Could Pre-Employment Test & Culture Convulsions have save Merrill Lynch & Lehman Brothers?

Sep 17, 2008, 16:39

Pre-employment tests plus corporate culture improvements could have saved Lehman Brothers Holdings and Merrill Lynch from self-destructing.

Merrill Lynch, one of the oldest stock brokerage firms in the world, blew itself up so horribly that it had to sell-out to Bank of America. Lehman Brothers Holdings was a monstrous investment bank that succeeded in blowing itself to pieces.

Imagine: If it is hard for a company to lose millions of dollars, just imagine how hard it was for Merrill Lynch and Lehman to lose hundreds of billions.

Lehman and Merrill Lynch could have saved themselves if, awhile ago, each vastly changed its

> corporate culture

> hiring factors


The corporate cultures of Lehman and Merrill operated like circular firing squads.

Their bizarrely wild, risky behavior naturally led to blowing themselves up.

It is like someone acting crazy at a rowdy party, and then committing suicide to cap off the night. In effect, that is exactly what Lehman and Merrill Lynch did.

Interestingly, I had close encounters of the Lehman kind. For about 16 years, I was a member of the Board of Directors of a publicly-traded company. Our companyA?a,?a,,?s chairman of the board kept receiving unsolicited phone calls from Lehman. At board meetings, he told us about outrageous, pushy Lehman bankers calling to peddle other companies to us, or trying to sway us to sell our company. Note: When we finally sold the company, it was to a much bigger publicly-traded company, and Lehman did not initiate the acquisition.

The point: The antics of Lehman bankers made Lehman seem like obnoxious children throwing frequent tantrums A?a,?aEURoe hoping they eventually might get their way if they harassed us enough.

Corporate culture trickles down from the top brass, just like children copy some of their parentsA?a,?a,,? behaviors.

Now, the whole world sees the horrible result of what trickled down from the top executives of two huge financial firms.


To have avoided the carnage, both Lehman and Merrill would have needed to make major improvements in

1. top executives

2. corporate culture

3. hiring methods

First, both Lehman Brothers and Merrill Lynch should have changed executives a couple years ago. To save the companies, the new top executives should have been people who (A) had A?a,?Eoeboth oars in the water,A?a,?a,,? and (B) would not encourage nor tolerate wacko excesses.

Second, the new executives would have needed to create corporate culture convulsions. In my fifth book A?a,?aEURoe A?a,?A"Absolutely Fabulous Organizational ChangeA?a,?? A?a,?aEURoe I explain corporate culture is how every employee knows he or she must act, even if no one is watching. The corporate culture at Lehman and Merrill Lynch seemed to be one that encouraged digging a grave A?a,?aEURoe and, when they saw the mess they created, they started digging even more furiously.

So, in a healthier corporate culture, out-of-control and ultra-risky investing would be banned. Allowed would be a more measured, calmer, and lower risk style of doing business. Employees who would not A?a,?Eoeget with the new programA?a,?a,,? would be de-employed, so they could idle away their days in another Wall Street gang.

Third, the new executives and healthier corporate cultures would have required hiring employees who fit into the new, more down-to-earth Lehman and Merrill Lynch. So, letA?a,?a,,?s delve into hiring improvements next.


Apparently, Lehman and Merrill hired many sensation seekers who felt thrilled executing a suicidal strategy.

Pre-employment tests could have helped Merrill Lynch and Lehman avoid hiring kamikazes.

Customized pre-employment tests and other hiring methods could have helped Lehman and Merrill Lynch hire ambitious but cooler heads. Such employees would have helped the two companies survive, and perhaps thrive, in healthy corporate cultures.

The pre-employment testing at Lehman and Merrill should have focused on helping hire investment bankers with better-quality ambitions. For instance, certain pre-employment tests could have helped them hire bankers who were

> less aggressive

> keenly followed rules

> focused on service rather than unquenchable greed


Corporate culture changes and pre-employment tests will not alter the wreckage Merrill Lynch and Lehman created.

Of course, it is too late to alter the harm and mischief Merrill Lynch and Lehman did to themselves, hoards of investors, and financial markets.

Nevertheless, I feel quite optimistic: Some people need to learn the hard way. Lehman and Merrill Lynch gifted millions of people with useful lessons about

- pushiness

- sensation seeking

- risky behavior

- immediate gratification

I am sure this debacle taught many people to act wiser.


Michael Mercer, Ph.D. is a consultant, book author, and professional speaker. He wrote 5 books A?a,?aEURoe including A?a,?A"Hire the Best & Avoid the RestA?a,?? and also A?a,?A"Absolutely Fabulous Organizational Change.A?a,?? Dr. Mercer created 3 pre-employment tests A?a,?aEURoe that companies use to help hire the best. He delivers speeches and seminars at many companies and conferences. You can get A?a,?aEURoe for no cost A?a,?aEURoe 14-page Leadership Reports plus subscribe to A?a,?A"Dr. MercerA?a,?a,,?s Management NewsletterA?a,?? at http://www.Pre-EmploymentTests or

Meet The Experts

    Enter name of Insurance Company and press GO button.