Of Work Ethic and Private Equity

For the past 15 years, I’ve had a running conversation with a friend of mine named Mary, over the issue of work ethic. It was originally derived from my time as a corps member with City Year (an urban peace corps of sorts), where we were paid $125 per week, plus a $50 bi-weekly bonus if we were on-time and properly uniformed each morning. Both rules were very strict. I once lost my bonus for forgetting to wear the correct belt, while someone else lost out after his train was delayed by someone jumping in front of it.

For me, the loss of $50 was devastating. I had already given up movies, restaurants and most anything else that didn’t include the word “free” in front of it. But that extra $50 was really needed for food, rent and utilities. My roommates managed to float me, but it was a tough enough month that I still remember it 15 years later.

What amazed me, though, was that a handful of my fellow corps members were regularly late or wrongly-dressed. Most of them weren’t bunking with their parents, but instead were living on their own (like me) and came from the inner city communities in which we worked (not like me). One of them was a teammate of mine named Mike, who I began calling at 6:30 each morning to make sure he’d arrive on time. Most of the time he thanked me, but sometimes he just hung up. Mike rarely earned his $50, and ultimately left the program.

To me, it was incomprehensible. Mike, for example, worked extremely hard. So how could it be a lack of work ethic? I also knew he needed the cash, so why was the financial incentive not adequately compelling?

This logical fissure was the nature of my talks with Mary, who would actually join City Year five years after I left. She had grown up in very difficult circumstances, and argued that work ethic was pure conditioning. “If you see your parents or friend’s parents eave for work at the same time each morning, then you’ll probably do the same,” she’d say. “It’s not conscious, and it’s divorced from the money.”

The conversations obviously were more complex than that, but the gist was my bewilderment and Mary’s understanding. What we both agreed, however, was that City Year was poorer for an Americorps rule banning corps members from spending three weeks working at a for-profit externship. It had been part of the program before accepting federal funds, and provided a corps members with certain white collar experience that many of them would not have had otherwise.

“Ok Dan,” says rhetorical reader. “Why on earth are you discussing this in a private equity column?”

Well, dear reader, it’s a very long way of giving recognition to Leonard Harlan and the rest of his team at mid-market buyout firm Castle Harlan. A few years back, Harlan participated in the Principal for a Day program at a high school in the South Bronx. Soon after, he offered after-school jobs to a bunch of that school’s students. Several afternoons per week, they’d head downtown to the buyout shop’s office.

Part of it, of course, was to provide a paycheck, but Harlan says it was also about providing an otherwise-unavailable framework of office life. He understood what Mary had been trying to tell me, and put it into practice. It’s one of those small things that could have extraordinary ripple effects.

“My experience with that high school and with [a related financial literacy/experience program for middle schoolers] has been one of the most rewarding of my life,” Harlan says. “I’m glad that we have had the ability to do something like this.”

So am I Leonard, and I hope that some other firms take your lead. With great wealth comes great opportunity…