Four Reflective Commentaries on Leadership – Part 1

I ran across four reflective commentaries over the last few days. The subject is business leadership. The focus is primarily on Banking Leadership, but it doesn’t have to. Banking is just so fascinating because bankers have always been powerful and will probably always be powerful. With that in mind, here are two summaries, with the remaining two coming soon.

Our Risk, Wall Street’s Reward by William Cohan in the New York Times (11/16/08)
This Op-Ed piece is from the point of view of an insider – someone who lived the world of an investment banker. Cohan worked for an investment bank that just recently went public and sold shares. He articulates the ramifications of this decision and the breakdown of some underlining tenets of investment banking. One is trust. Another is reputation. And another still is vision. I love this yester-year quote “The beauty of the partnership agreement was the collective liability clause it contained.” Liability and accountability became a mirage. These two excerpts either present the start to a compensation shift or a temporary compliant.

There has never been a better moment to correct this deeply flawed
system. For starters, where is it written in stone that bankers and
traders have to be paid millions of dollars for their services? The
gibberish about needing to pay that much just to keep superstars from
fleeing to private-equity firms or hedge funds is just another Wall
Street myth. The truth is most of them are lucky to have a job at all
and they know it.


Instead of fretting over government intrusiveness, titans like Jamie
Dimon of JPMorgan Chase, Ken Lewis of Bank of America, Lloyd Blankfein
of Goldman Sachs and John Mack of Morgan Stanley should be dancing a
jig that Mr. Waxman and Mr. Cuomo have given them cover to make the one
change on Wall Street that would help their bottom lines and prevent
the tragic cycle of lurching from one financial crisis to another. But
if they don’t, then the new secretary of the Treasury should help them
see the light.

Meet Your New Leader by Jennifer Reingold of Fortune.com (11/14/08)
Reingold points out the leaders, namely Jamie Dimon of JP Morgan Chase, who are coming out his crises as influencers are the ones who are not acting like their recent predecessors. Characteristics like humility, delegation (even to contrarians), and intrinsic motivation are coming to the forefront. Reingold recaps a few generations of leadership styles and sees a time for a shift to happen. She terms this shift the age of the lifeguard leader.

Unlike the Lone Ranger, the Lifeguard is comfortable not knowing what’s
about to happen. Scanning the horizon, he can anticipate a coming shift
– what leadership experts call “hearing weak signals.” He can work with
a team and with rules set by others. And he isn’t in it just for the
money.

And also, as Reingold points out, the era we are coming out of used two poor metrics to reflect performance. The first is the ever changing stock price. Although a stock price is a good long term indicator, frequent snap shots fail to tell the whole story. The second bad metric is the size of the pay package. Being paid something like 500 times more than the normal employee balloons anyone’s sense of importance. This created positive feedback loops – no conflicting ideas were allowed. This type of environment always leads to failure.

But if Reingold is right, this change will lead to something I believe is the future as well.

But in the void left by the visionaries, a new model is emerging.
Collins thinks that legislative, not executive, skills are now
ascendant – that top CEOs will be those who are able to create the
conditions for things to get done rather than hand down orders (as Hank
Paulson learned, what worked at Goldman Sachs didn’t fly in Congress).

What is so important about this is the implied consequences. The first is empowered employees. If you have a model in place to make good decisions, your employees – the experts – will make them. This improves productivity. The second is flexibility for the executive leadership. As environments change, the system is in place to adjust quickly. And there is a much higher possibility of identifying the impending changes earlier.

This new breed will have to be comfortable admitting what they don’t
understand and asking for help. Collins has analyzed leaders in tough
spots throughout history, including John F. Kennedy during the Cuban
missile crisis. He found that Kennedy had an extraordinary
“questions-to-statements” ratio, which reflected his comfort expressing
what he didn’t know.

Finally, these Lifeguard leaders will need
the courage to tear up the plan in case of a sudden squall, as Wachovia
CEO Robert Steel did when he quickly sold out to Wells Fargo (WFC, Fortune 500),
or Banco Santander’s Emilio Botín has done by snapping up rivals on the
cheap. “I’m shocked about people watching the train come down the
tracks, and they are still worried about the strategic plan,” said
Dimon at the Harvard summit.

Already, says James Reda, founder
of an eponymous pay consultancy, there are signs that boards may be
reconsidering what they look for in a CEO. “This is an inflection
point,” he says. One Fortune 100 director told him recently that “the
day of the $10 million CEO is over.” It may indeed be the end of an
era. As Collins puts it, “This will be a time of spectacular
opportunity for the right leaders.” Lifeguards, man your stations.

 

About benleeson
My name is Ben Leeson. I currently work for a large financial company in IT. I went to school at Marist College in Poughkeepsie, NY. I graduated with a B.S. in Business Administration concentrating in HR. Professor William Brown taught me and I enjoyed his classes; even acquiring an appreciation for just about all things HR. I didn’t pursue a job in that field after college but I’ve kept up with it. This blog will further my fascination with all things HR. I hope to grow my knowledge of the area through thoughtful writings and spirited feedback. I will attempt to have a fairly routine style so anyone reading can come to expect certain segments. Please excuse my incorrect grammar and occasional misspelling.

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