According to a recent Conference Board Report, described in the November 20 edition of the Wall Street Journal, executives are now putting people-issues on the back burner. Top executives' highest concern is excellence in execution, and consistent execution of strategy by top management. While it makes sense that efficiency and flawless execution are front-burner issues, I believe that this is an over-correction that will come back and bite executives once the economy starts to straighten itself out.
Courage to Continue in Tough Times
This morning's San Francisco Chronicle featured a story in remembrance of the Jonestown massacres thirty years ago. In the front page article, Congresswoman Jackie Spier recalls her trip to Jonestown with Congressman Leo Ryan . For the past several weeks, the daily financial news has been grimmer and grimmer. Business leaders are faced with rising costs, uncertain revenue projections, and a shortfall of cash and credit.
Merrill Lynch's Culture of Fear Led to Strangling Tangle
In today's
New York's Times,
Gretchen Morgenson recounts the rise and fall of Merrill Lynch. I read the article and said to myself, eureka, this is a Hush-Hush Tangle! According to my definition, a Hush Hush Tangle occurs when critical information is not shared, and lines of communication are cut off. Everyone knows that there is a problem but no one talks about it. It becomes a tangle because human dynamics are further complicated by a very complex business challenge. Complexity doesn't do justice to the complicated nature of collateralized debt obligations (CDO's). CDO's are a financial product group comprised of derivatives. Merrill Lynch became enchanted with this product and it led to the company's precipitous fall.
According to Morgenson, E. Stanley O'Neal, Merrill's CEO, is described as an autocratic leader. Two of his lieutenants discouraged open communication between the risk management arm and the sales arm. One of the lieutenants was Osman Semerci. Semerci she wrote, "often played the role of tough guy . . . silencing critics who warned about the risks the firm was taking." He also "would chastise traders and other moneymakers who told risk management officials exactly what they were doing." We can only infer that important lines of communication and necessary discussions to determine true risk were cut off. Most likely, not talking about the obvious, unexpected, or anything out of the ordinary became the norm. Some employees described Semerci as intimidating. Like the frog who gets comfortable as the temperature of the lukewarm water rises, Merrill employees no doubt became used to the culture of fear and didn't speak up.
