Wednesday, September 2, 2015
Post #2: Experience within an Organization
After my sophomore year of college, I interned at a Private Equity firm in downtown Chicago, and I was thoroughly surprised and impressed by the structure of the organization and how it was run.
Being an intern, I expected to be doing the research and due diligence on potential acquisitions for the whole summer. It made sense that the young guys would analyze and the older guys would make the pitch. But after a couple of weeks I was asked to make the pitch to a group of investors about buying a company, not the full time employee I was working with. I asked my boss why this was and he said that they simply run on a performance based system. It doesn't matter how long you've been working at the company, if you're good and doing the best work, it's next man up.
This philosophy is something that I'm a big fan of, because I'm a firm believer in making decisions off results, not tenure. While the people who have worked somewhere longer might have the experience, if someone else is outperforming you, then I think you should go with the hot hand. This mentality allowed me to get great experience at a young age, that has set me up well for the future. It's why the private equity firm I worked at had so many young execs, because they were the ones who delivered results, so they were moved up.
What this led to was some internal controversy though, because as you could guess the older workers felt disrespected when younger people were being given opportunities that should've been theirs. It even got to the point where some workers wouldn't help others because if they got credit for the work then it would have a negative impact on the person who helped out of kindness. So honestly, it wasn't the most collaborative environment, because everybody was competing. It was interesting to see that even though some workers weren't happy, they wouldn't leave. They knew they were still making a ton of money, but not getting as much responsibility. This was mostly the people 35 and above. While they were unhappy, they didn't let that drive them away. On the other hand, the younger people who weren't happy, whether it be for working long hours or not working in the most happy environment, were quick to leave. They seemed to value their happiness over money.
In my mind, I saw this as a stage in their life. From 21-30, you can still discover and search for what you want to do. Most people don't have to worry about a family or kids, so money isn't the most important. But for the older folks, they have a responsibility of providing for their kids and putting food on the table, so even though they're unhappy, they need to get paid.
Finally, regarding the organization, I found the most interesting piece to be about there method of recruiting. Almost all of their hires are from recommendations of current employees. This means that people are telling their friends it's so awesome to work here, that they should do it too. While I had an awesome experience, I know some people didn't, but the fact that they tell others to work there shows me how big money plays in picking a job. Even if you can't stand coming to work everyday, if there are enough commas in your paycheck, you're good to go. Very interesting. I'd elaborate but doing what you love versus doing something for money is a whole conversation in itself.
For now, I'm glad I had this experience at the Private Equity Firm because it was my first real taste of what it was like to work in a performance based organization. I learned a lot, and realized that at the end of the day, it's about results. It doesn't matter how old you are, where you went to school, or whatever it may be, if you can deliver, you're the one who's going to get called on.
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Interesting story. In your response to my comment, you might talk about how performance was measured. Were there clear objective metrics that spoke to how well things were done? Or did the opinion of the manager matter quite a bit?
ReplyDeleteOne of your classmates wrote about a job doing the sort of research on companies that you did, but he was talking about work in Singapore, not Chicago. Would the standard for what counts as good research be the same?
One might also ask why this company was swimming in money. We they buying failing companies and turning them around, startups that seemed especially promising, or something else?
Your piece also raises an interesting issue about life-cycle employment practices (though you seemed to treat people in their mid 30s as old, while I would consider them still quite young). One issue with life-cycle is whether turnover matters to the company. You seemed to suggest it did not for the young employees, mean replacements could readily be found with little to no drop off in performance. If the more experienced employees are doing the same sort of work then their turnover shouldn't matter either, but maybe it is not as simple as that.
One last point is on the conflict you mentioned. Bolman and Deal is quite good on that and you might be interest to read the section of the book on the Political Frame. But here you might consider whether the company cared about this or not, and if they did care whether there was anything they could do to discourage it. Normally we don't associate conflict with efficient operation.
So in regards to how performance was measured, a couple of things came into play. One was the research you did. Was it easy to understand the main points? Was it clear and specific? Or was it too much information at once and hard to get the big picture. Another factor, which probably was the biggest, was whether the boss liked you. And this mainly had to do with your deal making skills. Could you present in a manner that pumps up investors and makes them truly believe in the company and you? Or are you not as confident speaking in public and aren't the most polished? While some people weren't the most book smart, they could speak in a way that just captured an audience, and that was a huge factor that the boss looked for.
DeleteIn terms of the other student who did the same thing in Singapore, I would say the standard of good research would be pretty similar, because at the end of the day the investors want to know what the company does, where they've been, where we see them going, and how we're going to increase profits. If you can do that and put it in paper in a concise manner, it's going to work in China, India, London, Chicago, or wherever you go. So I would say the research would be judged the same, but the most important thing is whether you actually close on the deal and if it increases in value.
Regarding why I said the company was swimming in money, I said it because they buy failing companies and turn them around, similar to flipping houses, while also buying startups that seem promising. And they only buy companies that they're almost 100% sure will succeed, so in theory they can only make money. For every 1800 companies we do research on, they might buy 3.
In terms of your fourth point, when I said old, I just meant older than the interns. I completely agree with you that 30 year olds are still young. But yes they didn't really care about turnover because there are a lot of qualified people out there who can do great research. The people they most worried about when it came to turnover were the ones who were very successful at pitching to companies. So the people who were really good at closing deals, they tried really hard not to lose them to other companies.
Finally, regarding the conflicts between employees, I think the boss enjoyed it. It made the environment very competitive so everybody was trying to do the best work, which meant more stuff being done and a higher chance at making money for the firm. Money is everything in this business so as long as they're still closing deals, it doesn't really matter how it get's done, just that it does get done.