "lean in" in their roles of banker, trader, analyst, or researcher. They raise their hands to ask for plumb assignments, request to be put on innovative deals, and volunteer for special overseas roles. Always accessible and committed, they give up weekends, holidays and weekday evenings.

After a few years, they know it is critical to be on the inside of strategy sessions, senior management presentations, and any gathering to discuss ways to boost revenues or introduce new products and services.They find ways to nudge inside the doors where the biggest decisions are made.

But as they "lean in" and make exhausting commitments to the firm, the client, the deal, the portfolio and the business, many have not adroitly figured out what to do when they get "pushed back." Getting pushed back occurs more frequently than they expected. Often the push-back occurs for subjective, unfair reasons. Sometimes the push-back is blind-sided gesture on the part of a manager, colleague or management team.

Getting pushed back too frequently for inexplicable reasons leads to discouragement. It triggers floods of emotions and self-reflection:  What did I do wrong? What can I do to alter their perceptions of me? What more can I do to earn visible assignments or prove myself in a bigger role with significant responsibility? Why do they not recognize me when I raise my hand, make noise, stomp my feet and share my ideas for new products, clients and revenue growth?

Sometimes after such self-reflection, they find ways to rebound. Some learn the art of bouncing back and conjure the strength to rebound not once, but time and again. They take a different angle or approach, when they "lean in."  They respond to feedback. They return with an even better project idea, finance model, or client tactic. They re-commit to the team, deal, or firm. They find other mentors to toot their horns or help with a career strategy.

Unfortunately, getting pushed back too often leads to bewilderment and loss of energy and enthusiasm. Eventually it leads talented under-represented minorities (and women) to withdraw or recede while still on the job and ultimately to resign from the job itself. Bouncing back after leaning in and getting pushed back over and over becomes too draining, too stressful. 

How to bounce back from the push-back is usually the kind of guidance many mid-level finance professionals from under-represented groups (including women) crave:

When senior managers compose the deal team that will work on the billion-dollar underwriting for, yes, Sandberg's Facebook, how should they barge their way onto the team? When the team is being composed to advise Google, Eli Lily or John Deere on its next major acquisition, how do they ensure they are selected?

When a sector leader selects someone to lead a business group in London, Brazil or Tokyo, how do they win such a coveted assignment? When the institution rolls out a new product to a new client group in a different part of the country, how do they make sure they have a fair shot at the opportunity to lead the product campaign?

When they do extensive research, exquisite financial modeling or insightful analysis and come up with novel ways to assist a client or structure a financing, how do they ensure their voices are not silenced and their ideas not stolen?

As year-end approaches, when they review their accomplishments and contributions, how do they ensure in evaluation season their rankings or ratings won't slip, because they don't have champions or advocates on their behalf or because others diminish their contributions?

There is no formulaic solution to handle the "push-back."  Much depends on the environment, the firm culture, the immediate surroundings, management hierarchy and the financial state of the institution. Much also depends on personal goals and priorities (something Sandberg's book examines from cover to cover).  In all cases, it helps to reassess a situation, review those personal priorities, maintain confidence, and recommit to what is important. In some cases, it even helps to "lean on" others more experienced (not necessarily "lean in") who have traversed the same corporate routes and endured similar push-backs and setbacks.

Motivated and talented minorities and women lean in continually--every day, throughout the year, in every transaction, trade, client session, or discussion of risks, revenues, investments and new products.  They want to understand the best ways to thwart the "push-back." And they want encouragement and energy to rebound one more time with confidence that all the effort has a chance to pay off.

Tracy Williams

See also:

CFN:  Making Demands on Diversity, 2013
CFN:  Venture Capital Diversity Update, 2011
CFN:  MBA Diversity: A Constant Effort to Catch Up, 2012
CFN:  How Mentors Can Help, 2009
CFN:  Mentors:  Still Critical and Necessary, 2010
CFN:  Affinity Groups, 2011

Where Do You Want to Work in 2013?

Lists can be amusing. Sometimes they might be taken seriously.  Magazine and media companies like to produce them--even if they are flawed or biased, because they sell thousands of copies of issues or generate thousands of Internet clicks. They spawn discussion and banter and get people talking. Some lists should be shrugged off and dismissed. Some are worth examining, because they might offer helpful information about the topic being ranked.

Employees like good pay, good benefits and, yes, fitness centers

Fortune Magazine compiles many lists from year to year. One recent list in its latest issue is its "Best 100 Companies to Work For." To believe in the list and to ensure it's credible and useful, you must believe in its criteria. You must be assured that Fortune has amassed significant data and measured the information properly. Ask employees why their company is a favorite place to work, and you may get dozens of reasons, including especially compensation, benefits, vacation privileges, opportunities for promotion, and challenging assignments.  Some would contend a favorite place is one that is thriving, doing well and generating upward-trending, consistent stock-market returns.

For all the splash in a big cover story on top companies, Fortune's criteria was relatively simple:

a) Does the company plan to hire in substantial sums in the year ahead?
b) Are employees generally satisfied?
c) Can management be believed?
d) Is there camaraderie among colleagues--genuine collegiality?
e) Is turnover less than 5% annually?
f) Is compensation in the top quartile in the industry?
g) Do benefits apply also to same-sex couples?
h) And, yes, does the company offer free access to on-site fitness centers?

Did it miss anything? Of course, it did. It missed a lot.  It didn't address diversity and inclusion clearly. It didn't factor in long-term, sustained performance (Will the company be around 20 years from now?). And it didn't address whether a company is sufficiently managed and strong enough to survive downturns, market-related disasters, or unforeseen, colossal risks. All these factors might be important to at least a few prospective employees. Yet it knew it couldn't complete a list if it tried to capture too much, especially if the list relied on the completion of thousands of surveys.

Google is no. 1 on the list for the fourth time. BCG, the consulting giant, is in the top 10. Companies like Accenture, DreamWorks, Nordstrom, and Intel also made the top 100. Quite notable is a prominent lack of financial institutions.

Given:

a) what the industry has endured the past several years,
b) the topsy-turvy reorganization most large financial institutions must go through,
c) all the uncertainty financial institutions face in finding a way to generate revenues in the decade ahead,  and
d) the discouraging, frequent announcements of lay-offs and staff reductions...

Given all that, it's not a surprise that most of the best-known financial institutions don't find themselves on Fortune's list.

Strike one:  Many large banks, as we know, are not in aggressive hiring modes.  Check the business headlines weekly to see which ones have decided to rethink, re-situate and reduce staff in institutional trading and investment banking.

Financial institutions engage in some form of hiring every year. There is attrition all the time, and it makes economic sense to hire at entry levels annually to keep pipelines flowing and production efficient (and maintain long-term ties with top business schools). "Production" is efficient when junior bankers can do senior-level work at one-quarter the cost. And if you were to peek more closely, many institutions are indeed adding more staff in compliance, regulatory reporting and risk management. 

But for Fortune's benefit, not many plan to expand substantially on the front lines.   


Strike two:  Because of staff reduction, massive reorganizations and employee-related stress arising from uncertainty and confusion, employee turnover is bound to be more than Fortune's 5% benchmark.  If there is a corporate-banking unit with 100 professionals today, you can be assured a year from now, more than five (and as many 10-20 or more) won't be in the same slot a year later.

Strike three:  The culture, workplace and environment in many financial institutions are not the same as that of a Silicon Valley enterprise.  It's not likely the bank, insurance company or investment manager will support free access to a gym on the premises, free gourmet lunches or freedom to engage in playthings during work hours. Employees may wish for such privileges, and they would benefit from immediate access to a fitness center.  At many banks, still rebounding from the crisis, all that is not a priority.

That's not to say no financial institution made its list.  A few did. Many of the familiar names didn't.

St. Louis-based brokerage firms Edward Jones (No. 8) and Scottrade (53) fared well. And that may be no accident.  Both firms rely on the performance, contributions and production of a large, far-flung network of brokers, consultants and representatives. They obsess in making sure the brokerage force is happy, content and well-compensated.  They ensure the same force has ample administrative, securities-processing, and funding support.  Employees don't work under the haunting, continual threat of being laid off.

Another Midwest-based brokerage firm, Robert W. Baird, with similar privileges and values, appears on the list, too (14). The firm is applauded for rewarding employees with a significant ownership stake.

American Express is one of the few large, well-known financial companies on the list (at 51), despite its own restructuring hurdles the last few years. The company's business faces mammoth challenges in the years to come. It makes the list, nonetheless, because of its remarkable efforts in diversity and because of its widespread support of employee affinity groups (groups with common interests or shared backgrounds).  It also has fitness centers.

In pre-crisis years, on any list where MBAs in finance express where they want to work, Goldman Sachs always found itself at or near the top.  For MBAs from top schools, Goldman offered new associates prestige and compensation. It also offered MBAs a chance to learn and master all the nuances of finance, a chance to thrive in a highly charged environment, a chance to travel to all parts of the world, and a chance to exploit the strengths of the Goldman name to get deals done, make trades, invest on behalf of clients, and finance companies and municipalities.

Post-crisis, Goldman, too, would be vulnerable to the strikes above.  As a "bank holding company," it is re-inventing itself or reshaping itself to contend with regulation and profit-margin struggles.  Yet it squeezes its way onto Fortune's list (93), partly because of a commitment to reward employees exceptionally--via benefits and the resumption of huge payouts every January.  MBAs in finance still want to work there, perhaps for a handful of years, just enough to taste the experience, learn, earn and then move on to the next rung on the career ladder.

Of the Fortune 100, only about 10 are bonafide financial institutions (about half of which are insurance companies). The industry is not in the same turmoil as it was a few years ago. In fact, most have begun to report upward trends in earnings and share prices, while they spruce up balance sheets.

But much jockeying continues.  Much tweaking and twisting of old business models are occurring.  And for now, the maneuvering behind closed doors among the senior ranks, as they adapt to new rules and new markets, comes at the risk of neglecting to make themselves employers of choice. At least that's what Fortune's new list implies.


Tracy Williams

See also:

CFN: The Best Places to Work, 2010
CFN:  The Best Places to Work, 2011
CFN:  Affinity Groups in the Workplace, 2011
CFN:  Time to Make that Move? 2010

Composing the MBA Class of '14

Tuck: Over 2,700 applications for just 250 spots

At top business schools, including the Consortium 17, this is the time of the year  admissions offices fine-tune and compose a new class that will start in the fall.  Many schools have rolling admissions, while most schools notify applicants during the spring. The Consortium, too, notifies those who will be invited for membership and those who will have earned full fellowships.

How will the Class of '14 be different? How will it be like others? What do members of the class hope to achieve from two years on campus?

The application numbers and statistics are likely similar to those in recent years.  At selective schools from Harvard to Haas at Berkeley and from Chicago to Carnegie Mellon, gaining an acceptance letter for a spot in the first-year class is still a hard task and the result of perhaps a half-year process of securing recommendations, writing essays, taking tests, visiting campuses, expressing interest and trying hard to be patient and hopeful. In recent years, NYU-Stern and UC-Berkeley have accepted just 15% of all applicants for full-time programs. Over 4,000 apply to Stern; over 2,700 each to Michigan and Dartmouth-Tuck,  which accept fewer than 18%. 

Total applications across the country fluctuate somewhat from year to year. A dismal economy or financial crisis, such as what we've endured, with irony sometimes sustains the aggregate applications number.  Young professionals may choose to wait for a recovery while in the classroom or to transition from areas with little opportunity to areas of growth.

Market conditions, the economic environment, past personal experiences, the general outlook and total costs: All are factors that influence who return for the MBA, where they choose to attend, and what they hope to get from a rigorous, grinding experience.

Is this year's class more interested in unconventional segments, start-up situations or small boutiques, or do they prefer the formal tracks from an experience at Goldman Sachs or McKinsey?

This year's class, just as those who matriculated in the past three years, is familiar with volatility.  They know volatile markets, but they are also acquainted with volatile opportunities and even a volatile, teasing, uncertain recovery.  Thus, they will approach the business-school experience, knowing they must be flexible, realistic and willing to explore something new and different.

They may write in admissions essays they hope to pursue consulting, investment research or brand management, but they know the environment may force them or even encourage them to change their minds and pursue start-ups, community activities, or even industrial management. They may tell admissions officers they hope to work in New York, Chicago, or San Francisco, but two years later may accept job offers in Indonesia, Ghana, or Boston (as even some recent Consortium graduates have done).

A current student may have her eyes on an associate position at Morgan Stanley in M&A, but she won't be close-minded and will consider opportunities at General Motors, Google, Pfizer or even the World Bank or Zynga. 

Those who went to business school until the late 2000s to study finance, especially those who attended known, reputable institutions, could almost chart and measure their ambitions. They could make a conscious decision to go into consulting, investment- or private-banking, trading, research, venture capital or private equity; they could proceed through a check-list of to-do's to get from school to a cubicle at Carlyle, Blackstone, Wells Fargo, New York Life, Goldman Sachs, Bank of America or a hedge fund in Chicago or Greenwich.  They could expect to stay put for about 5-10 years, or at least until a vice-president promotion.

In 2012, the current classes approach the finance landscape differently. Someone just admitted to the business school at UNC, UVA or USC may visualize and dream of being in private banking at UBS or in investment management at Aetna , but won't slam the door if a San Francisco-based start-up turns him on to a role in corporate strategy or if a pharmaceutical firm invites him to work in its venture-investments unit.

Business school in 2002 might have been a springboard to a lucrative spot at Morgan Stanley or McKinsey, if the student studied hard, learned a lot, kept up with markets and played the recruiting and networking games astutely and unrelentingly.  In 2012, business school still provides an entry into the most coveted spots in banking, finance and investing, but this crop of students will be happy to explore something they never considered, if the opportunity makes sense, allows for rapid personal growth, and offers something on the long-term horizon.

Thus, within the ranks of the Class of '14, there will still be large numbers interested in corporate finance, interested in spots at Goldman, UBS, Barclays, Paribas or JPMorgan, and willing to pursue investment banking, equity research or bond trading in the new, highly regulated environment. There will still be more than a few interested in consulting at McKinsey, BCG and Deloitte.

Yet there will be quite a few who will change their minds in school, will discover a pursuit more pleasing, will choose not to  to go through marathon-like motions to chase a Wall Street dream job, or will learn they prefer strategy, operations, marketing, product innovation, and distribution  more than investment analysis, corporate finance and capital markets. The top banks, firms and funds won't have trouble finding attractive candidates, but a coveted offer from Citi, Booz, or Merrill  won't be the be-all or end-all.

Tracy Williams

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

MBA Job-Hunting: No Need to Panic Yet

On campus, the hiring process is not quite over.

For some MBA students, including those in Consortium schools, whether in their first year or about to graduate, February's arrival could cause panic:  Do I have significant job offers on the table?  Will I spend the summer at my first choice--proving myself in a formal internship program that will lead to a full-time offer in August?  Or must I resort to the only choice I have? Must I return to an old job I wanted to leave in the first place?  If graduation looms, do I settle for the first offer available, or do I wait for my dream post?

When February comes, some students beam and boast of offers from top-tier financial institutions, consulting firms, or big corporations. Some have already accepted offers. Others, without the offers or opportunities they covet, grow worried and try to figure out what to do with composure and a new strategy in mind. 

There's no need to panic just yet.  Buckle down. This is the time many gripe about campus career and placement services. These departments try to provide pathways from the classroom to corporate cubicles and conference rooms. They suffer, however, much criticism at schools everywhere. 

They operate under pressure to be all things to all students.  Deans watch them and push them to show the highest percentages possible of graduates finding jobs that pay the highest salaries possible.  In February, when they wish they could provide candid, thoughtful guidance on next steps for overworked, pressured students, they get mired in hiring statistics.  Take the first job offered at the highest compensation, they might advise unwittingly and without much thought.

For students still planning a summer or a first year beyond school, buckle down, and work with networks and alumni ties.  Reach out to alumni, professor and/or social contacts--at all levels. Most top firms, funds, banks and companies, where MBAs want to work, have already concluded the hiring cycle for 2012.  Students learn it is probably too late to seek employment at those places.  

But don't give up just yet.  Alumni and network contacts can alert you to what the real story is.  The hiring cycle has just ended, but there could be alternative ways to find an entrance through the backdoor.  

At the notable financial institutions, MBAs are hired for formal programs. But sometimes specific business groups with the larger company have sudden, special business needs. Human Resources may have under-counted the number of interns or first-year associates needed in the coming year. They misinterpreted the incremental work for new presentations, deals, clients, and finance models.  Business units will not want to wait for the next hiring cycle a year later; they seek to fill hiring gaps as soon as possible. 

In such scenarios, the institution will encourage the business unit to hire from within or look for someone willing to transfer into the unit.  Sometimes, however, the unit will head to campus to seek help or tap the MBA student who persevered and came through the backdoor. 

In the meantime, if the ideal offer hasn't come yet, now might be one more chance to review, refine and polish the story you are presenting to prospective employees. Make sure you convey a unique or intriguing story that shows how the finance MBA and past accomplishments translate smoothly into what you want to do, how a polished resume' will lead to immediate contributions in an entry position. 



The story you told before might indeed have been near perfect in your view; prospective employees might even agree.  But it may not have been for what they needed for the moment. Sometimes revising or re-engineering the story is an effective way of proving not just competence, but fit. 

Reach out to alumni at the places on your wish list, especially alumni who were in the same programs or management tracks you are pursuing. Touch bases even with first- or second-year alumni,  those who have recently gone through the process. They won't be involved in hiring strategies and decisions, but they are the ones who can share intelligence of hiring trends, hiring practices and strategies. They know which units are hiring, cutting back, or expanding abroad. Having been through the process, many don't mind sharing details of how they got through it or how they slipped through back, if that was necessary. 
 
Now is also the time to peek at Plan B and realize that Plan B may not be as bad as you initially thought.  Approach Plan B as if it were a stepping stone back to Plan A. You might find, in the process, that Plan A was wrapped in the wrong reasons to pursue a position (prestige, incentive compensation, amenities, e.g.).  Plan B might actually encompass the rational reasons (experience, exposure, skills refinement, immediate contributions, e.g.).

Explore carefully opportunities you might have dismissed early in the process. They may be at smaller companies, boutiques, or funds.  They could be in regions outside of the usual finance centers. They may be in industries (manufacturing, technology, communications, or energy) you hadn't discovered before, but where roles in finance, strategy, capital markets and M&A are still critical. 

If you pursue opportunities off the beaten path and are successful, negotiate an experience or role that will emphasize financial analysis, corporate finance, modeling, finance strategy, and/or markets. A profound summer experience at a global company or a first assignment in strategy, treasury or markets can still become gems on a resume' down the road. 

Everywhere in recent weeks, we detect hints, signs and trends that the environment has improved. The known banks and institutions are tip-toeing through this hopeful, but fragile scenario--still hesitant to hire in large numbers, still not sure what they should do for the long-term. Yet in pockets or office corners in scattered places, an alumnus contact might let you know that in her group, they desperately need a smart MBA intern from, say, Cornell, Virginia, Rochester, or Emory to help on a current deal, portfolio review, or strategy presentation.


Tracy Williams

Is I-Banking Still Hot?

Does investment banking still have the same attraction? Do MBA students still swarm toward investment-banking roles? Do many have dreams of joining a top firm, hitting the ground running doing deals and anticipating big year-end bonuses?

After the industry turmoil and a series of setbacks and embarrassments, is investment banking still a hot area?

There have been upheaval, backlash and calls for reform since Lehman Brothers and Bear Stearns disappeared from the scene. Yet since 2008, trends suggest (a) i-banking is still attractive to many MBA students in finance at top schools and (b) the industry has evolved, but not yet gone through the major overhaul and transformation many predicted or hoped for.

Despite public pleas for changes in how banks conduct business and pay bankers and despite sluggish economic recovery and stomach-churning markets, deals are getting done. Companies are going public, issuing long-term debt, or acquiring other companies. Not necessarily at levels from 2006-07, but there is activity, enough so for banks to continue recruiting and for MBAs to pursue careers.

In this year's entering class of Consortium MBAs, at least 90 new students (about a third) have indicated an interest in finance--a number that is about the same or slightly higher from previous years. Of the 90, as many as 30 (about 10 percent of all Consortium students) have expressed a specific interest in investment banking, corporate banking or corporate finance. The actual number interested in i-banking could be higher, as many students will indicate a general interest in financial services, but have not yet acknowledged an interest in banking.

(Ten students say they are interested in investment managent, and a handful express specific interests in media finance, private equity, venture capital or real estate.)

Most students understand they will probably revise plans as they proceed through a grinding recruiting process. Banks, as they did before, put prospects through rounds of interviews, including tough technical sessions. Some students don't survive the process. Some change their minds, while others switch to other industries. Some become even more charged with enthusiasm about i-banking.

Interest in i-banking, therefore, has not disappeared. The actual number that will be recruited and hired in 2012 has yet to be determined, especially as banks struggle to make sense of this summer of volatility and uncertainty. Those who are committed and will pursue banking will encounter an evolving industry, but one that reflects familiar traditions and practices.

Over the past three years, the players and leading firms have changed.  The sudden departure of Lehman and Bear Stearns and the absoprtion of Merrill Lynch by Bank of America left gaping holes in the "bulge bracket" lists. Goldman Sachs, JPMorgan, and Morgan Stanley continue to jockey for the top spots in equity and bond finance and merger activity.  However, foreign banks, especially international banks with large investment-banking operations, have shoved themselves into the big picture:  UBS, Deutsche, RBC, and of course Barclays, which bought the U.S. operations of Lehman.

Firms like Jefferies and Lazard Freres, once comfortable in their own mid-tier niches, took advantage of industry shake-out and expanded their reach and business. Jefferies is a more diversified, comprehensive bank than it was a decade ago. Some regionals--mostly the i-banking units of commercial banks--have also stepped up where they could.

Smaller "boutique" firms have picked up pieces and grabbed business that bulge-bracket firms once kept among themselves.  Bulge brackets are now "bank holding companies," subject to banking oversight by the Federal Reserve an often weighed down--in their eyes--by onerous capital requirements and ominous regulation.

As with all banks, bulge brackets must address a laundry list of issues since TARP rolled out in 2008.  Dodd-Frank regulation will force them re-engineer their businesses. They can no longer rely on surges in trading revenues to offset the cyclicality of i-banking. While big banks tend to internal restructuring and worry about declining returns, boutiques have slipped in and swiped a few lucrative deals away from them.

Boutiques absorbed experienced bankers who were dismissed by bulge brackets let go or were demoralized by the crisis. The new bankers brought clients, deals, relationships and junior staff with them. Boutiques, meanwhile, have remained steadfast in being experts in special areas (M&A, media finance, technology finance, restructuring, capital-raising, or strategic advisory).

They didn't venture to foreign lands or create hard-to-manage bureaucracies and processes. And they seldom need to scratch their heads managing conflicts of interests, "tail" risks, or burdensome capital requirements. They just do deals.

And they've done more than their share over the past year. Centerview and Qatalyst, boutique banks, had primary advisory roles in the recently announced Google-Motorola merger. Sandler O'Neill, adamant about remaining small, is one of the top banks for financial institutions. Moelis, Evercore, Allen & Co., Greenhill, Keefe Bruyette, and Perella Weingberg are all respected, if not envied, players.

Some challenges and issues continue to stifle firms these days, big and small--enough to frustrate senior managers and deal-doers who wish they could focus on clients and deals and enough to discourage some MBAs from pursuing a career.

The turtle-crawl economic recovery has a direct bearing on i-banking activity. Corporations are reluctant to grow their busineses or consider acquisitions. They hesitate to issue new capital (debt or equity) to invest in new business or innovative products.  They let cash reserves sit around because they are engulfed in uncertainty. In the end, investment banks can't convince corporate CFOs or CEOs to take their advice or proceed with financings that at least make sense in Excel spreadsheets. Deals ready to go to market are suddenly shelved.

Thus, fees and revenues from mergers, acquisitions, underwritings, lending, and new products fluctuate unpredictably, while senior bankers figure out how to endure uncertainty and MBAs ponder whether they should pursue a dream.

Pending regulation and reform are looming challenges. Banks try to interpret new rules and anticipate what they will be once regulators write them up more formally. Then they huddle in backrooms to reorganize their business to make them operate profitably with the new restrictions. The 25% return on equity some bulge brackets could count on in the glory days of the mid-2000s or late 1990s might become an unreasonable target. Disgruntled shareholders may need to become accustomed to, at best, 15% returns under new models.

Risk management at all banks has gotten much attention. Banks have increased risk staff and force deal-doers to assess, probe, analyze, and measure the worst-case risks in doing a deal or bring in a new client. Risk-vs.-reward exercises are more prominent than ever.

Derivatives once attracted Ph.d. graduates and quant jocks and spawned floods of profits over the past decade or so. Going forward, regulation will force most of them to be traded on exchanges and through designated dealers. Investment banks aren't sure what the new profit dynamics will be or whether it will be worth the effort to encourage quant jocks to create new forms of them. Quant jocks aren't sure they will be welcome or will flee to hedge funds. I-bankers haven't yet figured out what they should say to clients on a consistent basis.

Work-life balance in the industry was supposed to have improved, if only to attract graduates who fear that lower bonus payouts in the future won't make it worth spending 12-14-hour days in the office, six days a week. Anecdotes suggest work-life balance is often discussed and mulled over, but when deals must be done, it's back to back-breaking, suffocating hours in the office.

The current environment with uncertainfy, regulation, and dwindling profitability will add more pressure to bankers to find new clients, win more mandates and get more deals done.  Expectations by management and the public have risen the past three years. Competition from other banks is just as fierce, and clients are demanding more from banks. The pressure has not waned.

Yet the attraction to i-banking is still apparent. Despite the nervous environment, Consortium numbers suggest new students still want a shot at doing deals, helping clients borrow money or go public, or advising them on how to expand and grow.

The adrenaline from participating in a headline-grabbing transaction or a billion-dollar bond issue still exists. The satisfaction of deriving and negotiating the fair value of a targeted firm is still there. The thrill in traveling all over the country or globe to meet new clients in new industries continues.  Of course, compensation--even if it has become as volatile as markets--is generally still attractive.

One tradition has not changed. I-bank recruiting and the campaign to win a spot on a bank's interview list start the first week MBAs get to campus. Those who have ambitions of securing a spot in 2012 must get going now.

Tracy Williams

On Campus: No Summer Slowdown

Virginia-Darden Dean Bruner

Just weeks ago, members of the MBA Class of 2011 dispersed all over the country--first to take well-deserved breaks and vacations, second to prepare to move to big cities or other outposts to start new positions. Business schools get a short respite, a chance to pause after a bustling school year.

Afterward summer activity picks up again at most schools.  Many have summer semesters and course offerings. Most are gearing up to welcome the parade of bright, confident faces who will make up the Class of 2013. (Some have representatives who have just returned from the Consortium's Orientation Program in Minneapolis.) At some schools, orientation starts in a few days. At most, deans will inevitably proclaim the Class of 2013 as its best, most ambitious, most talented, most diverse and most interesting.

The pulse of business discussion, academic research, and the continual revamping of b-school curriculum is as vigorous as ever. Business schools, including the Consortium 17, don't lose a beat in their efforts to remain as relevant as ever.

In recent days, Virginia-Darden's Dean Rob Bruner shared his views of the tension and stalemate that has engulfed Washington. The debt-ceiling fracas, he says, will make a fascinating case study on business negotiation. The typical business setting is about negotiations, especially in finance, where deals are proposed, discussed and struck, and where prices, fees, terms and conditions are debated. Dean Bruner says, "To aficionados of bargaining, watching (the Democrats and Republicans in Congress go head to head throughout July) is high entertainment"--even if it's not amusing to the rest of the country.

In his blog (See www.darden.virginia.edu/deansblog) , he highlights primary discussions between two principals, but also the "hidden discussions" among the principals within their circles--the discussions that take place out of view. Tactically, negotiators should investigate those "hidden discussions."

He writes about "brinksmanship," the timeline point where neither side moves toward compromise and a deadline is looming.  He doesn't project how the Congressional stalemate will turn out, but he challenges professors to use the current imbroglio as a teaching point in classes in negotiation and policy. And perhaps even ethics.

Business schools still favor the case method of study for some courses.  With new technology (iPads, tablets, notebooks and laptops), do professors still hand out or require students to purchase the volumes of paper cases for students to review, analyze and discuss in class? Yes, many do. New technology is spurring schools to go the electronic route, especially schools that have thousands of cases on file.  NYU-Stern has tried to migrate to the iPad and other tablets, while Virginia-Darden is experimenting with the Kindle. 

The transition is not as easy as planned, even for b-school students who don't know a world without personal computers and cell phones.  Some students say using iPads, Kindles or other tablets for case study in class makes it difficult to keep up, turn pages, or make notes. Improvements will come inevitably.

At Indiana-Kelley, Consortium alumna Joy Somerset was featured this spring on its school site as an example of a graduate who achieved several objectives in finding the right job. (See http://www.kelley.idu.ed/.) While a Consortium student at Kelley, Somerset approached career coaches to help her decide what she would do after getting the MBA. A coach reaffirmed her interests in brand management, but observed she wanted to do something "altruistic," or "bring joy to others."

The advice and coaching helped lead her to an internship and eventual full-time offer at Consortium sponsor Eli Lily in brand management in a special role where she works with doctors and cancer patients.

North Carolina-Kenan this month launched its new MBA-online program, called MBA@UNC. Some approached this with apprehension, thinking it might not have the rigor, prestige and attraction of its full-time program. Will it offer the same credential, some asked?

The program, as it has rolled out, will prove to be anything but MBA-lite.  In its new class, many of the 19 new students have doctorates and law degrees. They will meet for class and have case-group discussions online. Students will be converge on campus at least twice for "immersion weekends." 

Many wonder how students will engage in partnerships in projects, in exchanges of ideas, or teamwork activities online. Students, however, will not be anonymous during classes and case groups.  At all times, when they log on, their faces will be on the screen, and they will be expected to participate and contribute in the same way in a classroom. Professors and case-group leaders will know who is not in class or who is not attentive or adding to the discussion.

UCLA-Anderson admissions director Rob Weiler told Businessweek (http://www.businessweek.com/) this summer that once again Anderson's full-time MBA program is gearing up for one of its best classes ever, a class that includes Consortium students. "Anderson students are confident, but not arrogant or cocky," he said."  "They tend to play well with others. They tend to be people who dive in." They don't sit on sidelines.

From about 2,500 applications, Anderson will welcome a class of 360, including about 30% minorities and 30% with an expressed interest in finance.

While full-time students are away, Yale's School of Management Shiller participated in the program.

Michigan-Ross welcomed its new dean, Alison Davis-Blake, who started her new job July 1.  She spent 15 years of her career at Consortium school Texas-McCombs and says her objective at Michigan will be to focus on entrepreneurship, innovation and globalization.

Meanwhile, with market volatility, debt struggles among sovereigns, and a financial system still trying to right itself three years after the demise of Lehman, there is much to research and discuss on campus. B-schools have been involved in that and much more, including such topics as the phenomenon that is Groupon, the fragility of the Murdoch media empire, and the anticipation of what could possibly be the next "black swan" event.

Tracy Williams

Financial Services: How Are Black-Owned Doing?

What are the top black-owned banks, brokers, and asset managers in the U.S.? Has there been progress in financial services for African-Americans who want to start, run, own and manage their own firms?  Is the outlook better today than it was in the 1980s--or even a few years ago?

For the young black banker, broker, or trader, are there fair, reasonable opportunities to dream and aspire to starting a new firm?

Black Enterprise magazine just published its annual BE100s lists. The list shows what's possible and what's been done. The magazine every year publishes several lists of the top black-owned businesses in the U.S. for several industry groups.  In financial services, its lists includes the top banks, top asset managers, top investment banks and top private-equity firms.  Those lists suggest how much black firms have penetrated within the industry.

Review and analyze the lists in financial services, and applaud the courage, progress and showing among top black firms. But notice, too, there is still a way to go before many of the top firms find their way onto lists of top 100 or 200 U.S. banks, investment banks or asset managers.

In most cases, the firms are led by experienced leaders, many of whom started their careers at established institutions (like Merrill Lynch, Morgan Stanley, or Goldman Sachs), but decided at some point to take risks and do it on their own. In many cases, they sacrificed big bonuses and industry notoriety for the opportunity to manage and control their own (smaller) operation.

The lists in 2011 include many familiar names and firms.  In recent years, the rankings have hardly changed, yet prove how many were sturdy enough to survive the financial crisis or bounce back from episodes of dwindling business opportunity or market volatility.  If the financial crisis was a momentary blow for Morgan Stanley or Bank of America, surely it must have forced black-owned firms to pare businesses and develop new strategies. Black Enterprises's list shows how some bounced back and even got better.

Among commercial banks. Harlem's Carver Federal Savings, led by long-time CEO Deborah Wright, is the no. 1 bank (with $744 million in assets).  Just like their larger peers, black banks had to wrestle with dwindling capital and credit losses from mortgage portfolios.  Many are now trying to boost their capital bases to keep regulators comfortable.  Citizens Bancshares in Atlanta, led by former JPMorgan Chase banker Jim Young, leads black banks with the most capital with $46 million.

Since the 1970s, blacks have regularly started their own investment banks and broker/dealers. Many started their careers as investment bankers or institutional traders at major investment banks. Once they gained a track record of success, relationships with dozens of clients, and the silent backing of major institutions, they opened their own firms.  Some took advantage of the goals of corporations and municipalities that with open minds opened up opportunities for minorities in finance by including them in syndicate underwritings and new bond and equity offerings.  Blaylock Partners and Utendahl Capital are two of many examples. Jackson Securities, founded in 1987 by former Atlanta mayor Maynard Jackson, attached itself to Jackson's relationships and reputation in the South to become a significant municipal firm in the South.  The firm struggled after Jackson's death in 2003 and is now owned by insurance company Atlanta Life.

Black Enterprise's 2011 list no longer includes Blaylock, Utendahl, Jackson and others, but there are familiar mainstays.  Chicago's Loop Capital and New York's Siebert Brandford Shank rank as the top black investment banks.  Loop Capital is well known for its relationships with leaders of the City of Chicago. That has led to consistent lead roles in Chicago municipal-bond deals.

Siebert Brandford was actually formed from a venture combining Muriel Siebert, the New York-based broker/dealer run by Muriel Siebert, well known in New York circles as a woman pioneer in the securities industry, and Brandford Shank, the black-owned West Coast investment bank.

Williams Capital Group and M.R. Beal are two other familiar black-owned firms in the top 5. They have survived and thrived in the past few years, despite industry turmoil and uncertainty.  Christopher Williams, an MBA graduate of Consortium school Dartmouth, founded his firm in 1994 after stints at Lehman Brothers and Jefferies.  Bernard Beal, a Stanford MBA graduate, founded his firm in 1988 after leaving what was then E.F.Hutton. Over the past two years, Beal has been able sweep up talent from large firms that downsized and import talent (of all colors and background) to help boost his firm.

The top black asset managers, just like the investment banks, include long-time firms, with leaders who first made their marks at major firms.  American Beacon Advisors is the top asset manager (with $44 billion under management).  Tracy Maitland's Advent Capital management ($6 billion) in New York climbed into the top 5 this year.  Maitland, a Columbia graduate, started his career in convertible bonds at Merrill Lynch in the 1980s and at one point worked with Utendahl.

The top 15 includes John Rogers' Ariel Investment (Chicago) and Eugene Profit's Profit Investment ($2 billion) (Maryland).  Rogers, based in Chicago, started his firm in 1983, shortly after he graduated from Princeton, where he also played basketball.  Profit, a Yale football player successful enough to have played in the NFL for the Patriots and Redskins, founded his firm in 1996.

Black Enterprise now also includes the top black-owned private-equity and venture-capital firms. Black firms in this segment are much smaller and have not yet established a long-term record as black investment banks have.  But there is progress.  Some are affiliates or extensions of the established investment banks (Williams Capital, for example, has a private-equity unit.)  Ronald Blaylock, who once led investment bank Blaylock Partners, now leads GenNx360 Capital ($600 million under management), a New York private-equity firm focusing on investments in medium-size companies.  Hartford's Fairview Capital is Black Enterprise's top private-equity firm ($3 billion). 

For black-owned firms, challenges still exist.  In many ways, they are the same challenges that larger, known firms confront:

(a) the need for more capital,
(b) the long wait for a sustained economic recovery,
(c) the hiring and holding onto top talent,
(d) the uncertainty over regulatory reform,
(e) the urgency to find, nurture and keep clients (as borrowers, investors, depositors, or issuers), and

(f) the requirement that operating costs are under control and compliance is in order

Black firms face special challenges, too.  They know they need to establish and maintain credibility, the continual, grinding effort to prove they can provide superior service, advice, trade execution, pricing, or research, compared to larger, peer firms, who are heartless, fierce competitors. In financial services, business is not necessarily handed to them.

They have the monumental task of proving to corporate clients and investors that it makes sense to move business from Jefferies, UBS, Morgan Stanley, Deutsche Bank, or Wells Fargo to their firms.  They must show officials from California or Illinois that they can help the state borrow at a lower rate than that offered by Goldman Sachs.  They must convince the budding trader or broker that career prospects (in the long term) are better at their firms than at JPMorgan Chase.  And they can't ease up.

Somehow they find a way to survive, get the big deals done, make a difference in communities, act as adviser to large corporations and municipalities and hire the right people in crucial roles (trading, risk management, lending, compliance, research, and brokerage). 

Among all black financial-service companies, Chicago's Seaway Bank is the leading employer (200 on staff).  Loop Capital, Carver Federal, Washington's Industrial Bank, and New Orleans' Liberty Bank each has over 120 employees.

Historically, black firms tend to try to go at it alone, unless dire survival is at stake.  Hence, seldom do they seek to grow or increase market share by combining or acquiring a peer firm.  The black banker who worked 10-15 years at Merrill Lynch, founded his own firm and struggled to keep it viable and profitable--while maintaining complete control of the firm and its strategic vision--usually doesn't want to give that up in a merger, even if the combined firm is twice the size.   


While it is discouraging to some that after decades, black firms are still a blip in the financial-services landscape, it's encouraging that many of the firms have been around for a long time.

Tracy Williams

Midyear, 2011: Perspectives, Outlook

Still looking for a sustained uptown?

We are all suffering fatigue waiting for a surging recovery in job markets and the general economy.  Every month or so, the news sours after a few months of hopeful, surging signs.

That--in a nutshell--describes midyear 2011.  A series of upturns and optimism followed by the stench of a momentum-killing downturn. 

MBAs in finance, especially those who embarked on careers the last decade, know these trends, teasing market movements and promising signs well. Many have adjusted to these ups and downs and press on.

As of midyear, 2011, the mood is not dismal. Uncertainty, however, always seems to be hovering overhead.  Many MBAs are finding jobs and meaningful positions in finance.  Job openings and opportunities are more prevalent now than they were in the depressed years of 2008-09.  Yet they may not be first-choice jobs or dream roles. While a select few are winning prize positions at investment banks or private-equity firms, most others are finding suitable spots at smaller institutions, boutiques and industrial companies and are content.

Consortium MBAs have seen growing opportunities in private wealth management.  The big firms, Morgan Stanley, Goldman Sachs, and JPMorgan, continue to hire large numbers of MBAs--right out of school or with a few years of experience in other finance roles. They have convinced MBAs from top schools to explore careers beyond, say, mergers and acquisitions or bond trading.   Big banks have turned asset and wealth management in response to the crisis, regulation and the likelihood that traditional trading and banking businesses will have difficulty achieving expected levels of profitability.

In midyear, 2011, market signs are unclear. One market, nonetheless, seems to have shown renewed life signs--the IPO market.  The evidence is not necessarily from a flood new offerings, but from recent banner-headline equity deals (Groupon's announcement, Linkedin's IPO, anticipation at Twitter and Facebook).  Technology and social networks have rekindled interests in equity offerings, although investors are still reminded of the busted dot-com bubble of the early 2000s.

Months and months after a new guidelines were enacted, financial regulation is still nebulous, arcane, and uncertain.  The rules are changing, but banks, brokers and funds are still stumbling to understand what the rules will be, how they will be enforced, how detrimental they will be to their businesses, and how certain instruments will be traded, processed and cleared (derivatives, most notably).  Financial institutions are going through proper motions, but many are at a stand-still on what the regulatory picture will look like 3-5 years from now.

Meanwhile, in midyear, 2011, insider-trading indictments and court cases are in the news, reminding old-timers of the dramatic insider-trading scandals of the late 1980s and early 1990s and reminding many that history oddly repeats itself more often than we think.

Lehman and Bear Stearns collapsed three years ago. Meanwhile, the barrage of books retelling what happened (at Lehman, at Bear, at Madoff, in mortgage and derivative markets) continues.  In the first half of 2011, new books telling dramatic tales of about Madoff, Goldman Sachs, mortgage-markets, and AIG have been published.  No finance MBA can keep up with cascading reading list, although many are already familiar with the subject matter and issues. Former Merrill and U.S. Treasury official Herb Allison just wrote a short treatise, not recounting the gory past, but proposing tough solutions.

Inside business schools and at many hedge funds, efficient-market theories have been analyzed and in some cases attacked.  Many are analyzing "asymmetries" of markets. Some are calling for an overhaul or review of older concepts; the crisis proved more than ever that markets are flawed.

Top business schools are now welcoming another class.  The MBA and the business-school curriculum and experience are still criticized by pockets of pundits and the public, who blame MBA-trained leaders, managers, traders and deal-doers for market and ethical lapses of recent years.  All business schools sprint to adapt, reform and make the degree as relevant as ever.  The degree is still in demand--among students, who have applied in near-record numbers in recent years, and among financial institutions, who recruit and hire by the hundreds when markets and business grow.

Diversity topics and issues are still on the agenda.  Few signs exist that big banks, financial institutions, and public companies have reduced emphasis, although even fewer signs exist that there is a notable pipeline of under-represented minorities or women who will step up to become CEO of a major financial institution soon. As ever, there is still work to be done, especially after the torment of 2008-09 discouraged much talent to explore opportunities elsewhere.

The recovery at midyear, 2011, has been a series of starts-stops, occasional stumbles, and promising upturns.  As many economists would say, just like most recoveries.

Tracy Williams

CFN's MBA Guide: Surviving First Year

Everybody needs a plan, so they say. Getting into a top business school (and earning membership into the Consortium) is an achievement. But it's a starting point for what's to come. Many Consortium students and other MBAs will acknowledge the starting point leads to an opening of flood gates. 

Business school starts in early September, in most cases. Students are bombarded with tasks, responsibilities, cases, assignments and meetings by the second day.  Many alumni admit later they knew b-school would be a challenge; they just never knew that the workload would be so overwhelming so soon. And there is the worrisome, looming task to get a summer job, even if the summer is nine months away.  Recruiting season, year after year, starts right before school and requires significant amounts of time and attention.

That's where the Consortium Finance Network's annual first-year guide can help.  For the third year in a row, CFN will distribute its guide for first-year MBAs in finance. It offers advice, guidance, and wisdom based on those who've been there before (students) or those who've been on the other side of the hiring process (alumni, recruiters, business leaders). The guide helps first-year students develop a game plan to manage the delicate, careful process of being an outstanding, diligent student, while looking for that meaningful summer internship.

The guide is based on input from alumni and recent students and is culled from commentary from the CFN Linkedin and blog sites. 

Summer is seldom a time to ease up for prospective business students. Many go away for a celebratory vacation or a respite between job and school. But a summer before b-school can also be filled with (Take your pick) pre-matriculation programs, boot camps sponsored by some institutions, orientation programs (including that of the Consortium), and other activities.  Many take advantage of these programs to ensure they get off to a blazing start once school starts and to absorb tidbits and tools that could make a difference later.

The guide offers advice on the summer before school:  How to develop a game plan to make the most of the first year and how to plan to get the internship.

The guide summarizes opportunities in finance, the short- and long-term outlook in primary segments. It tries to assist first-years who wrestle with gnawing career decisions. Should they pursue investment-, corporate- or private-banking? Are there opportunities beyond the popular b-school pursuits (community banking, non-profit activities, operations and technology)? Should they explore their passions, or should they purse opportunities based on their technical strengths or where openings will be when they graduate?

Mentors are crucial in helping students attain desirable positions in finance.  The guide discusses how to make the most of mentor relationships, how to develop long-lasting, rich relationships, or how to approach mentors who have little time or attention span.

CFN's guide addresses student concerns as they proceed during the school year. What should students worry about during the first weeks of school? How can they manage the time between adjusting to the pressing demands of school and planning for internships?  How can they arrange information interviews with alumni and mentors from out of town? Or how can they polish the resume', the elevator pitch, and the first-round interview? How can they prepare now for haunting technical interviews that come in January?

Handling dozens of b-school responsibilities with no spare time is already a chore, but students are also expected to keep up with topics in finance beyond the text and classroom:  the latest deal, the latest finance or economic trend, the latest regulatory proposal, the latest series of finance books that chonicled or analyzed the financial crisis, the latest movement in silver, gold, or oil prices, or the latest expectations about inflation.  The guide provides advice on how to keep up when there are midterms and class presentations to worry about.

Once students have learned how to manage time, take advantage of the wealth of offerings in seminars, activities, and speakers on campus, develop relationships with alumni and mentors, and perform well in coursework, the guide helps students get ready for summer internships.  Successful internships, as MBAs know, lead to full-time job offers in August before the second year.

Diversity, leadership and networking are important topics in schools and in financial institutions.  The guide reviews some of the latest discussion, including sharing lists of the best financial insitutions in diversity and the best in grooming leaders for the future and trends in diversity among senior ranks since the financial crisis.

The CFN guide will be distributed electronically to Consortium students who have indicated an interest in finance. It can be sent to others upon request.

Tracy Williams

Dimon's "State of the Industry"

Finance types everywhere are familiar with Warren Buffet's annual sermon to shareholders in the form of a letter in the annual report. It's seldom, if ever, a bogged-down analysis of company ratios and trends. More a colloquial finance lecture. Everybody knows the Buffet letter, an honest pontification on business, the economy and the financial system. Derivatives are, he once notably said, "weapons of mass destruction" (although Buffet's Berkshire Hathaway operating vehicle has used them adroitly from time to time).

This year, Buffet has other priorities and distractions. He has an internal crisis to manage. Top deputy David Sokol is under investigation for suspicious trading activity. Sokol reportedly bought an equity stake in a company before Berkshire announced it would purchase it. Buffet has publicly scolded Sokol, and Sokol, as expected, is no longer next in line to run Berkshile.

That thorny current issue undermines the message Buffet delivered from his shareholder-letter pulpit in 2011. Buffet's letter this year is, as always, his usual remarkable finance lecture--a mid-level MBA finance discussion, written in comfortable, flowing style. But you read it wondering about the ethics case that confronts the company right now.

JPMorgan CEO Dimon


That brings us to JPMorgan Chase CEO Jamie Dimon, who in recent years has stepped up to the plate to provide sharp insight from his Park Avenue pulpit.  His letter to shareholders, also colloquial and comfortable, often includes a frank diagnosis of the financial and banking system. It takes a four-prong approach during a period when much has gone wrong in the global financial system:  (a) What happened? (b) What went wrong? (c) How can it be fixed? and (d) Who's responsible for fixing it? (And oh, by the way, what do we do with those who were responsible for what went wrong?)

The 2011 letter, just distributed, follows the same course. As in previous years, the letter was eagerly awaited, widely anticipated. Analysts, shareholders, and market watchers wondered, "What would Jamie say this year?"-- in a year, not of turmoil, but one of mild recovery and impressive earnings among large financial institutions. Dimon, as usual, detects what's wrong and proposes a fix-it solution--whether you the reader, the politician or the stock analyst agree or not.

What did Dimon say in 2011?

Up front, he says he caved in and didn't like restoring the bank's high quarterly dividend. He says bluntly and does so on the broad finance stage, "(If) it were up to me personally, I would reinvest all capital into our company and not pay any dividend." But in deference to shareholders, he says, "(This) is not what most shareholders want." Shareholders will understand his sentiment and long-term view, but many wanted some upside after a few years of volatile stock performance.

In general, his message is upbeat, not like the financial death warnings he offered two or three years ago on the same pages.

On risk, he says:  "Five years ago, very few people seemed to worry about outsized risk, black swans and fat tails."  Five years ago, recall, it was 2006, when markets soared and deals of all kinds (leveraged deals, mergers and acquisitions and thinly documented financings) were getting done. After the crisis, he says, "Today, people see a black swan with a fat tail behind every rock." And he wonders if financial institutions might have been too strickened to take prudent levels of business risks today.

Dimon injects bits of humor. On work ethic, he states, "The American people have a great work ethic, from farmers and factory workers to engineers and businessmen." He adds, "Even bankers and CEOs."

Basell III and Dodd-Frank regulation are big issues at big banks these days. The behemoth banks aren't approaching financial reform with open arms and warm smiles. But they acknowledge the business of banking must be tweaked, and the effort to sustain returns on equity at certain levels will be an immense challenge.  Banks will need to divert some attention from normal business activity to implement changes and systems required under new regulation. They also operate with a veil of uncertainty. Many of the details of new regulation are still being written.

Dimon's message this year addresses regulation in depth. He isn't fighting it or arguing for repeal. He is resigned to banks adapting (and whispers that costs might be passed on to customers.) "A likely outcome of the new regulations is that products and their pricing will change," he writes. "Some products will go away, some will be redesigned and some will be repriced."

He devotes passages to the "unintended consequences" of regulation--that Government may have the right intent to propose and enact new legislation, yet the impact could lead to complex consequences--some good for the general public, some very bad for the institutions that must comply. "If a restaurant that sells burgers can't sell french fries (because of a new rule), it risks losing all of its customers."

Dimon relents:  "Like it or not, we will adjust...."

And like it or not, the relenting Dimon acceded to shareholders' requests that shareholders be entitled to much higher quarterly dividends.

Tracy Williams

Consortium OP 2011: Alumni Are Welcome

Consortium alumni, you are invited, too.

The Consortium's annual Orientation Program is not merely a five-day celebration of the Consortium's first-year MBA students. Alumni are welcome and can get involved in various ways. If they attend, they take advantage of the program's varied offerings--from career-strategy sessions to leadership and development seminars. And of course, the always-popular career fair.

Granted, the OP (including the Consortium's 45th this year in Minneapolis) is intended to be a memorable, festive welcoming event for over 300 first-year MBA students. First-year students get a head start on business school; 17 top business schools get acquainted with students formerly known to them for their GMAT scores, glowing recommendations and pertinent work experience. Corporate sponsors, by the hundreds, get access to diverse talent and get an early start on recruiting for summer internships.

Alumni can join the festivities, too. Consortium MBA alumni often say they want an opportunity to relive the OP experience of  their first years. But  now as experienced professionals, they look for reasons to attend and for programs geared to their interests and spots on the long career path. More and more, the Consortium has responded.

This year's OP will include ample programming for alumni--whether they are first-year associates at Morgan Stanley or team vice presidents at New York Life, whether they are in transition or they seek guidance on how to get the coveted promotion.   Throughout the orientation, alumni will be able to reconnect with their schools, with classmates or with others with similar interests.  Several school meetings and sessions are planned. 

A few workshops tailored for alumni and experienced professionals are scheduled. Alumni may also want to attend other sessions--including career panels and or seminars on innovation, leadership and strategy.  Alumni will flock, too, to various networking receptions and dinners.

Most sessions are intended for first-year students, especially career panels, which provide an in-depth introduction to, for example, corporate finance, investment banking, investment management and energy.  Alumni, however, in the past have appeared at such panels, especially to catch up on industry trends, to provide their own candid viewpoints, or to give feedback and guidance to first-year students. Career panels also attract alumni in transition, who, say, might have experience in marketing, but are pursuing roles in finance sales & trading.

Alumni in the past and certainly those in 2011 treasure the widespread corporate presence at the OP.  First, sponsoring corporations help make the event possible. Second, corporate representatives, officials and recruiters are visible and active throughout the several days. Accessible and approachable, they are eager to start relationships and recruiting dialogue with students and alumni.

This year, as usual, several companies will sponsor corporate receptions. Year in and year out the Consortium's major sponsors, such companies as 3M, Bank of America, Kraft, Colgate-Palmolive, Mattel, Nestle', Pepsico and Walmart will host gatherings.

The culmination of the OP's vast networking experience is the career fair, often held in a large hall with hundreds of company representatives present and willing to discuss careers, opportunities and specific job openings at their respective organizations.  Alumni are welcome, and many in past years have flown in just for this event.

Alumni need not attend the OP just for job search, career switching or transition soul-searching. They may come to help and be involved. The Consortium this year is welcoming alumni who want to volunteer to help in the dozens of program events, receptions, and panels. They may assist in advising or encouraging first-year Consortium students, who brace for the overwhelming tasks ahead of them in business school.

As in the past two years, the Consortium Finance Network (CFN) will have an OP presence (along with other Consortium special-interest groups). CFN will be at the career fair, will invite finance students to join, and will distribute (electronically) its guide for MBA students interested in finance careers.  Alumni in finance can invite students to join CFN and help steer them toward summer-internship offers.

For Consortium alumni, the OP need not be a one-year wonder or a fond first-year memory. There is a spot or role or purpose for all MBAs in Minneapolis.

For more information about the OP's schedule and registration this year, see http://www.cgsm.org.

For MBA alumni interested in volunteering, contact D-Lori Newsome-Pitts at newsome-pittsd@cgsm.org.

Tracy Williams

Firm Culture: Could You Work Here?



Dalio of Bridgewater Associates

 Bridgewater Associates is a successful, $90 billion hedge fund, located along the Connecticut corridor where other successful, gargantuan hedge funds have a home base. Ray Dalio, a Harvard Business School graduate, is its founder and leader. The fund's investors include pension funds and university endowments.

Over 1,000 people are employed in a variety of roles.  It recruits those who are tough-skinned, highly motivated and interested in a long-term career at the fund. MBAs in finance would no doubt be attracted to an opportunity there.

Would you want to work there?

Would it be a place where you can find a niche, thrive and be successful? Would you be able to endure hardships and demands to perform well? Would you be able to stomach equity volatility, risks of losses, and virulent market turmoil? And would you be able to perform under pulsating pressure and high expectations?

Bridgewater is also known as a fund that operates based on a set of cult-like principles, written and often updated and revised by founder Dalio.  "The principles" had been rumored and talked about for a long time. Before they were public, former employees, managers and investors mentioned them. They told tales of employees (traders, analysts, and researchers) being subjected to tough, unrelenting, bruising criticism--as required by the principles.

Dalio, perhaps tired of speculation about whether the principles exist or not, eventually decided to post them (all 122 pages) on the firm's website for all to see. (See  BRIDGEWATER-PRINCIPLES) There they are, to be seen and studied by competing funds, prospective employees, and academic experts in business strategy and corporate organizations.

In the world of hedge-fund blogs and chatter, some say Bridgewater is not a culture, but a cult. Others say if the firm is successful (having attracted talent and experience and having survived the financial crisis), then it's not a cult, but an organization whose culture might be replicated by other funds, institutions and organizations. Others who have worked there speak (anonymously) of having had demoralizing experiences or or having endured debilitating asssessments of their work.

Dalio is unapologetic. "We maintain an environment of radical openness," the Bridgewater site states. "(That) honesty can be difficult and uncomfortable."  Sharp criticism and open discussion, he explains, help people improve, which helps the firm be consistently profitable. There is pain, but there is ultimate gain for all.

Are there, however, costs to such success and consistent performance?  Bridgewater, as a private fund, does not report results and doesn't have to (except to investors and, even then, occasionally and in the manner it chooses).  As a reputable hedge fund with billions under management, fund managers, traders, analysts, researchers, and new MBA recruits are well-compensated. Yet at what costs?

How would a Bridgewater culture differ from the vaunted, well-examined cultures of such firms as GE and Goldman Sachs? If it works at Bridgewater, can it work in other industries? For new MBAs, how important is culture in evaluating a prospective employer?

Some outsiders say employee retention is low at Bridgewater. It's not unusual for 30-40% of those hired to  leave within the first few years. Some ex-employees say the smothering criticism starts during interviews, where interviewers crush prospects with analyses of weaknesses and deficiencies.

Dalio contends it works and suggests that employees who understand and absorb the principles thrive and benefit in the long term.

Bridgewater's principles, as they appear for all to see and examine, aren't corporate-polished. They are bluntly presented. They are ruminations from Dalio--imperative statements based on experiences in the past and based on what has worked for him the past three decades. They boil down to understanding reality, not hiding from it, identifying mistakes, learning from them, and using them to get better. Identifying, exposing and calling out mistakes boldly, brashly, and purposefully. That's where it gets uncomfortable.

Bridgewater is susceptible to being called a cult, because the principles are presented as a one-way stream of thoughts from its founder. The principles never address the details of Bridgewater's fund business. They expound on goals, planning, and behavior. Nothing about capital, risk management and asset allocation; nothing about arbitrage, currencies, technicals, trading momentum and value-investing.

Some of its principles make sense--at least for this type of organization, a large hedge fund required to make trading and investment decisions in swift-moving markets. They may work for a fund, but not for a manufacturer, an industrial complex or a conglomerate.

The principles address decision-making--a critical element in hedge-fund trading and investing fund capital. What are the goals in making decisions? How should decisions be made? How can the fund ensure that people will make the best decisions on behalf of the fund?

The principles discuss goals. Reaching goals requires identifying and solving problems. And solving problems requires harsh, candid assessment of employees. "Once you identify your problems, you must not tolerate them," Dalio writes. Diagnose the problem, he says, and solve them--even if it requires upsetting employees. After goals and problem-solving, the principles address planning and execution.

Some of the principles are reasonable and well-rationalized.  For example, Dalio says managers should obsess in putting people in the right roles, increasing the probability they can succeed.  He says in evaluating employees, pay for the person and not the job; weigh an employees' values and abilities more than skills.

Dalio says, "In our culture, there’s nothing embarrassing about making mistakes and having weaknesses....At Bridgewater people have to value getting at truth so badly that they are willing to humiliate themselves to get it." Elsewhere, he says, "(E)valuate (employees) accurately, not kindly."

As an MBA in finance (with or without experience), could you work and thrive in this environment? Would potential compensation and experience offset possible personal humiliation?


He values communication, even excess communication to ensure everybody throughout the organization understands goals, issues, and corrective action. He values managers, employees, and colleagues maintaining healthy, tight relationships with each other, making it easier to evaluate the performance of each other.

In 122 pages, almost all aspects of management and organization behavior are covered--from performance metrics to firing employees (when they exhibit no potential to improve). Some topics are not addressed, possibly because Dalio has not gotten around to writing them down. He dismisses job-related stress, leaving it to employees to internalize egos or handle the frustration of being humbled by a jarring critique of a recently completed project.

The principles don't address the value and importance of diversity in organizations--except when Dalio explains the value of permitting all voices within an organization to speak up and share their views or criticism of others.

For the most part, the Bridgewater approach is "take it or leave it." But Dalio heartily believes you might be better off "taking it."

Would you be willing to do so?

Tracy Williams