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Nearly every day, we are bombarded by allegations of sexual harassment or other types of behavior of questionable integrity.
The result is a war on the character of our society, marked by meaningful debates ranging from whether Vladimir Putin had a hand in impacting the outcome of the U.S. elections to the active stance taken by Gal Gadot to remove Brett Ratner from the production of the Wonder Woman sequel.
As part of that debate, and in the context of such unprecedented social upheaval, I ask myself how I run my own business and lead people — particularly a business in a male-dominated space like the hedge fund industry.
It is easy to be seduced by the self-righteous approach and pronounce judgment against the entire industry. But that would be hypocritical, as my career success has largely been driven by men (and women) who have treated me fairly and have mentored me regardless of my gender or background.
Yet it is also impossible to ignore the very real issue of prejudice because, as a founder, I am in a position of influence in my firm. At Marto, our culture is not yet solidified and is being defined during our growing pains. I specifically aim to create diversity at Marto because based on my 20+ years of empirical experience, I have seen diversity of background lead to diversity of thinking, and to better outcomes. As a result, we have a team that comes from seven different countries with diverse cultural, religious, and ethnic backgrounds. Half of the investment team are women.
There is a cost to diversity. There are more debates, more disagreements, more ruffled feathers in the short run, and a number of ongoing cultural faux pas. Yet I gladly pay that cost, because I believe we have less groupthink — and groupthink is a death sentence in our industry.
One of the challenges of having a diverse team is ensuring that we still create an environment that is truly meritocratic. Frankly, I do not have a foolproof solution to that quandary, but there are a couple of guidelines which do not allow for compromise.
Hire for character — first. I am a sucker for intelligence. I love being surrounded by supersmart and interesting people. I take pride in having smart colleagues, friends, a smart husband, smart kids, and so on. Historically, I have put intelligence as the number one requirement for bringing anyone onto my team or in my circle.
That has led to bringing together outstanding talent, but has also allowed in some bad apples from a character perspective. In a very painful way, I have learned that no level of intelligence can compensate for bad character. Elon Musk, one of the most brilliant innovators and radical thinkers of our time, points out that his biggest mistake has likely been “weighing too much on someone’s talent and not someone’s personality. I think it matters whether someone has a good heart.” Intelligence without character always leads to disaster. Thus, my hiring practices have switched to make good character a quality at the top of my hiring criteria. The character interview is always front-loaded in our process.
Second, even when hiring for character first, it is still important to know how to establish guidelines of behavior. In light of the media coverage of sexual harassment, one of my colleagues recently shared that he is afraid now to say he has professional friends who are women. “Where do you really draw the line?” he questioned. He is a great guy who has both intelligence and character — so if he is perplexed, I am sure there are tons of others who feel the same way and who are confused over where to draw that line.
At a recent industry conference, I was honored to have the opportunity to listen to former President Barack Obama speak. Among other things, he is a role model for me in behaving with integrity when in a position of power. He shared that he spent significant time training his staff at the White House on ethics. Despite all the training, one of the aides asked the former president how one knows if they are crossing the line and engaging in a conflict of interest. The President, tongue firmly in cheek, answered: “If it sounds fun, don’t do it.”
What he meant is that the line (when applying common sense) is pretty clear. So, to my friend, I answered, “The line is simple when dealing with your female friends in business. If you do not want your wife or mother to see it, don’t do it.”
Finally, it is important to support one another along the way. The junior people on the team do not always listen to what we say, but they watch what we do; our culture at Marto is ultimately defined not by the principles I aspire to, but by the worst behavior I will tolerate. At times, I have found myself faced with having to let go a talented and valuable employee who had crossed the line, which then left me wondering how I would manage the workload. The rest of the team stepped up to fill the gap, and together we became more productive.
