I’m not a big business-lunch or -dinner guy, mostly because I value the opportunity for a mental-health break that much more. However, I have found these outings useful for gaining some good insight into the character of a prospective hire, advisor or business partner. In particular, I pay attention to the interactions with the waitstaff. Food-service folks work hard taking orders, delivering meals, refilling water glasses—the least we can do is acknowledge their existence. But you’d be surprised how many can’t be bothered to utter a simple thank-you. Is this the sort of person you’d want to manage the staff you value or to guide you through a complex transaction?
It’s long been my policy to hire only those whose qualifications and character I can directly confirm with someone I trust, plus one degree of separation (in other words, my trusted person’s trusted person). The same goes for engaging advisory and service firms. This concept is known as assignment of credibility, where a reliable third party’s endorsement serves as a proxy for an unknown commodity.
These days, the social-networking sites have gotten in on the act with easily clickable professional endorsements. But is this really the same? I don’t think so, particularly because of the implied expectation of reciprocity between the party doing the recommending and the one being recommended. Like many other things, credibility is subject to supply and demand: Flood the market with it and the price drops.
No one wins when an employee announces his departure and is talked out of it by management. If you were to imagine a cartoon with thought bubbles over each character, the employee’s would read: “If I hadn’t threatened to leave, she’d never have agreed to pay me what I’m worth, or granted me the promotion that I deserved.” The managers would read: “He just held me up for more money (or a promotion). I paid it (or promoted him), but I’ll never trust him again.”
What value is there in subordinates who agree with everything you say? Or a board of directors that strokes your ego instead of challenging your concepts? A leader who is smart enough to realize that he isn’t as smart as he thinks he is, is also smart enough to surround himself with people who know more about what they do than he does.
Epilogue excerpt from Practical Finance: A Straightforward Guide to Personal and Entrepreneurial Finance