Archive for the ‘credentialism’ Category

Why not Implicit Minimum Return for investors?

February 2, 2009


Implicit minimum bonus? (to use an expression that Basab Pradhan acknowledges if not defends) Huh, that sounds like a boy thing. Mine’s bigger than yours sort of `entitlement’…Why do CEOs need extravagant perks even when they are firing staff and pleading for taxpayer bailouts? Can it be shrugged off as weird DNA makeup?

It takes arrogance and narcissism to become leader of a Fortune 500 company. Those same traits, however, have become their undoing during the deepest recession in decades.

How about the `ticket items’ mortgages, kids’ schools etc. of the staff that get fired by the dour suits that mess up business strategies?  I think their sense of `entitlements’  should be perched a few notches higher because they likely don’t have much `retained earnings’ (excesses of yesteryears) to fall back on while they sit at home after having lost their jobs.


And then, why not Implicit Minimum Return for investors?  How many C-level executives will brave that diligence?


That’s a tangent the Wall Street “High Performers” never recognize.  It suits them not to.  It kind of gets wired into their DNA.  But you can never blame the suits’ instincts alone for being so haughty. When they arrive at that position, they have all kinds of toadies toasting them what geniuses they are, and then of course they begin to feel their lifelong feelings of self-importance have been confirmed. There begins the grand ride of delusion, taking credit for pure serendipity (or ancestral good karma) driven good years propelled by overall good sentiment, supported by acquiescent or similarly deluding credit rating agencies stamping away `AAA’ even on toilet paper coming out of a certain Bear Stearns masking their near absent appraisal criteria and redundant evaluation metrics.


For such muck up, the Wall Street suits express no sense of remorse to the investors/other stakeholders they wronged but have the gumption to stand up and claim Implicit Minimum Bonus.  Well the show can go on until some day soon a bunch of harried bondholders will suddenly get physically generous and allow their thighs to be used as ear muffs for the Wall Street bonus claimant.

“Who will take the risks?”

August 31, 2008


Lately I got to read quite some stuff on credentialism.  I haven’t analyzed it enough to form an opinion though I firmly believe in my ability to influence, if not control, outcomes. Odds might be long, but they are rarely insuperable. The folklore of individual successes in business already confirms my thesis.  But I do have a great respect for meritocracy – that advocates crowning anyone that truly deserves – than credentialism.


Way back in 2005, David W Boles referred it as phony-on-the-surface and irresistible-in-the-depths separation of people by paper (degrees).


How about validation by the market place? Something like a true blue hands-on guy that boxed every norm and broke every tradition that beat all others to the top on just raw nerve and imagination; I would love those types.  They are so seeped in and when they start to tell, it hits you hard and shakes you up. You get your comeuppance.


But the system always demands more to keep out those it wishes to not welcome. As more and more people challenge the ivory tower power base with higher base degrees, the bar of perceived excellence gets higher and higher, just to keep the self-proclaimed majority elite in power; and that is accomplished by requiring more and more layers of bullshit to protect a process that is already overrun by pomposity and downward-nose-looking.


I see a lot of that in Investment banks and Private Equity funds. They recruit people that have expensive foreign degrees or MBAs with an added engineering background thrown in.  A few years with Wall Street I-Banks, you are THE guy.  Your level of awareness of local market systems, business laws, entrepreneurial culture and traditions hardly matter. You don’t need go far to seek why there are fewer multi-bagger exits in proportion to the sums invested. These are the guys that manufacture subprime crisis, invent alphabet soup like ABS, CDO, CLO that eventually screw up a vibrant market, bring out IPOs and later pressurize the issuer to withdraw when the sentiment thaws. When the market is at its peak, they open their treasure chests, buy minority stakes at mind boggling valuations.  Later when it slumps and valuations look realistic, they shirk even from their underwriting obligations and do fewer deals.  Small businesses like mine are beginning to feel the chill because of their frostiness.  We drive deals to these icemen and they sleep over it for weeks leaving us to face clients with no firm answers.


Soon they too will get their comeuppance. As James Fallows asked, “If everyone has the tenure and security that come with professional status, who will take the risks?”