Double Journey

I’m usually in interview loops for most of the management positions in the company.  I believe in giving a simple “Hire/No Hire”.  Most people in interview feedback are quite wishy washy.  They say things that are middle of the road without truly committing one way or the other.

But I learned early on that you have to give a solid yes or no on any interview.  When in doubt, you give a no.  This comes from the simple fact that it is much better to pass on the right person than it is to hire the wrong person.  Getting rid of the wrong hire can be really difficult.  So when it doubt, better to just pass on the person.   Now I’m not sure if it is the quality of candidates we are getting or if my standards are too high, but I have not been giving very many “Hires” lately.  Perhaps it is because I’m interviewing for mostly higher level management position.  These are the positions with the most leverage in the company.  A wrong hire here can affect dozens of people and really affect the profitability of the company.  Given that, I’m extremely reluctant to hire the wrong person.  But am I being too difficult.  If I’m giving out almost no “hires” are my standards just too high?

Wilbur Ross, a famous investor best known for buying companies in distressed industries, proclaimed that he is looking to buy a bank.  He declared,
“We will end up with a bank, there is no doubt about that.”   He goes on to state that he actually wanted to buy a bank sometime last year but the government’s TARP plan put a hold on that.

Read that line again.  Because the government intervened, a private investor decided not to invest.  I actually blogged about this a few weeks ago when I talked about the unintended consequences the government was creating with its bailout plan.   And now here is proof that this is exactly what is going on.  Because the government is now in the business of investing in private institutions, private investors are holding back their own plans to do the same thing.  Can you blame them?  Government interaction does a number of things.

• Makes equities more expensive because government is propping the company up
• Subordinates your own investment since the government is mandating first rights to any liquidation
• Makes it near impossible to really value companies because you are not sure what the government might do next

To make matters worse, the government is putting YOUR tax dollars at risk here when others were more than happy to take on the risk instead. I do not really care if someone like Wilbur Ross loses his shirt when a bank collapses. I care very much when my the government loses my tax dollars. Even if these “investments” pay off for the tax payer, I think the government was silly to take on the risk because it could just as easily go the other way.

Of course it is just going to get worse.  The government is going to start investing in more programs far more reaching than just the banking sector.  Will it crowd out private investors?  Of course it will.  The only real question is, by how much?