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Author and financial consultant Charles Ellis spoke with Kellogg students April 27 about the common characteristics of great firms. “In each profession, there’s a gold standard firm,” he noted.

Author and financial consultant Charles Ellis spoke with Kellogg students April 27 about the common characteristics of great firms. “In each profession, there’s a gold standard firm,” he noted.

Lessons from America’s top companies

Author and consultant Charles Ellis identifies the qualities of ‘gold-standard firms’

By Rebecca Little

5/2/2011 - Securities firm Goldman Sachs and pioneering hospital Mayo Clinic may not seem to have much in common at first glance.

But financial consultant Charles Ellis says the best professional firms in any discipline share a number of characteristics that make them great.

“In each profession, there’s a gold-standard firm,” Ellis, a former managing partner of financial services firm Greenwich Associates, told Kellogg students in an April 27 talk.

Ellis’s list of the top professional firms includes Goldman Sachs, Mayo Clinic, McKinsey & Company, investment firm Capital Group and law firm Cravath, Swaine and Moore. The list was generated as a result of his lifelong habit of asking every professional contact the same question: What is the best firm in your profession?

Ellis found that people in each profession gave the same answers over and over again.

Successful firms, he said, tend to:
  • Emphasize recruiting. “If you don’t recruit the best people, you cannot have the best firm,” Ellis said. 
  • State a clear, overarching sense of purpose. The values may differ across organizations, but having a clear mission attracts the best people and clients and guides the group, Ellis said. 
  • Prioritize training. Great firms devote time, attention, and resources to training new people and make it a priority among senior people to mentor younger associates. 
  • Allow for innovation. Create an environment that can lead to strategic changes. 
  • Encourage leadership. Create — and entrust — leaders within the organization.

Ellis is the author of 16 books, including The Partnership: The Making of Goldman Sachs. He notes that while Goldman Sachs suffered more than a few public-relations dings during the financial crisis, it is learning from its mistakes. The company is changing how it handles the mortgage industry, improving training within the organization and defining a clear mission statement that establishes that “clients’ interests always come first,” Ellis said.

Only time will tell how Sachs recovers, but Ellis said he’s “hopeful” that the company can make the changes necessary to stay at the top of the professional heap.