A Bullying Boss Leads to Financial Meltdown?
I've been a big fan of Michael Lewis and his writing since reading “Moneyball: The Art of Winning an Unfair Game” years ago. Great book and my first introduction to the Red Sox's great Kevin Youkilis.
I'm not normally a Vanity Fair reader, but I stumbled across this issue in print and was engrossed by the story of why A.I.G. collapsed.
Could it really all come down to one “leader” being a bully and, as Bob Sutton would say (in an academic sense) an asshole?
It seems that there was a fateful change of leadership (and leadership style) at AIG:
At the end of 2001 its second C.E.O., Tom Savage, retired, and his former deputy, Joe Cassano, was elevated. Savage is a trained mathematician who understood the models used by A.I.G. traders to price the risk they were runningâ€”and thus ensure that they were fairly paid for it. He enjoyed debates about both the models and the merits of A.I.G. F.P.'s various trades. Cassano knew a lot less math and had much less interest in debate.
So he wasn't a great financial mind, but Cassano especially seemed like a bad leader:
…a guy with a crude feel for financial risk but a real talent for bullying people who doubted him. “A.I.G. F.P. became a dictatorship,” says one London trader. “Joe would bully people around. He'd humiliate them and then try to make it up to them by giving them huge amounts of money.”
A lot of us (myself included) who worked for a bully who acted this way to some extent. Not the type of environment where quality work can take place, eh?
Another former employee piled on:
“The culture changed,” says a third. “The fear level was so high that when we had these morning meetings you presented what you did not to upset him. And if you were critical of the organization, all hell would break loose.”
There are more examples in the story, many of which include language I'm not going to reprint here.
So with an environment like that, you wonder why people might take risks and do questionable things in the name of keeping the boss happy?
Hit the number, no matter what. Don't question the boss.
It's a recipe for financial meltdown, apparently.
Will we ever learn? Dr. Deming said the first job was to eliminate fear. Wall Street didn't listen.
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