Bear Stearns: Lessons in Integrity and Accountability by Stan Slap
Bear Stearns was not “torpedoed”; “cratered”; “leveled and left as a trembling, anxious buyout candidate,” as numerous published analyses have stated. It was not “badly damaged by the nationwide credit crisis,” as Wikipedia has noted. All of this thinking is blaming the effect for the cause. Bear Stearns did the torpedoing and left itself quivering and vulnerable.
Nor was the company “hit by a terrible storm,” as its former absentee CEO complained. The subprime crisis was not some terrible and unpredictable force of nature that suddenly roared through the finance industry, flipping slow-moving cows and august investment houses into roadside ditches. It was manmade and preventable.
Bear Stearns was a victim of its own mismanagement, insatiable avarice and irresponsibility to both the future and to those currently depending on the company to operate with a native intelligence and ethical foundation greater than your average iguana. The company was regularly overstating its portfolio value. It collateralized billions to prop up its own funds. A couple of its key hedge fund managers were… what’s the term? — ah, yes — lying through their teeth. “Bear Stearns was noted for its addiction to leverage even at a time when Wall Street, which runs on debt, was drunk on the stuff,” commented USA Today.
The company was caught up in a greed cycle with other banks and mortgage lenders, governments, credit agencies, brokers and underwriters, large private investors and nouvelle-tycoon homeowners who yesterday couldn’t figure out how to string Christmas lights on their roof but suddenly could manage a string of roofs in elaborate real estate pyramid schemes. World without end, amen.
When this housing crisis is all over a whole lot of people will have gotten hurt. Those who inarguably deserve it mostly won’t. Those who arguably deserve it mostly will. Those who didn’t deserve it at all definitely will.
The Senate will preen itself in “hearings,” and some serious spanking of the banking industry will likely occur—this is too big to ignore without new regulations. But it won’t really be “over” unless lessons were learned. Lessons won’t really be learned until we act with integrity. We won’t really act with integrity unless we start with accountability.
Managers have elaborate excuses to explain why poor performance is rarely their own fault and is instead the result of forces far beyond their control. They quickly assign accountability to various Acts of God and major world events.
El Nino — no, wait! — La Nina! — no, wait — Katrina! Iran — no, wait — Iraq! — no, wait — Iran! The rise of technology — no, wait! — the fall of technology! — no, wait — the rise of technology! The lack of government interference –no, wait — government interference! The collapse of the Soviet Union — no wait — the return of the Soviet Union! Congress! — no, wait! — the president! — no, wait — Congress! Christmas is falling on a Monday! Easter is falling in April! The Kiwi crop has frozen in New Zealand! Those damn killer bees are back!
Those companies that aren’t well run have many excuses for the downturn in their business. They blame the economy. They blame market forces. They blame the competition. They blame their employees. They blame their customers. They blame everything and everyone—except themselves. A key distinction of successful companies is that they actively prohibit this type of powerless thinking amongst their management team. And these managers likewise delegate punishment-free accountability to their people.
Of course, most managers don’t really delegate. They have a switch with two positions: Control and Abandon. Delegation is the mythical third position. But if you can’t control the onset of a problem, don’t abandon hope. Control the process of solving the problem by respecting and supporting solution attempts at every level. (This process is known as “delegation.”)
An excuse mindset has to be stopped before it starts: A bias for solutions must be modeled by senior management and enforced through every layer of the organization. Otherwise, it becomes part of the culture, and once a management team is allowed to blame external circumstances for internal problems, all hope of creative answers departs and apathy, helplessness and blame set in.
Yes, you are managing in maddening times. But the first step to solving any problem is to accept your own accountability for it. The best managers hold themselves accountable for their failures as well as their successes. They don’t spend time validating all the reasons business is down. Who cares whether things suck? What’s important is what management does about it.
Excuses are irrelevant; it’s the job of management to bring good answers to bad circumstances. “Whining” isn’t a strategy. “Victim” isn’t a job description. “Everyone else is in trouble, too” isn’t management information.
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Tags: accountablity, Bear Stearns, control and abandon, describe the role of organizational culture in business, emotional commitment, excuses, family, greed cycle, integerity, key role of organizational culture, manager, manager training