The Case of Howard Investments

Prepared by: Gates Matthew Stoner Copyrighted © 1998

N.B. The case is entirely does not represent a real event.

Howard Investments is a small investments firm in Texas specializing in individual retirement accounts (IRAs). John Howard was a son of an immigrant and became the first person in his family to graduate from college with a degree in finance from UT Austin in 1940. After graduation, he started working at a local investment company before being drafted into the Army for World War II. John returned to the United States after serving with distinction in the European theatre. John then returned to Texas and started his own investment firm with the profits from the war bonds he had purchased before being drafted. Howard Investments celebrated its 50th anniversary in 1996, and in 1998, John celebrated his 80th birthday. John's eldest son, David, has handled the operations of the family business since 1993.

Ray Johnson, a recent honors finance graduate from the UT Austin's School of Business Administration and Public Policy, has been at Howard Investments since September of 1993. Ray has worked closely with David Howard in the individual retirement accounts division since his arrival at Howard Investments. David Howard supervises the individual accounts division and has been a general partner in the firm since his father's retirement. David has worked closely with all the account specialists within the division and has been a mentor for Ray. Ray was the first person David hired after being promoted to partner. After arriving at Howard Investments, Ray was assigned to the Dallas office for training and his first accounts. Ray took over a portfolio of accounts managed by the retiring Maureen Waters.

Ray quickly adapted to the corporate culture of Howard Investments, and to working during the early morning hours before the market opened in New York. He was determined to maintain the professional quality of service clients expected from Howard Investments. While many of his fellow account specialists were successfully completing their assignments with various clients, Ray experienced lots of difficulties learning the ropes.

David had been reviewing Ray's accounts and was concerned about his performance within the division. While David was pleased with Ray's transitioning, he worried about Ray's morale since Ray had not acquired any major clients on his own. Ray had been at the firm for almost three months and his first review was next week. David knew that Ray would be very worried about the review and his performance. David thought the expectation to succeed might be affecting Ray's ability to complete his assignments. David decided it was time for a pep talk with Ray.

David started the meeting by asking Ray to review his own performance since arriving at Howard Investments. Ray turned his head down towards the floor and mentioned his disappointment in his performance so far. As Ray started apologizing, David stopped him mid-sentence saying, "Ray did you know that I was not able to get my own first major client until one year after I started? I was so worried about impressing my father, I was unable to get the job done. My father knew I had the skill and never said a thing. Then one day it just happened, and look, I'm a partner now."

Ray looked up from the floor with amazement upon hearing David's story. David sensed that this was what Ray needed to hear. Together, David and Ray outlined an action plan for the next six months. David outlined some goals for Ray to meet each month, such as expanding his client base with new customers and increasing the value of the portfolio he took over from Ms. Waters. Ray also agreed to maintain open communication with David regarding both his progress and difficulties.

David adjourned the meeting and scheduled Ray's next performance review for the first week of December.