When managing your team of traders/PMs, how do you handle the fact you are a player at the same time you are the coach? How do you lead at the same time you manage assets shoulder-to-shoulder with your team? Do you distance yourself and lead “from above” or get closer and reveal your own vulnerability? Mistakes made in your own trades? What level of closeness do you cultivate with team members?
One of the most beneficial factors in a fund’s performance is the individuality present on a team of analysts. Equal importance among a team in the decision making process rids the team of “groupthink” and creates unique perspectives. A team culture where no higher figure is present, creating a lasting impact on confidence in every corner is preferred.
Yes, disagreements are inevitable when making trades, but the morale created when individuals know their role significance allows having faith in another’s perspective. Thus, a fund’s analyst team must have a high level of closeness.
How do you balance the team roles? How much time do you spend on asset and portfolio management versus operational/HR/logistical issues?
Maintaining your ability to keep up with the ever changing markets while reassuring sufficient output from your team must be planned far in advance.
What incentives and bonuses do you use to keep key talent motivated? What kind of parameters do you use when assessing them for promotion/allocation increases/retention? Do you use the same criteria when vetting new hires as well?
A team should be consistently opinionated with honesty between each other so the value that they’re contributing is always evaluated and known to them. The amount of work that is put in by an analyst is always noticed and always recognized.
This brings the feeling of true importance in their presence at a fund. The incentives that are promoted aside from compensation should be, among others, the respect that you always strive to get from each other.
How do you manage the different emotions that come up in individuals and the team itself? Sadness and depression in low times, stress and burnout in intense periods? Do you use incentives, support them personally, or use other resources?
This is a tricky question because emotion has the potential to be one of the most detrimental to a fund’s performance. The key things in avoiding these kinds of situations come down to the attitude of their leaders.
When the going gets tough, the positivity in a team’s ability to rebound from their loss while maintaining rational decision making must be constant, at all costs, moving forward.
How do you specifically manage the top performers? The most ambitious and highest performing individuals usually want unreasonably high rewards, and if they don’t get it they threaten leaving. How do you walk the tightrope between retaining rising stars and giving them what they want?
Some of the best performing hedge funds started in the beginning simply because of their passion for the financial markets. An employee that gives threats to management will always first be dealt with effort in compromising. If management has become aware of their issue, steps will be taken to better meet their expectations.
However, in the case of employee continuing their threats after our compromise, termination is highly probable. A team should always strive to the best of their ability to create an environment where the team itself will strive and have success.
Key Lessons from Michael
- Equal importance in viewpoints. By considering every team member equally important, the group will not as easily fall into groupthink or bias – anyone can intervene and give their honest opinion;
- Constantly evaluate value provided by individual team members – and recognize it. Apart from financial incentives, it’s imperative for each team member to know the impact their work is creating. This creates a culture of mutual respect for other’s quality work;
- Positive leadership in emotional times is key. In situations where there is a high emotional charge, the leader must step up and drive his vision with positivity;