One summer during college I interned with a private accounting firm doing IT advisory and audit work. They flew all the interns to Orlando, FL, put us up in the Ritz Carlton, took us to Disney World, and rented out Universal Studios. It was impressive.
After school I took a full-time position at a publically-traded IT consulting company. The company had been a private partnership for decades but IPO’d in the early 2000’s. The differences between private and public were immediately noticeable. Our new joiner training took place at a large training facility an hour west of Chicago. The rooms were tiny and dated. There were no special trips or perks (although the food was excellent). SWAG was kept to a minimum.
I chose to work for the public company because their approach to consulting resonated with me. Rather than leave behind a Powerpoint slide deck, this company gave recommendations and then helped turn those recommendations into reality. I wanted to build something, not just recommend something.
Since my initial 4-week orientation my formal training has been limited – only three weeks over the course of six years. I decided I was overdue and registered for two different courses. Shortly after registering I received cancellation notices from both courses with no accompanying explanation. I sent multiple emails and was finally informed that all training within my group had been cancelled in order to increase chargeability and hit financial targets for the quarter.
I was shocked that leadership within the company had fallen into such short-term thinking. “Let me cancel all training so I can hit a quarterly target”. We are a professional services company. Our only assets are our people. Training is the equivalent of R&D. You don’t skip training or R&D when you’re thinking long-term.
Quarterly earnings passed and I was able to reschedule and attend one training. The second training has not been offered again. I feel very disquieted by the short-sighted decision making displayed by leadership. I’m not ignorant of the reasoning behind it, and I fully acknowledge that strong company performance is good for the individual employee. But the message I heard loud and clear was “Wall Street is more important than you.”
Public companies make far too many decisions with the motive of keeping Wall Street happy. John Kay, a visiting professor at the London School of Economics, wrote an interesting book called Obliquity . The main argument of the book is that our goals are best achieved indirectly. A company will not make a lot of money because they have the goal of making a lot of money. Money is a byproduct of other goals. Walmart’s goal is to represent the “every man” and have low prices. Google’s goal is to organize the world’s information. Apple’s goal is to build beautiful products. Tesla’s goal is to bring electric cars into the mainstream in a beautiful way. Virgin Galactic’s goal is to make space travel available to everyone.
Kay advises that when a company starts saying their goal is to “maximize shareholder value”, it’s a good time to sell your shares. Those companies don’t realize that the best way to “maximize shareholder value” is to forget about the shareholders and focus on the customers and product. I’m fascinated by Jeff Bezos and Amazon, who doesn’t play the quarterly Wall Street game. That is how a public company should be run. Read more here.