MBA Professors: The Most Popular 10

NYU's Damodaran, tops on the list

What makes an outstanding business-school professor? Ask a few MBA students, and you might get a dozen answers, a dozen criteria, and many examples. 

Many will say the best professors are those who teach with passion, energy and excitement. The subject matter--whether it's first-year corporate finance or the mechanics of an intermediate-accounting course--comes alive. Those are the professors who present the principles of debit-credit accounting or the equations of Black-Scholes in a spirited way--as if they discover gold time and again.

Many will say the best are those who share details, memories and stories of having been on the front lines of business, those who were involved in heavyweight corporate strategy, major acquisitions and tense negotiations. They might be adjunct professors who can convey decades of experience within the outlines of a core course. They may have spent years on Wall Street, in boardrooms, or in Europe or Asia in special assignments.

Others will say the best are those who encourage and spawn new ideas. They have new theories or are preparing to unveil a batch of new ideas. They nurture innovation and clever ways of thinking. They have new ways of looking at stagnant business models. They offer new ways to value corporations or manage large organizations.  They cheer for and support students who have entrepreneurial instincts and interests.

A few weeks ago BusinessWeek tried to identify who might be the top (or favorite? or preferred?) professors in top business schools. (See http://www.businessweek.com/bschools/blogs/.) It polled over 3,700 students at 30 business schools to come up with a top-10 list. Students were asked to name a favorite or popular professor on campus--not much more than that.  No criteria, no explanations.

At least 60 students from a school needed to respond to allow that school's results to be included in  national polling. A professor who made the final list received at least 20% of all votes on that campus. Students weren't required to explain why they preferred a professor, but could provide commentary.

Eight of the top 10 professors were from Consortium schools (and suggest the high probability that Consortium MBAs have had some interaction in the last few years with some of the country's most popular professors).  BusinessWeek presided over a popularity contest and promoted it just as that.  Students approach the MBA program and learning seriously, so they likely voted fairly. Not necessarily based on the grade they received. Or maybe the final grade spurred them to participate and vote.

Aswath Damodaran, a finance professor from NYU-Stern, topped the list. His specialty is corporate finance, more notably the equity valuation of companies. He's so popular that he has over 4,000 followers in Twitter. He has a Ph.d. degree from Consortium school UCLA-Anderson and taught at Consortium school UC-Berkeley-Haas before joining the staff at Stern. 

Damodaran writes a popular blog of corporate-finance topics, helpful for both students and practitioners on Wall Street (http://aswathdamodaran.blogspot.com/).  In the past month, he blogged on such topics as "trapped cash" in corporations and the "equity risk premium." This week he offers rambling, reasoned "musings" on the share price of Bank of America. It's not just the topics he blogs on, but the enthusiastic, ponderous ways he shares ideas in finance.

Finance instructor Jim Nolen from Texas-McCombs was third on the popularity list. Students say they like him because he's a story-teller with a Texas accent. Nolen is an expert in small business and new-venture financing.  He teaches a popular course in financial management of small enterprises.  Texas students say they are entranced by his stories and experiences in business. According to BusinessWeek, they adore--most of all--how he has helped placed students in lucrative roles in finance.

Emory's Raymond Hill, a finance professor, was sixth on the list. Hill brought years of business experience before he joined Goizueta. He spent 11 years in investment banking at Lehman Brothers and over a decade at the utility Southern Company. He started out in academia, switched to investment banking and business, but returned to the campus. (He has a Ph.d. from MIT.)

At Lehman, he spent seven years in its Hong Kong office managing banking activities in Southeast Asia.  At Emory, he specializes in energy finance and project finance. Students cited his ability to relate arcane, difficult theory from texts (macroeconomics, e.g.) to current events and trends. 

Sharon Oster, an economics professor from Yale-SOM and its dean until a few weeks ago, was seventh on the list. As a woman in economics and business management, she has long been regarded a pioneer, having been at Yale for 37 years.  She specializes in economic competition, competitive analysis, and labor economics.  She has written extensively on regulation and non-profit management.

Students highlight her devotion to Yale's program and its students. Some say she tries to keep ties to every student she has taught while at Yale-SOM and can often prove it.

Other Consortium-school professors on the list include Gautam Ahuja, a strategy professor at Michigan-Ross (2nd on the list); Terry Taylor, an operations and technology management professor at UC-Berkeley-Haas (5th); Neil Morgan, a marketing professor from Indiana-Kelley (8th), and Eric Sussman, who specializes in real estate and accounting at UCLA-Anderson (9th). That Sussman is known to sing 1980s pop songs in class doesn't hurt his popularity.

BusinessWeek all but apologized that Oster from Yale is the only woman on its list. Students don't necessarily prefer male professors. The scarcity of women is likely due to the fact that women still comprise small numbers of experienced faculty members at business schools. And that is likely due to the lagging percentages of women at top business schools and women who pursue doctorates in finance, economics or business.

Being male isn't sufficient to be on the list, but it surely helps to have passion about the subject matter. And it helps to have an ability to tell stories, share experiences, write colorful blogs, keep the material relevant, be an unabashed promoter of the school, help in career placement, and maintain ties to most students who pass through the doors.

Tracy Williams

One Thing for Certain....

Uncertainty. It drives equity markets insane, causing them to swoop, surge, nose-dive and rumble upward, only to swoop and surge again. Investors can't figure out whether to ignore, reallocate, hold or sell. Speculators and high-frequency traders find ways to thrive, often spurring markets toward a  plunge and or meddling to make them bounce like ping-pong balls.

Such is the way it has been in this August of market turbulence. It has felt too much like autumn, 2008.

At financial institutions--especially at large banks, investment firms or trading houses--uncertainty in the marketplace leads to a degree of certainty in-house.  When markets bounce all over the place and when ongoing threats to a reviving economy slow it down, there are predictable, certain patterns within banks' walls. Examples?

1.  When markets turn downward or signal a downturn of any kind, even if momentary, financial institutions "circle the wagons." They assume worst-case scenarios in revenues, business, outlook, and opportunities. They hope for a prompt upturn, but plan for the worst.

They examine deals in the pipeline and business and transactions not yet closed. They go through business or balance-sheet "stress tests" to see how they can withstand a collapse in markets or business activity.

2.  Financial institutions begin to reassess, retrench and respond.  All of a sudden, with revenue declines looming, they look to cut costs. And personnel costs are the easiest and first to slice. With certainty, they reassess recruiting and hiring and lower projections for how many they plan to bring in over the next year.

3.  With the prospects of a diminished flow from deals, clients and new business, they huddle up to reassess bonus payouts. They outline cost-cutting and layoffs. Shortly thereafter, they communicate to employees, analysts, and media the cost-cutting campaigns that will come from lower bonuses and planned staff reduction. While investors applaud their efforts to retrench, employees and new recruits begin to worry.

Unfortunately this atmosphere of anxiety becomes a distraction from winning new business, planning new products or bringing in new clients. The managing director who normally flies off to Chicago to see a client is now forced into morning sessions to decide how much year-end bonuses should be scaled back and what group should be hit the hardest. The vice president who gathers a team to explore a new business strategy now wonders whether senior managers will have time to pay attention to the new idea.

4.  Often with uncertainty and volatile markets, banks get risk-averse. With the prospects of lower revenues, they don't want to worsen troubled times with bad investments, bad loans or bad business decisions. A deal, transaction, or investment that was smoothly approved in good times is shelved, pushed back or ignored in times of uncertainty.

Some institutions promised they would carry lessons from other crises, especially the lesson of being disadvantaged by acting too quickly or too rashly at the hint of a downturn. Does it make sense, they wonder, to retrench and retreat too swiftly, only to be forced to gear up, ramp up and rehire when business begins to flow again? Some retain the lessons; many others follow the familiar pattern of gear-up, retrench, lay off, rehire, expand and are comfortable with bearing the related administrative costs.

Experienced MBAs and professionals in finance know these patterns well and have learned how to adapt to them, even if they aren't comfortable going through them. New professionals and recent graduates learn fast that this is often the way of the world of volatility and instability.

Both the old and new understand the importance of concentrating on what they can control--working hard and performing at high levels. They also realize that underneath the piles of spreadsheets, projects, and presentations and in the midst of attending non-stop meetings on confronting the worst case, they must have a Plan B.

Tracy Williams

A Summer Reading List?

Summer reading lists.  Everybody tends to have a list of books they want to read, they need to read, or they prefer to read, when the days and weeks before Labor Day mean half-hearted attempts to focus on work or dreamy moments of a planned vacation.

In finance the past few years, there has been an explosion of published accounts of the financial crisis. Just when we think there is nothing else to report or analyze as it relates to the collapse of Lehman, Bear Stearns or AIG, out comes another 300-pager.

Then comes the summer of 2011. Just when we thought it might be safe to escape for vacation and tote copies of what's on our reading list (in duffel bags or imbedded in a Kindle), the circus of Washington becomes more frenzied. And the markets behave as if it's 2008 all over again.

A summer reading list at a time like this? With the daily chaos of global markets, political fisticuffs over sovereign debt levels, S&P punishing politicians and the U.S.'s lackluster recovery, will there even be time to go on vacation before fall arrives?

Is there any point to combing through an old analysis of the Madoff scandal, Goldman Sachs' "big short" on mortgage markets, or Countrywide's massive buildup of subprime assets when nobody knows what today's markets and business confidence will look like next week? When much of the industry had hoped to be gazing at the horizon from a vacation rental?

Still, prospective students in finance will ask what's appropriate to read as they prepare for business school or gear up for a tough semester of corporate finance 101.  MBA alumni and other experienced professionals wonder what they can read to catch up on current issues.

What can they read to "stay ahead in the game" or have an in-depth understanding of specific topics? What should they read to comprehend the controversy of derivatives, CDOs, and mortgage-backed securities? What should they read to figure out what happened at Madoff, AIG, Merrill, and Goldman? Why did some hedge funds prosper during the old crisis? Could Bear Stearns and Lehman have been rescued? With pending reform, what will banking and finance look like in the next decade?

Publishing houses have flooded the book-reading public with new takes and versions on what happened in 2007-09. There are numerous viewpoints, analyses, and updated summaries of events. In the latest round, William Cohan follows his thorough accounting of the fall of Bear Stearns ("House of Cards") with a new book on Goldman Sachs, a book project he likely had in mind for years. But he might have updated his approach when Goldman suddenly became a symbolic punching bag as industry recovered from mishaps of the 2000s. 

Cohan's "House of Cards" was an excellent, day-by-day account of Bear Stearns' fall and explained better than others how lack of funding, liquidity and perhaps wisdom and morals caused the firm to sink.  His understanding of investment-bank operations, people, deals and history would make the new book "How Goldman Sachs Came to Rule the World" required reading.  Goldman, of course, doesn't rule the world, even if it tried to, but Cohan provides a solid accounting of how a top firm manages to remain perennially profitable.

Last year, Suzanne McGee hopped on the Goldman story-telling bandwagon with her book "Chasing Goldman Sachs." She argues the crisis of 2008-09 is partly due to other firms and funds trying to "be like Goldman." Everybody wants to achieve similar returns and approach businesses and markets in the way Goldman does. And they think they can do so--whether or not they have the capital or people.

In doing so, we got the near collapse of the financial system in 2008.  Her book, however, offers pages of solutions.  She suggests an overhaul of investment banking and recommends the industry be operated as a public utility if it doesn't learn to manage risks. McGee knows she won't win fans in the industry with this idea, but hints this may be inevitable if more crises ensue.

Joe Nocera, a New York Times op-ed columnist, teamed with Bethany McLean to write the consummate book on how mortgage markets spurred the crisis:  "All the Devils Are Here." They write fascinating accounts, for example, on the internal failings and politics at Countrywide, at Washington Mutual, at Merrill Lynch (before BoA acquired it), and among regulators.  They spare readers some of the technicals. Instead they present the drama of bankers and mortgage brokers hustling to become rich from originating and selling subprime loans.

For just one summer, the list is almost too much to choose from.  Gretchen Morgenson, a Times business columnist, and Joshua Resner paired up to pinpoint leaders who were responsible for the troubles at Fannie Mae and Freddie Mac in "Reckless Endangerment."   Times business columnist Diana Henriques offers her account of the Bernard Madoff scandal in "Wizard of Lies."  She was the first journalist to interview Madoff in prison. Roddy Boyd, not from the New York Times, jumped in to tell the tale of what happened at AIG, or more notably how its derivatives-trading unit contributed to the mortgage mess: "Fatal Risk."

One new book sought to explain the mechanics and virtues of high-frequency trading, although nobody has yet written the book on last May's "flash crash," a subject that might be too cumbersome for a general reading audience.

Even with the cascade of books, nobody has sufficiently tackled the pressing issue of how banks will evolve and be profitable in the face of new regulation and reform.  Many argue that greater amounts of capital help banks survive or withstand tough times.  But not many have figured out ways for banks to achieve reasonable returns, when more capital will be required.  Banks themselves are struggling to figure this out.

And nobody dared to touch the impact of the crisis and subsequent upheaval on diversity? Have the events the past few years discouraged those from under-represented groups from becoming traders, bankers, investors and researchers? Why does it seem as if there are fewer women and people of color in top levels in financial institutions?  Do banks, insurance companies, and hedge funds care as much? 

For now, for this late-summer period of stomach-churning volatility, most will agree on one thing: Not many right now will want to read a book about bipartisan quarrels and political jockeying occurring on Capitol Hill.

Tracy Williams

Team from Tepper Takes ELC's Prize

A Carnegie Mellon quintet of MBAs faced challenging competition from teams from USC and Michigan, but managed to emerge as the winner of the Executive Leadership Council's (ELC) annual business-case competition in Alexandria, Va. in May.  (See http://www.elcinfo.com/.) The USC and Michigan teams followed in second and third place, respectively.

Exxon Mobil and ELC sponsored the annual competition. ELC has presided over the competition since 2002. This year the topic was energy and the reduction of greenhouse gases. Students from top business schools were asked to present a detailed business strategy outlining America's transition to lower greenhouse gas by 2030 in the most cost-effective way.

Carnegie Mellon's winning team from the Tepper School earned over $35,000 in scholarships.  The team from Tepper, a Consortium school, included recent Consortium graduate Jacob Garcia.  Other team members included Jesse Alleyne, Ian Buggs, Felix Amoruwa, and Richard Burgess. (USC and Michigan are also Consortium schools.)

Team captain Amoruwa told ELC organizers his group sometimes worked until 3 a.m. to work on the project and had follow-up meetings the next morning at 8 a.m. He said the group's effort "truly paid off for us."

The project was expansive. Teams had to outline plans for the nation to meet energy goals without incurring excessive costs. They had to identify areas of public and private investment and job growth.  And they were required to specify ways to recruit more African Americans and other under-represented minorities to work in energy.  Over 50 teams from business schools across the country participated.

The Carnegie Mellon team will be honored at the ELC's annual gala dinner in Washington, D.C., in October.  The team will also participate in leadership activities in New York in the fall.

Consortium student Garcia graduated from Tepper in May, where he concentrated in marketing, strategy and quantitative analysis. Tepper student Alleyne, a rising second-year student, was also a winning participant in case competitions sponsored by McKinsey and Deloitte. Buggs, a recent Tepper graduate, was president of the school's graduate business association. 

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

Business Schools: "Satisfied" Alumni

Dartmouth's Tuck leads top business schools in alumni-participation in donations

Who are the most satisfied alumni among top business schools?  "Satisfied," for these purposes, isn't defined by the alumni happiest in their careers, the most content in their outlook,  or the most optimistic about business opportunities. Satisfied," in this case, applies to alumni who are happiest about their business-school experiences. 

They are the ones who most appreciated the two years of toil to get the MBA and reflect fondly on time spent with professors, deans, classmates and career advisers. They might recall cheerfully the class "field trip" to China, the end-of-year skit performed before a standing-room crowd, or the thought-provoking cases in project finance. They will have appreciated the school's brand-new, state-of-art facility--featuring technology marvels and electronic wizardry.

Sometimes satisfaction in career correlates closely to satisfaction at business school, because alumni reason that the b-school experience helped prepare them well for a thriving career. Other times, unhappy alumni may not appreciate a long-ago experience until years after they graduate.

They will complain about a tortuous experience in an advanced accounting course while in school, but will appreciate the principles they learned while doing a deal years later. They will gripe that a school is too far from the finance centers of New York and Chicago, but will appreciate decades later the contacts they made and the friendships and networks they cultivated. They may not understand why they must take a required course in policy or decision-making until they are sitting in decision-making roles later on.

Business schools, their stakeholders, and those who try to rate, rank and evaluate business schools struggle to define ways to measure "alumni satisfaction."

One way they do it is not necessarily the best or fairest way. But they measure it anyway. They measure satisfaction by tallying up the numbers of alumni who contribute consistently to their respective schools.  They presume alumni happy with their experiences on campus will happily write checks once or twice a year. The amounts will vary, depending on what alumni are doing and where they are in their career stages.

Along this premise, CNN and Money magazine tried to determine which top schools have the "most satisfied" alumni based on percentage of alumni who give back (http://www.management.fortune.cnn.com/). Consortium school Dartmouth (Tuck) was a run-away leader with 67% of nearly 9,000 living alumni who made donations in a recent year.  Analysts attribute that to "satisfaction" with their experiences in Hanover, to appreciation of how Tuck prepared them for careers, and to Tuck's vast, tight global network of alumni.

Consortium schools Yale and Virginia (Darden) followed in second and third place, with 46% and 43% participation rates, respectively.

As with any list, readers should approach statistics-based rankings with care.  Some observers or deans say alumni giving is influenced by many factors. Some schools, for example, encourage alumni to write their big checks during reunion years (once every five years), so year-to-year participation rates can be misleading.  Other schools encourage alumni to contribute something--any amount in any way--every year to get into the habit of giving. 

Some, according to CNN, say public business schools lag because alumni may presume as neighboring tax-payers they are already supporting schools.  Other schools encourage giving, but are just as happy if alumni donate time, volunteer in service, or partipate in mentor programs, interview prospects, or recruit.

Satisfying and memorable experiences surely influence alumni giving. But economic conditions, personal situations, time constraints and the schools' own alumni infrastructure can be significant factors, too.  The development offices at some schools are more efficient and successful than at others.  National alumni networks are better organized at some schools. 

Then there could be the UC-Berkeley MBA graduate, who appreciates the courses and professors in entrepreneurship that helped her launch a start-up in nearby Silicon Valley. She has intentions to give back, but in her company's early stages does not have the resources or time to be "reflective" or "appreciative" of experiences at Haas. Or she simply promises herself to write the big check when her personal net worth soars.

In general, Consortium schools fared well on CNN's list.  Cornell (Johnson), 23% participation, was seventh; Consortium schools UCLA, Carnegie Mellon and USC were 11th, 12th and 13th , respectively with participation rates between 19-20%.  UC-Berkeley, Emory, UNC, Michigan, Indiana, NYU, and Texas were also included in the list. 

Consortium schools Wisconsin, Washington Univ., and  Rochester were not included on the list--likely because they were unintentionally omitted from the survey or CNN may not have had sufficient information.

For all schools, the median gift is about $150--suggesting that many alumni, no matter their age or experience or net worth, will make a nominal donation yearly because they are sufficiently satisfied and because they are respectful of the schools' solicitation efforts (the e-mails, the letters, and the phone calls).

What about giving rates among Consortium graduates? Do Consortium graduates give back to their schools? Do they also give back to the Consortium?  Compiling these statistics is more complex than it appears. Consortium graduates give back to their schools, probably in comparable percentages as the rest of their classmates. Many Consortium graduates give back to the Consortium, too. Some make donations to both; some request and hope contributions to the Consortium are also counted as contributions to their schools, and vice-versa. 

Some even dream of making a philanthropist-like contribution, too, once personal net worth soars "after the IPO" or after "the new business takes off."

In 2010, the Consortium reported a 13% increase in the amount of donations from over 1,200 individual donors (including alumni)--an increase that is due in part to improved economics, but also to the Consortium's own well-planned efforts to reach out to alumni and others.

The statistics may not capture one popular Consortium sentiment: Most, if not all, Consortium alumni, whether they contribute regularly or not, will say they are "satisfied" with the opportunity the Consortium experience afforded.

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