Eighty percent of your networking will be a waste of time - Guest Comment

4 January 2013

3 minute read

Eighty percent of your networking will be a waste of time - Guest Comment

The Pareto principle, otherwise known as the 80/20 rule, was probably not designed with networking in mind – after all, the Italian mathematician who devised it died in 1923, long before the concept of working a room was invented. Nevertheless, networking fits Pareto’s principle perfectly.

Here’s my point in a nutshell: you can have 1,000 Linkedin connections but only a small minority (maybe 200?) will really go out on a limb for you. They will be there for you when you really need to call in an important favour.

Often, those important favours are to do with the kinds of deals which make or break a banker’s career.

The strongest 20% of your connections will give you a lead over the competition. They will allow you to access privileged information that you might not otherwise have had. It might not be ethical. It might be fair, but all’s fair in love and war.

Such favours come with quid pro quos, of course. No one, not even a close friend, will bend the rules for you without expecting you to reciprocate at some point. But the prospect of a stored favour alone isn’t enough. They also need to know that they can trust you and that your friendship is worth their risk.

That’s why most of the people you might consider to be “contacts” in the loose definition of that word won’t do these things for you. It’s only the ones who feel you’re as invested in them as they are in you who will really help you out.

Don’t neglect nurturing your real network

The danger with ‘modern’ forms of online networking is that they can give you the false impression that you’re nurturing your network – even when you’re not. Simply adding to your connections is not networking. Real networking requires an investment of your time.

I’ve seen this at first hand. A close friend in a mid-ranking position in a private equity firm is always adding to his LinkedIn contacts. He’s also very busy and spends a lot of time travelling. He’s so busy that when a mutual friend of ours (whom we both met on the analyst programme of a major US investment bank) got married, he missed both the stag do and the wedding. Our married friend was so angry that he vowed never to help the prolific online networker out again. Meanwhile, the deal the absentee was working on fell through anyway.

As tempting as it can be to work your fingers to the bone and to take it for granted that friendships will look after themselves, they won’t. Sometimes need to be there for your mates. It might even be the right thing for your career. Remember this as 2013 gets properly underway next week.

Simon Steward is the pseudonym of an author who has worked across a number of investment banking roles and considers himself an expert in careers issues.

AUTHORSimon Steward

Insider Comment

3 comments

Gr
Grigory
10 January 2013
There is a cliche that recruiters pay attention to quantity of contacts in LinkedIn (as a gauge of networking). If networking is really a fake, it still makes sense at least to imitate it.
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an
anonymous
8 January 2013
I think the reaction to the article is actually better than the article itself. I also agree 100% with what
Peter is saying. One good gauge I always use is, does the 'employ them' work up and down. Is the person looking for the job fit in above or below yours. If you are asking someone an old colleague, or University friend to employ you, ask this question first, - would you employ them?
If the answer is positive, then they will probably take you on. If not then dont bother even asking them.
There is so much jealousy and competiition out there, it takes someone of real character and calibre to get their head around doing someone a favour. As Peter says, the networking list is a waste of time. Apart from anything else if you really are good, most people will fear you. As such I do not comply and have always remained true to myself.
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Pe
Peter
7 January 2013
This 20/80% principle is the biggest MBA rubbish around, only idiots believe in it. Wake up, real life is not this simple....
As someone who does Econ PhD work on finding jobs through social networks at a top top top university of the world, I would like to add the following to your 'analysis':
Before you attempt to write an article about network economics and information economics it helps if you read the relevant literature first (not dumbo MBA materials). For example, weak ties are better for job search than strong ties (close friends) (read Montgomery- Strength of Weak Ties).
Finding jobs using your network has not much to do with friendship either. The only factor that matters is whether you are good enough to be recommended by them and the only way they could be sure about it is if they have experience working with you. This is due to information asymmetry (read Akerlof - The Market for Lemons, his Nobel prize winning work).
More than 60% of the people who find jobs through social contacts do so through ex-colleagues, a further 24% finds it through university friends they have studied with (e.g. people who know about your work ethic and your quality as a worker).
Basically, noone wants to recommend and bring in a 'lemon' to his workplace. The best and most helpful contacts were employees inside the firm where the jobseeker ended up. My study used data from the UK banking and finance segment of the labour market. (Hundreds of investment banking and finance professionals filled out our survey.).
Employees know that the performance of people they recommended will affect them (the employee) as well. They will not recommend friends if they don't know for sure whether they are good. It can cost their own jobs. Friendships are valuable, but we are not willing to risk our own livelihood just to help out a friend, especially not in this job market. Reciprocity is less common in banking and finance than in other business areas.
If you want to find a job through your social network, get in touch with your ex-colleagues and university friends. Don't waste time and money on golf clubs, private clubs, parties etc. There are interesting and nice stories floating around about people who found jobs through all sorts of contacts, but on average these are rare compared to the masses of unemployed who find jobs through ex-colleagues and university friends.
While in employment, try to maximise the number of people you work with directly and make a good impression. Individuals who know how great you are as worker are your first class tickets to future jobs. The more first class tickets you have, the more insured your future is.
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