A code of conduct - long term greedy.
Jefferies monthly newsletter - a message to employees from CEO Richard Handler and President Brian Friedman:
'Each of us at Jefferies works on the proverbial Wall Street. As active members of this community, we have grown up and been trained to think, act and live in relatively short increments of time. What was today’s P&L? How did our business do this month? How did the firm perform this past quarter? Are bonuses this year going to be good? Does my year-end incentive vest in three or four years? The two of us believe this artificial and short-term mentality is one of the key reasons our industry has suffered such repeated upheaval. In our view, this mindset is also the primary reason why career satisfaction is often low in financial services and why people often earn significant compensation, yet fail to create true wealth.
We discussed this at our recent Leadership Offsite, but it is so important that it is worth sharing with everyone for our collective benefit. Warren Buffett is one of the greatest investors and builders of wealth in history. If you ask him, one of his main reasons for success is his long time-horizon. He likes to buy good businesses attractively, make them better and hold on to them forever.
Now, “forever” is a long time, but we have to start somewhere with our commitment. So what is the right amount of time for someone on Wall Street to commit to her or his job, partners and firm? Our answer is SEVEN YEARS. Why seven? Our method isn’t scientific, but makes sense to us. Ten years seems too long and hard to get one’s head around. Three seems too short, not enough time to get anything significant accomplished. In fact, even five years doesn’t feel like it will consistently get us where we need to be. For better or worse, we would like everyone to contemplate what Jefferies would be like if each of us believed, acted and lived as though we would be partners in building Jefferies for the next seven years.
Please keep in mind that this thought process is not binding on any of you (the two of us feel bound in every way to help lead this firm forward until the day we no longer feel we can or should come to the office, a day we hope is a long, long way off (more than seven years….)). We are also realists and understand things can happen and even the best laid plans are subject to change. We are not talking here about signing your life away or throwing away the keys. We are, however, saying that we would be less troubled by an employee-partner who is with us at Jefferies for only the next 4.3 years, so long as he or she breathed, dreamed and acted like someone who is going to be with us for seven years, versus having someone actually stay with us for the full seven years, but constantly be re-evaluating at every year end whether he or she wants to truly stay. While it might seem like we have it backwards, we strongly believe that we are right because a true seven-year commitment will drastically change everyone’s personal incentive system and we know that the results will improve our firm in a remarkable way.
If you are “all in” and truly act like you believe in your heart that you will be at Jefferies for the next seven years:
1. It is suddenly worth it to you to make the tough long-term decisions about our business and your role. When you are committed to the long term, you will reap the benefits of making the right decisions over a very long period.
2. It is suddenly worth it to you to help us retain other capable people, as well as actively recruit the absolute best and brightest to join us. You will be amortizing the benefits of the extra work that this requires for a very long time.
3. It is now worth it for you to help us weed out the bad apples, and those who are only in it for the short-term. It is always much easier to see the failed logic of short-timers, if your lens is a long-term view.
4. It is now worth it for you to actually become a true mentor of the right people in our firm. When the young analyst who has been working all weekend on the pitch book comes down to the lobby all bleary-eyed from a lack of sleep, you will now suggest they go back upstairs, grab her or his jacket and come to the pitch to meet the client.
5. It is worth it to actually treat your clients as long-term partners and cement the real bond, versus trying to do a transaction and obtain a fee. You will never again see a client as a counterparty, asset, transaction, fee or a trade. They will feel the difference.
6. It will be entirely worth it for you to always give the right advice to our clients, as you too will be living with the results of whatever you are encouraging or executing.
7. It will be worth it to truly invest the time to learn everything you possibly can about the firm and our products, services and geographic reach.
8. It will become worth it for you to truly get to know your co-workers/partners because you will be looking to build our firm together with them for a very long time. None of us will be surprised when long-term thinking and the accompanying behavior makes the sharp elbows or “me” mentality absolutely disappear.
9. It is now worth it for you to make the personal investment to help improve our culture and our brand every day.
10. You are now forced to be truly long-term greedy, which we all know is the only way to truly maximize wealth and personal satisfaction.
The bottom line is this: We are not asking any of you to sign your life away or even to verbally commit to one of us or your manager that you will be at Jefferies for the next seven years. What we are asking is that you commit to yourself that you will breathe, dream, live and act as though you will be at Jefferies for the next seven years. We both believe 100% that this way of living will propel our firm to heights that would never otherwise be attainable. Additionally, this mindset/philosophy will enhance your personal satisfaction, improve your perspective, reduce stress and actually be huge fun. Who knows, you may blink your eyes and find yourself here for 24 or 13 years before you know it. It happened to us.
Let’s have a great February,
Rich and Brian'
image: © ph4mp573r