You won’t get a lot of management tips in this space, because I’m a lousy manager. (Well, one tip: be sure the withholding from your employees’ wages gets to the IRS on time. Oops.)
But I’m on a plane from Jackson Hole, Wyoming, where I was the only human within 500 miles in a blue blazer carrying a loose-leaf binder — everyone else was in a North Slope something or other, carrying ski poles or antlers — and I learned something that may be old hat to you but made my eyes widen. (“Why didn’t I think of that?”)
Have you any idea how geeky it feels to walk into the world famous Cowboy Bar in a blue blazer? But this has nothing to do with what I learned.
I was there to interview Foster Friess (pronounced “freeze”), who manages the highly successful $11 billion Brandywine Fund. (It has a $25,000 minimum and very high turnover, so it’s out of the reach of small investors and — in my view — poorly suited to taxable accounts despite its remarkable record. But Foster sure has done well for the Nobel Foundation, among others. If you should ever win the Peace Prize, you’ll be getting a good deal more dough than you would have without him.)
Foster is a piece of work, in the best sense of the phrase, but that, too, is another story, which curious readers will have the opportunity to watch on Public Television in the fall. To be called BEYOND WALL STREET: The Art of Investing, it is being directed by the same fellow who directed CIVILIZATION (not to put the two undertakings in exactly the same league).
Anyway — leaving Foster’s investment insights ’til then — I wanted to share one of his management innovations. He has about 60 employees in Jackson, in Delaware, and in Phoenix. They tend to be highly competitive people. One we filmed is a top-notch stockpicker Monday through Friday and the world’s fourth ranked stunt pilot on weekends. She’s amazing. Another is a downhill racer. Yet Foster wants them all to be a happy family and to share their insights and ideas.
How do you get that to happen?
One way he does it is through administration of the bonus pool. The pool — which can in some years amount to 400% or more of base pay, so it’s taken very seriously — isn’t divvied up by Foster. It’s divvied up by the employees themselves. At the end of the year, Foster asks each to fill out a form showing how THEY would split the pie (themselves excluded). He then more or less averages their responses.
Think about it. All year long you know that your bonus — which can be the bulk of your pay — will be decided by your colleagues. How likely are you to be backstabbing or sarcastic? How likely are you to want to go out of your way to be helpful and constructive?
I’m no management guru, but it seems to me this scheme (which includes everyone from the receptionist up to the most senior people) sends incentives that are pretty much win-win.
Any comments from those of you who know a lot more about managing, and being managed, than me?
Quote of the Day
In 1992, more was spent on legal fees in California [$16.3 billion] than on auto repairs, funerals, tanning salons, one-hour photo finishing, videotape rentals, detectives and armored car guards, bug exterminators, laundry, haircuts, day care, shoe repairs and septic tank cleaning combined.~Census Bureau survey, as reported in the LA Times
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