Due Diligence: Critical for Investment Management (and Building Your Career, Too)

stone_house_-_holly_h_miller_-_photo11By Melissa J. Anderson (New York City)

“The difference between a million dollar account and a hundred million dollar account is a couple of zeros – and a lot of time,” said Holly Miller, Partner at Stone House Consulting, LLC. Miller has a passion for due diligence. Benchmarking and record-keeping, she says, are going to be critical for the success of investment management firms moving forward.

“Due diligence is a big, hot topic, particularly since we all found out about Bernie [Madoff].” she said. “If you look at the investment management industry, we have a poor track record for tracking metrics – metrics on trades per day, orders, how many portfolios, fail rates, etc. …The industry needs to do a better job of benchmarking. What do things cost? What does it take to support the business?”

She continued, “In the past we were able to ignore this because of the high profit margins. But those days are gone. We, as a business, need to do a better job – and benchmarking has become more critical.”

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Reframing Flexwork for the New Economy

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iStock_000004944174XSmallBy Melissa J. Anderson (New York City)

Having weathered a recession that revealed inefficiencies, carelessness, and just plain antiquated business practices, companies are facing new demands from shareholders, employees, and customers alike: increased productivity, accountability, and sustainability.

And the solution to these demands may be an idea that has, for years, been relegated to the HR department or affinity groups, marked a “woman’s issue” and not taken seriously in the boardroom.

Judith Cherry, Head of Research and Insight at the UK-based organization Opportunity Now and author of the report “Out of Office: Solutions for an Agile Future” [PDF] explained, “We’re moving the debate away from flexwork – because we’ve come to the understanding that we’re all flex workers. What we’re doing now is “agile working.”

The distinction is important, she said, because agile working is about more than working from home, or using mobile devices. It’s a whole new system of management.

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Changing the Game: Ending the War on Moms

iStock_000006061643XSmallBy Tina Vasquez (Los Angeles)

In her book The War on Moms: On Life in a Family-Unfriendly Nation, author Sharon Lerner is spot-on when she writes, “To say there is a sinister plot against American women is both overblown and exactly right.” She was also right in her astute observation that giving birth is the new financial turning point for many women.

Lerner details the plight of American professional women; working mothers exhausted from their countless obligations at work and home, their lack of options, flexibility, and assistance. The result of years of apathy on behalf of employers – and the country as a whole – has resulted in what Lerner refers to as the “maxed-out generation,” which she characterizes as an “epidemic of exhaustion sweeping through cubicles, cluttered kitchens, and child-care centers around the country.”

According to the author, the things that are really bringing American women down are the things they lack: guaranteed paid maternity leave; decent, affordable child care; health coverage; and good, flexible work options. These things they do not have, but so desperately need, are always in the back of their minds as they also continue to play the role of primary care taker to their children.

“The idea of super moms is a construct created by the media,” Lerner said. “There’s no such thing, it’s something we project on to women. Women [leaders] never say, ‘I’m a super mom.’ We turn them into super moms, but it’s impossible to do everything.”

Despite the challenges, says Lerner, there is reason to be optimistic about the future of motherhood in America.

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Voice of Experience: Michelle Clayman, CFA, Founder, Managing Partner & Chief Investment Officer, New Amsterdam Partners LLC

N_MClaymanBy Melissa J. Anderson (New York City)

“I was born and raised in England, and did my undergraduate degree at Oxford,” began Michelle Clayman, CFA, Founder, Managing Partner, and Chief Investment Officer of New Amsterdam Partners. After graduating, Clayman took a job in commercial banking with Bank of America in London for two years, before heading to California to attend Stanford Business School.

“After business school,” she said, “I took a job at Salomon Brothers in sales and trading, and then, after a few months, was asked to go into a new division called quantitative equity research, and I was there for six and a half years.”

“Then I decided to start my own company – and the rest is history,” she continued.

Clayman has built her career and her company on the value of performance-based quantitative metrics. And she believes performance-based careers, like those in investment management, are more amenable to women. Because they’re based on results, she said, there’s less room for gender bias.

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In Case You Missed It: Business News Round-Up

Beth 005Contributed by Beth Collinge of CTG – a division of ILX Group plc.

The US this week passed a sweeping overhaul of bank regulation, while the EU is in the process of finalising similar legislation. Goldman Sachs settled its lawsuit with the SEC, paying the largest-ever penalty by a Wall Street firm to the Commission. BP’s shares are up, after reporting that it has successfully capped the damaged Gulf well.

Economic Backdrop

  • Markets in the US weakened during last week, as a series of disappointing data on retail sales and consumer confidence coincided with the release of the minutes of the Federal Reserve’s July policy meeting, at which it lowered growth forecasts and hinted at concerns that the threat of deflation might be rising. The DJIA ended over 100 points lower. The yield on the US 10-year Treasury sank back below 3 per cent on Friday.
  • In the currency markets, the dollar dropped to a 10-week low against the euro, as the single currency went above $1.30 for the first time in two months: the euro also advanced against the pound.

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Giving Top Brass a Hard Time: A Brief History of Women in Corporate Governance

Black business woman in conference with associatesContributed by Jilaine Hummel Bauer, Bauer Consulting

If you read the news story run under the headline, “Woman of Steel Gives Top Brass a Hard Time,” about an activist shareholder who objected to executive compensation and introduced a “say on pay” proposal at an annual shareholders meeting of a large, prominent U.S. public company, you might think the story had run yesterday. Would you believe the story actually ran in Life Magazine back in March 1950?

Wilma Soss, the story’s protagonist, introduced the proposal at a U.S. Steel shareholder meeting. Founder of The Federation of Women Shareholders of America, Ms. Soss espoused the goal – now broadly supported not only by investors, but also by a growing number of companies, governments and regulators around the world – to increase the gender diversity of corporate boards.

Her campaign literature featured Matisse’s painting Girl Asleep with the caption, “AWAKE! You own 70% of U.S. Private Wealth!” Frustrated by company management’s “old fashioned thinking,” she reportedly threatened to appear at a future shareholders’ meeting in a bathing suit – circa 1902!

Many who support “say on pay” shareholder proposals and increased board diversity will relate to Ms. Soss’ frustration, and some might even consider the tactics she threatened at future shareholder meetings and Congressional hearings. However, there are events –albeit not as eye catching – from 1950 to present day that are notable for their effect on corporate governance in the United States today.

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Getting the Right People Around the Table

iStock_000001548910XSmallBy Cleo Thompson (London), founder of The Gender Blog

Last year, The Glass Hammer covered IDDAS’s report on the female perspective on board effectiveness, in which the London based provider of board level coaching and leadership development services interviewed some of the most senior women in British business (female board members of FTSE 350 companies) and took their views from the top.

This year, in the wake of the 2009 Walker report which examines UK corporate governance and makes suggestions as to how to improve board effectiveness, the IDDAS team have gone to the top of the tree and interviewed 21 FTSE 350 and large companies chairmen, asking them about the skills required of a chairman, their relationship with the CEO and the key issues that need to be addressed in running a board.

The survey – “Board Dynamics: The Chairman’s Perspective” – was launched in London last week and investigates key corporate governance issues, including diversity, succession planning and board assessment.

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Is Sexual Harassment on the Decline in the Finance Industry?

iStock_000000227687XSmallBy Tina Vasquez (Los Angeles)

The easy answer is yes and no. According to recent statistics compiled by the U.S. Equal Employment Opportunity Commission (EEOC) for FINS, a Wall Street Journal offshoot, sexual harassment charges in finance, insurance, and real estate have decreased by roughly half from 287 to 119 over a four year span beginning in 2005. Over the same period, sexual harassment charges across all industries remained relatively flat, hovering around 13,000 nationwide. This sounds like fantastic news for women in finance, but as we all know numbers can be deceiving.

According to the EEOC’s Lyn McDermott, “Like victims of other forms of discrimination, many victims of harassment do not file charges,” She continued, “On the other hand, not all charges are meritorious. The merit factor rate is a closer measure of the percentage of meritorious claims filed with EEOC because it represents all charge resolutions in which the charging party received a benefit. Merit factors include negotiated settlements (including mediation), conciliations, and withdrawals where the parties have reached a private settlement. The merit factor rate for sexual harassment charges in the past five years has ranged between 28.6 and 30.3 percent.”

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Ask-A-Career-Coach: How Do You Manage Your Job and Your Career?

jobsearchContributed by Caroline Ceniza-Levine of SixFigureStart™

Your day-to-day job is not the same as your career. Your job is but a subset, and your career is made up of each successive job, as well as your accomplishments, publications, keynotes, branding and networks. Therefore, doing well, even spectacularly well, in your current role, is helpful to your career but not sufficient. With roles becoming more broadly defined and communication (and accountability) running 24/7, how do you carve time out of your day-to-day for not just your job but also your career?

Use parallel processing. I first mentioned parallel processing in my June 2 Ask A Coach, when I talked about balancing personal and professional goals. In this case, there are also two distinct and separate goals – your job and your career. You need different time, focus and activity on each, and the ability to maintain each in tandem with the other. Recognize this, accept it and schedule accordingly.

Use your job as a springboard for career planning. Collect testimonials and references from your current work. Join relevant trade associations that will help get your job done but also provide a broader network outside your immediate role. Use insights learned from your current job (nothing confidential, of course) to share with a wider platform via publishing or speaking at conferences.

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Incentivizing the Return to the Office after Childbirth

motherhood penaltyBy Kate McClaskey (New York City)

Being family friendly means more than just offering services to new parents. It means taking investment steps towards providing financial incentives for new parents to return to work – and stay there.

According to the May 2004 Current Population Survey, 27.5 percent of wage and salary workers had flexible work schedules. Too many companies do not realize the benefits of having such an option. A recent study from the Cranfield School of Management in the United Kingdom found that employees with flexible schedules tend to work more intensely and have higher job satisfaction than their coworkers with more rigid hours. Those with more flexible hours also had lower stress levels and greater company loyalty.

The average unpaid maternity and paternity leave in the United States is anywhere from eight to 12 weeks. Comparatively, Swedish mothers and fathers can receive 76 weeks between them, and in the UK mothers can receive 39 weeks paid leave and fathers can receive four weeks paid leave. This is important because according to a study published in the Journal of Health Politics, Policy and Law, mothers with more paid time off tend to have less health risks than mothers who don’t.

While smaller companies may not be able to afford to establish and administer family friendly policies, larger ones should realize that the benefits of adopting such practices can outweigh the costs because they can potentially reduce absenteeism, lower turnover, improve employee health and increase productivity.

An ever-increasing number of companies are finding that new moms and dads are demanding more such as longer maternity/paternity leave and flexibility after having or adopting a new child. As the corporate world changes, so does the importance of a family friendly work place. It takes more than just more time to keep moms and dads engaged and content in their new role as employee and parent.

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