HR Challenges

Career Paths : Worth studying? (1/2)

Part 1 here is a bit older and focused on high performance cultures in banking/finance/consulting.

One thing that fascinates me quite a lot in my life are people. And one aspect I want to share here is people as people in careers. How did people become who they are and what do they choose and what will they choose to make out it? I am not entirely sure all here is completely accurate, but it is something I have been thinking about lately.

The interest here for me is how to form great teams. The idea for this probably started when I wondered by Hedge funds like to hire Bankers – but not PE folks – and consultants – but not entrepreneurs – and engineers – but not sales people. And why Google, Facebook and Co hire engineers out of high school and university, but hire sales and marketing talent out of senior corporate positions. Maybe this is of interest, so I thought I share.

Very small companies and single individual companies

We start with the simplest and most boring case. Just think of a doctor opening his office, a small handyman shop – car repair, heating systems installation, painters – or any form of law firm you know.

There are three dimensions that define career progression in the firm. A steady increase in product-market fit to reach the highest paying customer fit at highest utilization desired for a given size of the company. A continuous specialization and quality of service improvement to perform against competition. And a steady demand of intelligently dividing labour into higher and lower cost individuals. All happens with a fairly fixed and pre-set office space and total set of tools and implied capex.

A career in this industry requires you to basically work on few factors:

(1) You continuously become better at what you do and improve your quality of service and cost-efficiency (by becoming more effective).

(2) You join the path on specialization and compete with other specialists competing for your clients. So you learn a lot and stay up to speed. You might have an intellectual challenge there to create the best patterns and habits to learn faster and more effective. And you might use this to also improve quality of service and you might identify better product-market fit options. By making such product-market fit contributions, by becoming a rockstar specialist, you can improve your salary.

(3) Lastly, you progression from “low cost labour” to “high cost labour” and rise in rank, you need to basically learn to improve and execute on the process and finally land deals with new clients. Something that you almost surely will do out of the office. Unless you rely on good standing with some partner that shares clients with you because he cannot cope.

It is as simple and boring as it gets. As a doctor, mostly 3 matters to retain and develop clients, and stay low on (1) and (2). Even more boring.

Old Money and Power

Also fairly simple to describe, but probably hard to understand and execute is old money and power career progression.

You start with a lot on your plate. When you start being a doushebag for your parents, you start activating your network and expand it among peers. You also work on your ability to access superior information. Both combined : good network and access to superior information will give you the ability to focus on pattern recognition and building a very good people and opportunity judgement. Young as you are, you will love the ability to judge opportunities very well.

On the next level, you start to understand that networks of peers are equal in reasoning and don’t prove lots of insight and that the circles are small. You start looking for sourcing new talent. You will already know that most people are too difficult to handle, good executors and profit makers are rare and that you have to get the skill running of finding the brightest and best to support your cause without making you vulnerable – loyal and target focused is rare, too. As trial and error continues, you also learn next that cutting losses soon as possible is crucial and improve again on pattern recognition.

By this level you will have developed skills on the process of identifying and luring talent, monitoring risks around it, leverage it for maintaining your network and will cut it lose soon as risks are getting too high. With all that on your back, you start to understand that risk management and asset protection is likely even more important that superior judgement and fast profit taking. The entire approach will become more risk focused and more disciplined tactical allocation and more process will sneak into your behaviour and you will know better which parts of the network you already have is stable and furthering your interest.

And once this is all set-up, you will start to look at opportunities from a different ancle, win a few very lucrative ones and look at your descendants.

A lot more social, a lot more holistic, the focus is a mix on pattern recognition in a global macro, local opportunity and people assessment skills and ability to network among peers and handle the politics.

Corporate Career

So we looked at the mechanically short and simple ones. We now look at the intellectually mid- to less challenging, but the most complex evolution path. That of a corporate employee.

When an individual enters this type of career, he is very likely bringing very little with him and starts from scratch. Probably trained in the wrong field or trained on a high level, the basics consist on understanding and coping with the fact that a very boring small nieche will be the area of specialisation. This blocks the entire view on how simple the learning curve might be in the beginning and it will be crowded by an overwhelming set of politics in the environment you are placed in. But anyway, the first stage is called specialize and perform. The entire idea is to understand within your immediate team and under your supervisor to understand the politics that exist, that they exist and that there is noone going to change them. Then using your way around them to learn the specialization and learning to do them well and with passion. It now starts with guessing what your brand and image and values are to survive on this low level and impress your boss who is likely to shield you from anthing outside his team. You might have cross functional friendships, but all being super unexperienced and it being unclear who might be of future value, you will have a hard time finding out who to network with in a very limited and low value network.

Next step is called the prime dog phase. You have to find your sponsor which might be your direct supervisor, his supervisor or someone from another department. Prime dog means that you are the one go to guy for this individual that you are loyal to and where you perform better than any peer on the metric. First finding a worthwile supervisor and handling all the politics around following and positioning yourself to this individual will be vital. You also have to continuously assess if you want to be a specialist-perfectionist (always MECE, correct but slow), a specialist-performer (doing the things good enough to be merited but not overdoing things and exhausting yourself or annoying too many people without return on the effort), a 360° generalist that uses his low level to learn all parts of teh business and build a very wide low value network or a political maverick that goes into the right battles, makes the right friends and build a name as a political affeciando.

Once the prime dog status is established, it is all about using the support network of your prime dog status to grow you network and visibility in this network towards those that might matter while managing negative pulbicity and conflict with those that see you but are not in favour of your actions. In this stage, learning to fight and befriend the right people, manage and leverage outsiders and non-participants in the game is one plus, becoming more focused in the performance approach is and understanding the political behaviour and culture in the firm and the power landscape around you, key success factors for your career and that of your prime dog supervisor is crucial. In this phase, you have to master the company culture, finally define your values and image, and understand it is the best you have int his firm and that you won’t abandon it ever again without making enemies on those who really on that you that you created.

The next step after you settled in here is to show extreme performance. Something that catapults your visibility in favour of your prime dog supervisor and the supervisor your supervisor is the prime dog to. For this, you must have opened up a deep understanding how you can add value to as many higher levels of management and the company itself as you can. And by showing consistent and reliable performance that is lauded and can be understood and verified by others as they observe you will build a strong image that can carry you on for your first promotion and the level where you are actually managing other people.

On that level, team management plays another role. Now you shield the lower levels untill you know they can position them well to the higher levels without backstabbing you. You have to know when someone wants to and knows how to shine against your interests and understand how to cope with it, get rid of the individual and how much you can steal his value add or use it for your own benefit without stirring too much attention on the action. This phase ultimately requires you to continue the same work as before, but your goal is to find a loyal prime dog that will carry on your legacy after you rose or left, but without standing in his shadow. At the same time, no level in the corporation is higher in competition among peer and more risky of having idiots combined with an overly aggressive and ambitious contestant under your belt than this and it is vital that you have a stable and good history at the firm and in your political network that you can control these forces under you.

Once you mastered this risky environment, whether you rise or not, the next step is to increase the level of highly relevant favors. You take risky projects, you take actual risks to your careers and to the careers of others under your belt and solve the underlying problems with grace. The difficulty here is to assess the risk correctly, take the risks that still fit your personal brand and political stance in the company – everything you do is visible on the higher levels now and invisible to the lower levels – and that your brand allows you to focus on company interest without killing your affiliation with the group you are engaged with politically. In most cases, you will also not be in the winning group, so waiting for a change of the wind and weathering a lot of shit storms is vital. The same problem exists for those who are part of the winning group, which must execute fast and quickly before the wind changes and where people are unlikely to leave while the wind is strong. Understanding the dynamics of the wind and that it is likely that someone up the chain will leave when the negative blow and season comes is important for rising further. Understanding who is stable in conviction, has a strong network that is also stable and loyal to each other and belongs to a network that has – after x changes of winds – has the ability to be small enough to reach a high level is crucial. The good thing is , on the team lead level and an overall approachable character and a lower key on politics, you can take your time to assess which league in the company you belong to until you completely understood these dynamics. And that makes it easier to change than being an outspoken member of a group whose dynamics is unclear. Shifting then to a new group later is difficult.

The story likely goes on, but that’s how far I got here.

Banking/PE/HF careers

The banking or finance career, at least in the past – who knows about their future – was that of outsiders trying to make it into the old power and money environment. The rationale is to become great at deal making and furthering economic interest and becoming dominant and aggressive in winning those deals. The career ladder is naturally completely different from before.

On the “learn the basics” level the goal is is simple. Understand professionalism in conduct, behaviour, grooming and appearance. Learn the necessary skillsets and frameworks. Learn to manage your efficiency – energy management, health, emotional stability by having a strong support network, finding mentors, etc., master the internal political aspects as fast as you can and use very change to grow your external network to experts, senior individuals and your internal superiors. Learn to shine by focused performance and be robust, aggressive and holistic and laid back in character.

The next level, analyst level, is to build an industry leadership position. Your expert network, market, industry, financials and so forth skills in your target skills must make you a top candidate for all competing banks and industries. You must have a bankable and defensible model of building your external network to experts, friends – peers among bankers who share the desire to use each other to advance careers -, peers – good standing to other people in your industry based on respect but without proactive career support – and seniors. You also have to learn information channels to understand details and master core aspects of process managmeent during a transaction. And you should have solid first insights and opinions on aspects relevant for the deal making process.

On the next level, as associate, you must know how to drive your analysts and interns, master the process and all stakeholders in it, build your negotiation and project management skills – whatever that means from intimidation, ridicule to empathy, rapport and engagement – with stakeholders along the line, identify good financial and legal structures, lead the advisors – lawyers, financers, etc. – towards optimal solutions around the deal and build long-lasting friendships based on trust and mutual success with these sakeholders. You should then use this to clearly understand the merits of deals from a holistic perspective. When is an opportunity there and spotable in the financials, when can you assess and determine the controbale side on the external environment of a target co, how can you structure a deal to make it profitable and how can you be sure that your execution strategy around the value capture works. Of course, you are competing on the higher level and must display your competence while not pissing any of the other highly ambitious peers and supervisors off. At this level, you also should already know that you and your industry exist to whip and kick everyone else in the process (buy side). You outsmart every stakeholder in the process are use force and dominance to at least outdominate them.

When you get to the VP/Principal level, you should be an expert negotiator, be able to schmooze and have your external social skills, have a very strong business acument that you know how to use to pitch deals to new clients and know how to bargain a good position for yourself or your team to do the transaction, knowing you compete with other people of your grade in other firms and in your firms. OF course, all the political aspects of the corporate world exist in parallel. But the key here is that you are now maturing already to the level where the corporate guy will never come to, and where the old money and power guy started, with the difference that you are still stuck in your firm and know little outside the scope of your deal sourcing and what happens in your network.

When yo uare finally getting to the MD level, you are starting where the old money individual started initially. Only you have no comparably substantial asset base and you are completely dependend on your network which doesn’t include a single on of these old money guys and you don’t qualify as a solid quality pick they learned to find later. You will remain a servant in this group untill you 100 timed your money and your assets are completely managed by others and all you do is to be even better than your already pretty good asset managers. They way you operate on this level is to compete with that old power layer by networking with those in the same position. Building loyalties that later on can break your neck the same way as false affiliations in a corporate career can. But at least you made it outside of the industry and your peer network will be global and corporate/finance-ladden.

Consulting career – Pattern spotting

A consultant might not be a good deal maker such as a banker, and not an expert in his industry such as a corporate ladder individual. A consultant is a political maverick, with a strong focus on either a specialization or general frameworks, an salt grain of sales talent and most of all a pattern recognizer: someone that knows how culture and uniquenesses of firms in industries and industries affect performance and what it takes to use these uniquenesses to increase performance. And he knows ideally how to execute on opportunities based on these aspects.

So how does this career progress?

At the basics level you start learning frameworks and how to communicate complex things in a simple and understandable and very polished level. You become a sales person by being highly polished, being able to bullshit yourself through situations by assertiveness and politics and you quickly pick up the political environment you are sitting in. Who can you trust and who is especially not trustworthy and you enemy, whose interests are you serving and whose interests are you hurting, how do you manage information, time, visibility, actions. What patterns exist to solve the issue in various difficult situation. You learn on the ground running how to understand culture and politics in the environment, how things are done, who talks to whom and about what and you learn to observe. In this process, you learn when to engage and when not, where to engage and where not, what levels of secrecy you need, when you need to use which behavioural strategy to get what you want. And how to overall get along with all sorts of people that do not want to get along with you and how you even befriend them.

In this process, you already start to understand patterns. Why are things bad? How could you use your people skills to make them a bit better? What impact on the top and bottom line could this have for your consulting firm and the advised client company. Where are strengths and weaknesses here?

On the next level, let’s call it a mid- to senior Consultant, you already know how to steer this environment and get the results you want. You understand exactly why things are the way they are, how to effectuate change and what impact it has and how you use this impact estimation to bring everyone on board. You might even start to learn how to employ a team of others that are similarly suited in this to increase the performance of your team which is a mix of increasing billable hours – taking it slow – while retaining client satisfaction and recurring projects – while having a defensible argument on the positive impact if the success is challanged and how to use your entire presence at the firm to build your network to later on generate new contracts. In that process, you also know the budgets of your clients, the decision makers and interests in the company that make a consulting business flourish and how to use all this to decide on how much you should work towards fixing or even worsening things to retain clients.

As you now progres to the manager level, you have mastered all that and learned how to build your client network fairly well. You now optimize your ability to allocate resources to the client that leads to good packages for your firm that also further your standing within the firm among senior partners. You know who to make and break from the junior side, you have a clear brand in the industry you operate in that gives you the leverage over clients and your internal senior stakeholders and gives you the power to curtial your teams that maximize your income/bonus, client success, company success and your strategic objectives in this environments. Whether you want to become a partner, move to a client company or want to start your own practice.

As you are still travelling a lot, family organization and having a healthy and happy life overall is another tasks that is hardest in this industry, as you are mostly unlocal, the localities you visit aren’t cool or interesting and you must steadily fight the idea of your being completely pathetic in everyones eyes. Something that hardly comes off that hard in another industry.

As a manager, you also have to start building sales and landing huge contracts, bringing in new clients by being referred to new clients by existing clients, or by sharing “deal flow” within your firm or with other firms managers – a strategy that works for the firm, the clients and your bargaining power on income.

Finally become a partner and think about what’s next. Becoming a named partner? Starting an own firm with higher billing rates and lower costs and more profit for you as founder? Or are you entering a vertical and build a new company, start a fund, etc.?

Sample Analysis

Now what to do with such simplistic and idealized career paths? Well, the first question is certainly why individuals fail to reach the expectation of the idealized execpation. Assuming appropriate intrinsic motivation, a lack of awarness of the problem people need to solve on their level is one interesting aspect and asking why they lack the awareness, if they are interested in overcoming this lack and/or if there are factors of intellect, mindset and/or other factors that inhibit is is interesting to ask if you look at those careers.

Another classic and interesting to observe is what people do when they follow a typical pattern Two common patterns are an increase in family orientation and the workaholicism problem. Those that enter the family orientation at some point stop following the career trajectory. They decide they rather capitalize on the existence of the company they are part of. They know others will keep following the trajectory and that it is sufficient for a percentage to follow it – given all companies around the globe follow the same pattern – to sustain the existence and competitiveness of the business. They will eventually despise the behaviour of these individuals whose interest goes against their own, but it allows them to stay on board with sub-optimal performance while the company survival is ensured, thereby providing the security in the job they might need to continue their own choice of career: taking a haircut on promotions and salary increases for the benefit of having time for family and friends. And having the benefit of reducing the complexities around learning, politicing and executing. And thereby also providing cases for turnaround and PE cases where the temporary level of performance is increased by increasing the threat level on job security and getting people back from family mode to performance mode.

The other side of the spectrum would the workaholic, which is putting so much effort into what he at some point thinks is his role and career trajectory that he cuts out his own foundation to perform in the long run – his standing among more senior people who managed to have a social life and hence pity him/her and have less empathic connections and other factors – that he gets a partially conscious and subconscious pressure that negatively blocks the individual which then also has no support network to remove the block and leaves the individual burning energy on the wrong priorities and makes it fail. Again raising the question: What caused it, why does it persist? And if it is a consistent pattern: what is the pro and con of the such an individual. It is obviously harder to manage and steer a workaholic than it is to manage a family type. Mainly, because if a business continues to flourish and is made up of family types, it can increase total effort in times of crisis and has potential for rewarding top performers and has reason to not reward non-top performers without attrition, while a company consisting of workaholics is more likely to decrease performance under increasing pressure and will face more attrition if not giving a hire share of compensation benefits after the crisis, providing more risk of losing good employees and having to increase the cost base long-term after a single potentially short term crisis.

Also, when putting an overly ambitious well-trained consultant on mid level among senior corporate family types, you will ruin company culture if you continue to retain the individual or you will lose a trained employee. Since the individual will use his training ground of politicing and effectuation to annoy his surrounding untill it gets promoted or released from the company. A highly motivated consultant of that type steering a group of workaholics would work out well, on the other side. Having a banker and deal maker doing the same will completely fail at high probability. In both negative examples the big question would be how each individual could be hired for the role.


All that said, this list is not complete. People that hustle their way through life operate on a completely different level. Entrepreneurs operate on a completely different level.

But the complexity and variety of life styles and life choices, at least in my opinion, is highly interesting and creates a lot of material to reason about when thinking about hiring policies and talent management or building great teams for founders. And understanding these career paths is vital for a venture capital firm to fully utilize its network to add value to the portfolio companies.

Hope you enjoyed it. Opinions are my own.

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