Lessons from My Bosses

by

Sallie Krawcheck

I’ve worked directly for 7 financial services CEOs (don’t ask…..it’s a really long story) and covered many more during my days as a research analyst. Each of them worked very, very hard; each of them was incredibly smart; and each of them was human. They each taught me a lot as I saw them work under great stress….both “what to do’s” and (unintentionally) “what to don’ts.”
The best really understood the concept of NPV (net present value). By that, I mean they were willing to forgo earnings today, to invest smartly for more earnings tomorrow. For example, at Sanford Bernstein, we pulled our research analysts out of the underwriting business, with the view that an unconflicted business model, focused on just one set of clients, would be a winning one. (It was, eventually, but it sometimes hurt along the way.) In contrast, others tried to maximize every quarter’s earnings, cutting investments halfway through the year (or quarter) like clockwork in order to reach consensus analyst estimates. Even worse, a number consistently under-invested in technology, mostly because it was hard to quantify the return. The end results ranged from poor customer and employee experiences, to devastating mistakes in managing risk.
The best set the company’s course, communicated it broadly and were ok if some shareholders chose to sell the stock. In contrast, there was one who set the company’s annual budget based on meeting sell-side earnings estimates. Here the cart was firmly before the horse.
The best: one of my bosses was insatiably (almost obnoxiously) curious; he would stop people in the hall to ask about some detail of their business, or some tidbit he had heard in his travels. He peppered nearly everyone he met with questions, including unsuspecting taxi drivers. His business reviews were exhausting, detailed affairs, akin to mental marathons, in which explanations were not taken at face value. The result was that everyone operated at a higher standard.
On the other hand, I once sat through an entire business review in which the CEO didn’t ask his managers a single substantive question. Instead, he opined on his view of the business to (or at) the assembled businesspeople.
The best: at one firm, the culture was to hire unconventionally, bringing in people with a broad range of backgrounds. The talent we uncovered, where others weren’t looking, could be amazing. In contrast, a couple of CEOs surrounded themselves with a long-tenured “inner circle” and filtered information through them. One of the many reasons for the financial melt-down was the unexamined groupthink that pervaded Wall Street, enabled by senior managers “breathing the same air.”
The best didn’t just say he cared about employees in the Corporate Value statement. He actually did. And he demonstrated it, in one case using his Board contacts to find a top specialist physician for the dying girlfriend of one of our employees (an employee he had never met, by the way). This rippled through the company like wildfire and was a source of pride. At another company, while the Corporate Value statement said about the same things, one long-time senior executive was fired while he was on vacation with his family (!)…..and was given the responsibility of announcing it to his management team in a conference call scheduled for 30 minutes later (!!) Oh, and it was a reorganization; the guy was not fired for cause. This too rippled through the company like wildfire, but in a very different way.
The best CEOs gave thoughtful, detailed performance feedback to his directs on a regular basis. In contrast, I worked in one business that coupled forced stack rankings of employees with anonymous 360 degree performance reviews. What those reviews lacked in pettiness, they made up for in nastiness, as employees tried to improve their own relative standing by anonymously criticizing their peers. Lovely.
The best CEO was highly visible during the financial crisis; even if he was saying the same thing again and again, you had no doubt that he was captaining the ship. In contrast, one leader hunkered down and nearly stopped returning phone calls as he worked through the issues. The work and mental effort were admirable, but the lack of visibility fed enormous anxiety at the company.

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