Why greed is not so good

Aug 24, 2009

No movie was better than “Wall Street” at capturing the spirit of the go-go 80s. Michael Douglas played the role of Gordon Gekko, a charismatic “rock star” investment banker who gave a speech on the subject of “why greed is good.” I heard that speech quoted a couple years ago by an investment banker who was giving a talk to a large group of impressionable college students at a dinner for a business plan competition they had all entered. He didn’t know Douglas’ character was a parody. He agreed with Gordon Gekko and encouraged the students to be greedy, i.e., pursue the American Dream of wealth accumulation. I don’t mind saying that this guy’s dumb speech (am I being too harsh?) pretty much got my ire up. Why in the world would anyone tell young people who were thinking that they would like to have their own businesses some day that greed is good? I just didn’t get it! Greed is not rewarded in the business world— certainly not over the long haul. But then again, I have had the privilege of working in an industry that does not reward greedy behavior from firm owners. Forget the moral issues associated with greed and just look at the business implications of it. There is simply no way any design or environmental firm on our The Zweig Letter Hot Firm list would be there if their owners were greedy. You cannot build one of these companies— over the long haul— by being selfish and greedy. In fact, it takes the opposite approach— whether dealing with employees, suppliers, or clients. Greed is not good. In fact, it is the enemy to firm growth. Greedy firm owners will try to get too much from their clients and eventually lose them because of it. I’m talking about nickel-and-diming them to death with extra services charges. Or, simply asking for exorbitant fees to start with because it would be difficult for a long-term client to change providers. Eventually, the clients get fed up and go find a new service provider. And, we all know you have to keep at least 75-80% of your business each year or you won’t be a high-growth company. Greedy firm owners will also try to get too much from their employees so they, personally, can have more for themselves. Whether that means they want to keep salaries too low, have a bonus plan that pays all the profits to themselves, or do not provide a decent benefit package, the end result is the same. When you do that in an industry where good jobs for good people aren’t that hard to find, you lose your people. Everyone knows that continuity of staff is key for any service-providing business. And, you can’t grow if you have high turnover. Greedy firm owners don’t value their subconsultant relationships, either. They beat every supplier up for the last few cents and then take forever to pay. For example, I just heard about a certain architectural firm I won’t name that takes 60 days AFTER they get paid by their clients to pay their subconsultants. That’s outrageous— and greedy. No surprise— they have never made The Zweig Letter Hot Firm List! And, no surprise they have a hard time finding quality subconsultant providers, either. Time to get off my soapbox now. I’ll see you in Hell, Gekko! Originally published 8/24/2009

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Zweig Group, a four-time Inc. 500/5000 honoree, is the premiere authority in AEC management consulting, the go-to source for industry research, and the leading provider of customized learning and training. Zweig Group specializes in four core consulting areas: Talent, Performance, Growth, and Transition, including innovative solutions in mergers and acquisitions, strategic planning, financial management, ownership transition, executive search, business development, valuation, and more. Zweig Group exists to help AEC firms succeed in a competitive marketplace. The firm has offices in Dallas and Fayetteville, Arkansas.