Money and power have always been the most prominent, and perhaps only, way Wall Street has ever valued success. But could integrity finally be playing a role in how titans value their self worth?
I think so.
I was fortunate enough to join the hedge fund industry in the late 1990s when it was small enough to draw relatively little attention. When the Internet bubble burst and credit became a "free for all," a laissez-faire government attitude took center stage and the industry boomed, as did its profits and the professionals who rushed into it like bees to honey.
By all accounts, and speaking from a biased point of view, the hedge fund industry was perhaps the most upstanding of its fellow counterparts in the banks and on Wall Street. Investors were careful to treat all their clients equally and respected the "honor code" that existed among them for quite some time.
Not much later, these experienced fund managers handed the mantle to a new batch of newly independent investors whose sole focus appeared to preserve their simple (yet costly) existence. Flamboyant hedge fund managers become celebrities by parading before the press and New York social circles and several forms of exotic, marginal businesses from specialized recruiting to professional counseling to every form of research and middle man sprung up to meet any need the hedge fund industry could possibly want or need.
Since the industry was still unregulated, almost everyone did as they pleased. To be fair, many adhered to the call to place their clients' interests first and preferred to accumulate assets under management (and the modest management fee that came with it) than keep a smaller fund with a generous incentive fee that was collected annually off of unrealized net profits. However, the majority of hedge fund managers did both (why not?). Life couldn't be better. The two metrics of success -- money and power -- were at their utmost heights.
Then came the fall of 2008 and a quiet-yet deafening paranoia and fear swept the Industry. You could feel Darwinism in the air. Managers were eyeing their employees -- what exactly did some of these people do and how did they get away with underperforming for so long? They made headcount calculations of those that needed to be let go and justifying their own jobs by immediately pointing blame anywhere but themselves. Peers who once worked side-by-side and shared all their personal and professional experiences together turned on each other to ensure their own success. Insecurity reigned supreme.
The financial crisis brought the out the worst in everyone's persona. But on Main Street, it was a struggle for actual survival, for keeping a home, providing for families. In the hedge fund world, it was no longer just about survival of the fittest, but a mission to stop at nothing, so that you would be one of the few left standing. The reason is simple. The lifestyle created, maintained and exaggerated in the days when money flowed like water -- the private jets, multiple homes, expensive tuitions and exotic vacations -- was not going to be let go of without a fight to the death. Havoc and competition reigned, usually not overtly, but in the subconscious, manifesting itself in malice and fear. I like to refer to it as "Darwinism on steroids."
Will this new metric of professional integrity start factoring into the evaluation of Wall Street executives and impact the traditional culture of "make anything happen, at any cost"? Will meritocracy (work ethic, competency, productivity and yes, integrity) finally trump politics and stereotypes and receive the rewards, financial, promotional and otherwise, that it deserves?
Post-2008, accountability for the losses the banks, nations and ordinary citizens suffered was demanded by all, and the regulators were finally forced to deal with the public outcry. It was then that this third metric was born. All of the sudden, money and power, now severely reduced to cut margins and because of severe losses, were beginning to be overshadowed by professional reputation. Those who were suspected of insider trading, fraud or frankly, anything remotely unbecoming were investigated and ultimately questioned, charged or released. All the money and power in the world couldn't measure one's success, but one's conduct and reputation could. That third metric is now equal if not more important than money and power, it is the future of the hedge fund industry, and it is making headlines every single day.
This post is part of a series produced by The Huffington Post in conjunction with our women's conference, "The Third Metric: Redefining Success Beyond Money & Power," which took place in New York on June 6, 2013. To read all of the posts in the series and learn more about the conference, click here. Join the conversation on Twitter #ThirdMetric.