The Lost Investment Banker
Note From Rand
The baseball season is well underway, and the Orioles already have the worst record in MLB. When I expressed optimism for this season to my attorney, Henry Clarke, he asked me the following question: “Rand, who’s the team owner?” If you’re a baseball fan, you get it. If you’re not, call me and I’ll explain it.
I’m already looking forward to the Mike Shanahan led Washington Redskins. I must be a masochist!
Two articles I think you’ll like this month. The first, The Lost Investment Banker, details my personal experience coaching a client in NYC. It’s a story of how difficult personal change can be. The second is a “pack up the babies and hide the old ladies” admonition about debt. Here’s the short version: Prepare for the worst; it’s going to happen. If not this year, then in future years.
I’ll be back to scare you again in June. Until then, get real, get tough, and get going.
The Lost Investment Banker
Frank was the CEO of a large investment bank that was owned by a gargantuan New York bank. His boss Charles, the chairman of the bank, called me to coach Frank. (Frank and Charles are pseudonyms.) As Charles described it, Frank had a “rough engagement style,” which is corporate speak for not being able to play well with others.
My phone call with Charles went like this:
Charles: “Rand, Frank runs the risk of mutiny on his team. He belittles his guys publicly. He second-guesses all of their decisions. He has an appetite for a granular level of detail that results in his having an intrusive style. He’s really a throwback – a cigar-chomping, suspender-snapping, Gucci-wearing plutocrat.”
Me: “So Charles, what would a successful outcome look like to you? What are your conditions of satisfaction?”
Charles: “I don’t expect miracles, Rand. Frank is 55 years old. He’s pretty much who he’s going to be, from a style and personality point of view. I get that. I just want him to behave in a more respectful way toward others. I’d like you to help him “own” this issue, and then develop some strategies to take some of the rougher edges off of him. Frank is my friend. I want him to remain with the firm. He makes us a lot of money. If he doesn’t change, however, I’m going to have to cut him loose.”
Me: “Have you discussed this with him?”
Charles: “I have, and I believe he really wants to change. I don’t think he knows how, and I’m certain that he doesn’t understand the magnitude of the problem or how to fix it.”
Fast forward four months. After working with Frank, his behavior had improved. He had implemented the strategies that we crafted together. His people were in a better (not perfect, but better) place that I would describe as cautiously optimistic and moderately suspicious but supportive. I wasn’t ready to declare victory, but I was pleased with Frank’s progress. So was Charles, the guy paying my fee. Life was good!
Not quite!
One Sunday afternoon, I got a desperate phone call from Frank that went like this:
Frank: “Rand, I’m ready to throw in the towel on this goody-good, Kumbaya stuff.”
Me: “What are you talking about?”
Frank: “I’m not getting any love from these people. I’m really trying hard to change, but I’ve not received even ONE compliment.”
Me: “Let me explain something to you, Frank. You have seven people reporting to you. Each of them has done so for at least three years. Four of them have reported to you for over five years. Correct?”
Frank: “Yeah, so what?!”
Me: “Let’s just use the five-year guys to make my point. They have four years and nine months of experience … minimum … with the “old Frank.” They have three months of experience with the slightly new and improved Frank. They all know that I was asked to work with you. How am I doin’ so far?”
Frank: “You’re testing my patience by telling me what I already know.”
Me: “Here’s the big question: Which Frank do you think they believe is the real Frank – the old, four-year, nine-month version or the new, three-month, working-with-a-coach-at-the-behest-of-the-CEO version?”
Frank (after sitting quietly for five minutes): “Wait a minute, Rand! Are you telling me that in order for them to believe that change has taken root, I’m going to have to be this way for five years?!?!”
Me: (slightly disappointed but not stunned): “No, Frank, I DON’T mean that. What I mean is – you’re going to have to be this way FOREVER! What I mean is – you can’t view this as a destination, and that once you reach it, you can revert. What I mean is – you should be doing this because some fundamental change was required in order to be effective. What I mean is – you need to do this because YOU believe it’s the right thing to do, not because you’re not getting enough ‘love from your peeps’!”
My relationship with Frank flourished, and over time, he became a much more evolved leader, although never what Jim Collins would describe as a “level 5″ leader.
The lessons for you:
• Personal change is easy to accept, until you have to do it and then sustain it.
• We’re all very comfortable being who we already are.
• In order to maintain commitment and momentum, we have to be accountable to another person. That person has to value truth more than comfort.
• It’s OK to want to be validated; it’s not OK to need to be validated.
• If there’s no pain in change, you’re either not trying hard enough, or the change isn’t big enough!
• Fear is the root emotion that keeps people stuck. If you want the big reward, you have to develop the courage, resilience, endurance and persistence to crash through quitting points.
Get Ready for Round 2
I keep hearing pundits and business people insisting that our economy is getting better. In the very short run, that might be true, but WHO is going to pay for our massive $13 trillion ($10 trillion of it incurred in the last year) federal debt? No one seems to have an answer to that question. Every man, woman and child in this country now owes over $350,000 to the federal government. Wake up!!!! Here’s a staggering comparison – the USA vs. Canada:
Federal debt to GDP: Canada – 36%; USA – 93%
Unemployment Rate: Canada – 8.2%; USA – 9.7%
Total Health Spend (public and private) to GDP: Canada – 10%; USA – 15%
Total Defense Spend to GDP: Canada – 1%; USA – 5%
Estimate Household Consumption to GDP: Canada – 54%; USA – 69%
Let the good times roll?
Federal debt in Canada has not grown materially in 15 years. Our debt grew 400% in the last year. Our politicians argue that it was necessary to save the economy. Actually, they did it to save their collective a–! The only thing that is (temporarily) saving the US dollar is colossal mismanagement in Europe, where the only way to preserve the integrity of the Euro is to let Greece default – not gonna happen!
What a mess!
Here’s what you can do: Be an example FOR others rather than following the example OF others when it comes to living a prudent, responsible financial life by:
• spending less than you make.
• paying yourself first.
• incurring minimum debt.
• paying off credit card, auto and mortgage balances as soon as its practical to do so.
• teaching your children to be financially literate.
• becoming financially literate yourself, if you aren’t.
Some very smart financial people are predicting dire consequences for our economy as a result of financial mismanagement. You cannot impact that except by voting for politicians who have, in the past, demonstrated fiscal restraint. (And no, I don’t know many other than Peter Schiff from Connecticut.) You can, however, live in a way that maximizes your personal chances of weathering any storm.
Thanks to Ben Peress, my financial manager in McLean, Virginia, for the USA vs. Canada stats. In the fall of 2008 when it “hit the fan,” Ben saved us. If you’re looking for a guy to handle your $, he’d be a great choice.
