23 SUCCESS IS USUALLY DEPENDENT ON ABILITY
Smith says, ‘To excel in any profession, in which but few arrive at mediocrity, is the most decisive mark of what is called genius or superior talents.’ In his world it wasn’t possible to reach the top of your field without talent. Ability mattered, although it is questionable whether it still does.
Today, people seem more interested in where you went to school than any ability or lack thereof. Progression up the greasy pole of commerce is more down to nepotism and ‘old boy networks’ than talent or genius. Nowhere has this been more devastatingly demonstrated than the City.
DEFINING IDEA…
No amount of ability is of the slightest avail without honour.
~ ANDREW CARNEGIE, INDUSTRIALIST AND PHILANTHROPIST
Michael Sharpe (a pseudonym given by the press to protect his identity) was managing director of one of the largest trading desks in London’s Canary Wharf. In an anonymous interview regarding the impact of the City’s rampant bonus culture, he revealed, ‘I was never under the illusion that I was worth my bonus. Last year [2007] I got $2.3 million, small fry relative to some of my peers, who raked in up to $30 million. But the truth is that any fool could have made money in the market in the past few years. It was easy. You could be mediocre and make millions.’
According to the Centre of Economic and Business Research £7.5 billion was paid out in bonuses across the City in 2007. An estimated 5,000 ‘Sharpes’ received seven figure annual bonuses, and some hedge fund managers regularly banked over £100 million a year.
Smith adds, ‘The overweening conceit which the greater part of men have of their abilities is an ancient evil remarked by the philosophers and moralists of all ages.’ No doubt, Sharpe is one of the few in the City who didn’t believe his own bull***t, but he is certainly rare.
Banking executives, traders and CEOs are never anything more than shepherds of shareholder investment, yet they reap entrepreneurial style rewards without risking any of their own capital. These self-proclaimed ‘Masters of the Universe’ are employees, nothing more, and have never deserved the outrageous remuneration they once enjoyed.
This is a sentiment shared by some surprising people. In April 2008 the Governor of the Bank of England, Mervyn King, attacked the City’s bonus culture, adding that a ‘decade of excessive risk-taking’ paved the way for the financial crisis that began in mid-2007.
King also lamented the bonus culture for causing a brain drain from other parts of the economy. In the US the financial sector also became a powerful magnet for academic talent. In 1970, just 5% of Harvard Business School graduates went into finance. By 2007, a whopping 30% from this prestigious college expected their first job to be in finance, not business.
HERE’S AN IDEA FOR YOU…
Mediocrity married to excessive wealth only ever existed in the finance sector and the current financial crisis will no doubt eliminate that, at least in the short term. Concentrate on excellence in your field and then at least if you do end up making serious money, you will not fall victim to hubris and may sleep soundly in the knowledge that you’re worth it! Focus on improving your knowledge and skill base by learning and practice.