Lately a thought has been rolling around my head. That is about the corruption that is endemic to the culture of Wall Street.
By “corrupt” in this post I don’t mean the kind of corruption that is directly about lying, cheating, and stealing. I’m just referring to a broken culture where people’s attitudes are all wrong. It may lead to lying, cheating, and stealing, but the problem is deeper than that.
And before you think I am going to go all socialist on you, I’m not talking about the culture of greed and profit-seeking. Greed and profit-seeking are forces for good in the world.
So, disclaimers, out of the way, I will tell you my story.
The motto at OCS is “ductus exemplo.” “Lead by example.” It is at the core of Marine Corps leadership culture, and, I think, it is at the core of any good leadership philosophy. The good leader sets the standard. A leader can’t expect his people to put out if he isn’t putting out himself. The good leader is the first one to show up in the morning and the last one to leave. He works harder than the people reporting to him, because he is responsible for them. He works harder and sets the example because that is the only way to develop the respect that is required for his reports to obey his orders, faithfully and unquestioningly.
The other day I had an interview with a big investment bank. I asked the interviewer, with the intent of learning what kind of work he does on a day-to-day basis, “what is your typical day like?” Somehow he thought I was asking about what the working hours were, and he responded, “well for me or for you/intern?” Not knowing his misunderstanding, I replied, “well both.” or something. His response was telling. He said, “well I get to the office around 7, and I leave around 6. You’d probably have to show up at 6/6:30 and stay till 7 or 8.” (I may not be remembering the numbers correctly.)
Is it any wonder that Wall Street is fucked? Certainly, the guy works hard. It was clear from his tone that it was a given throughout Wall Street that the lower echelon arrives before management and stays later. Of course one might object, “you just don’t want to work hard and be a hard-working entry-level grunt.” That is invalid because I of course aim to work at a high level, at some point, and while it would be easy and relaxing to be in an environment where I can be the last one to show up and the first one out the door, it would be wrong.
The culture of Wall Street is broken. Of course the firms that need to fail need to fail for all the usual reasons, but really they also need to fail because the whole thing needs to burn to the ground and be rebuilt. Any firm where management thinks that they don’t have to lead by example deserves to be liquidated. I’m sure that describes all the large investment banks out there, the ones that are no longer and the ones that continue to limp along. There are probably a significant number of small firms that are well run, however. These firms are the ones who could rebuild our financial system, if we would just let the broken ones burn.
It’s not just working hours, even though that is the example I cite. Recently a whole lot of grief has fallen upon the “quants” because they created this financial mess. They created models that did not reflect reality and that caused huge blowups. Who were the people relying upon these models? It wasn’t the quants. It was the higher-ups who didn’t believe the quants when the quant said, “I have this model and it has these caveats, so be careful.” The higher-ups said, “oh look this model says we can make money for free, let’s ignore the caveats and lever up 35:1. I will get my multi-million dollar bonus, and then when it all blows up, I’ll blame the quant.”
Leadership means taking responsibility. Here is an example of taking responsibility in a non-broken cultural environment: Jet Pilot Had Chance To Land Before Crash.
Here is an example of a broken culture: S.E.C. Chief Says Staff Ignored Warnings on Madoff
Of course I can’t really advocate burning it to the ground and rebuilding it from scratch, because in this political environment, if we did burn it to the ground, what would be rebuilt would be pure 100% unadulterated socialism.
I really wish we could though.
My experience at most firms is that everyone tends to work as long as they need to, no more, no less. If you have to work until 2am, you work until 2am. If your work is done at 5, you leave then. I haven’t noticed management in most places working particularly different hours than anyone else.
By: Perry E. Metzger on March 15, 2009
at 5:39 pm
Well that’s good to hear. Certainly not the impression I have gotten from the outside, but of course that is just my outside impression at this point.
By: creativedestructionblog on March 15, 2009
at 5:51 pm
One senior mgr I worked for at an i-bank always was the first in (we didn’t even know how early he got there, no one had ever beaten him in) and was frequently the last to leave. I found most managers there and elsewhere worked exceedingly hard. It was usually more that they had freedom to work from outside the office, at meetings, on business trips, from home, whereas the junior staff pretty much always had to be in the office working.
By: Jo on March 16, 2009
at 8:42 am
amen
By: ppearlman on March 24, 2009
at 10:26 pm