Is being nice less efficient?

I work in the fast-paced M&A arena where hundreds of millions of dollars (at times even billions of dollars) are on the table and can be made or lost with one mistake. This often requires very long hours, being at the client's beck and call and very stressful situations. However, everyone in my company typically treats each other with respect. In my mind (and most others'), we are all one team and, though one person ends up making final decisions, all equals who should be treated with respect and dignity.

The clients we work for often have their jobs on the line (or even more, their entire net worth) as they decide whether to continue to pursue an acquisition target based on our analysis and recommendations. As such, they are often under enormous pressure. Specifically, our very large private equity firm clients, where hundreds of high powered wealthy people have trusted the PE firm with investing their money and providing superior returns (often greater than 15 and 20% annually). As a means to incentivize the PE team, most of them have equity in the firm as well and will be handsomely rewarded if the deals they end up closing achieve high returns. And vice versa, of course.

We often spend quite alot of time with our clients, many times in a "war room" at the client or target site with the PE team doing the deal. While it is not immediately apparent who is on the PE team and who is the advisor (as we are all typically 25-40 year old white males, dressed and groomed well), spending 10 minutes in the room would allow a bystander to easily differentiate between the two teams. How? The interaction between members of the PE team is hostile, at best. It is so hierarchical in nature that rarely would you see a lower level team member even addressing his immediate superior. And when superiors (the 30 year old VP who has been in the business 5 years) talk to their juniors, (the 27 year old analyst who just finished his MBA) they are so derogatory, insulting and condescending that I am often embarrassed to be in the same room listening to the discussion. Let me give an example:

I sat in a conference room with 5 other people, 3 on my team and 2 on the PE team as we delivered our report. The senior person on the PE team was making a point about some issue and made a reference to a number provided by the target company. The junior person spoke up and corrected him, as he used the wrong number. The senior guy then got up, without a word, went to the chalk board and drew an organizational chart. He was at the top of the chart, his wife and kids were below him, his dog was below his kids and then he wrote the junior guy's name below the dog. Didn't say another word, sat down and continued the discussion. The point being that this team member/co-worker who had a few years less experience in the industry and in life was lower than a dog. Even though the junior guy was actually right, the senior guy would not stand for such insubordination. Nice eh?

Now it is readily apparent where the culture comes from - from the top. I have watched the very senior executives treat everyone below them like dirt as well. And of course once someone gets promoted, they treat those below them like shit because that is how they were treated. I was on a conference call on a large automotive transaction with 278 other professionals on the call. I bill $540 per hour. If the others averaged only $400 an hour, the hour long phone call cost the client $111,000. But I digress....the senior guy was telling everyone how important it was to work their asses off the next few days before the deal closed. And he didn't say it nicely or implore people to finish the deal in a strong performance with great results, such as they have done so far. He said, on Monday, "The deal is supposed to close Thursday. If anybody so much as leaves their desk to sleep, shit or eat in the next 72 hours, you are fired. If you are not available when I look for you, you will be dismissed immediately."

So what do I take from all this? The fact is that the guys in the PE firms make alot more money than anybody below partner in our firm. Many of the 27-30 year olds walk home with $1 million a year due to strong performance of acquisitions. So they tolerate the long hours and working environment. And then they leave after several years and become one of those "command and control" leaders that existed in the 50s-80s that have taken a back seat to leaders promoting a healthy work/life balance.

However, the environment I work in and relationships with my co-workers are excellent. We travel together, eat together and spend time together with our families outside of work as we enjoy each other so much. The collegiate atmosphere fosters learning, camaraderie and harmonious relations, teaching our future leaders and partners the importance of working together with positive attitudes of respect. We always get our work done and are successful in meeting our clients' needs. And our people walk away happy to be doing what they are doing and look forward to coming to work the next day. I can't help feeling that an enormous amount of time and intelligence is wasted in the PE firms due to resentment towards ones' peers and not speaking up for fear of being derided and ridiculed, as well as the creativity that is stifled over the careers of these people as they become leaders of large multinational firms.