John Mack on the Current State of Wall Street

John Mack is getting softer, and he thinks that Wall Street is coming along with him. At least, so he said to an audience of HBS students on Monday, October 20 in Spangler Auditorium. In a speech hosted by the HBS Finance Club, Mack, the CEO of Credit Suisse First Boston, spoke about the improvement of Wall Street attitudes toward employees and predicted a movement toward better people management, with a greater emphasis on work-life balance, the Holy Grail that Associates on Wall Street have been seeking for years. Mack paralleled this movement on Wall Street with a shifting in his own attitudes that he has experienced since taking the reins at CSFB in July 2001. “My leadership style is essentially the same, but I’m a lot softer than I used to be. I believe in what I’m saying, and when you believe, it’s emotional. Why have I gotten more emotional? Maybe because I’m older,” joked Mack.

Mack shared insights into his experiences since joining CSFB in July 2001, four months after his departure from Morgan Stanley Dean Witter, where he served as President and Chief Operating Officer. He spoke of walking into a culture of money, contracts and entrepreneurship at CSFB and actively working to change this environment to one that emphasized a longer term interest in the development of its employees. While still a work in progress, Mack spoke proudly about the success of his early initiatives, particularly regarding the improvement of the environment for female professionals in the firm. Women came to Mack when he joined the firm voicing their frustration with the challenges that they faced, and Mack vowed to improve the situation. He noted as a sign of tangible progress the placement of two females on his management committee.

“We still need to see the same type of progress at middle levels of the firm,” he added.

During the Q&A session, RC and EC students, many of whom were former bankers themselves, pushed Mack to put a stake in the ground of the investment banking culture wars by stating a preference between his former employer, Morgan Stanley Dean Witter, and his current organization, CSFB. Mack steadfastly refused to pick a favorite child.

“People always ask me what the difference is between the two organizations,” said Mack. “I don’t talk about the differences. My former firm was an excellent firm; my current firm is also an excellent brand, perhaps more entrepreneurial.” Another student tried an alternative tactic, asking whether he felt the Donaldson Lufkin Jenrette element within CSFB has had a negative effect on the culture of the firm. Again Mack maintained neutrality. “I have only known CSFB post-merger, so I couldn’t tell you the difference between one of my bankers who comes from DLJ versus one who came from the old First Boston.”

The LEAD faculty will be happy to know that Mack has carried the lessons learned from Rob Parsons at Morgan Stanley over with him to CSFB.

When asked what he would do with a star banker who isn’t treating people well, Mack firmly responded that he would “be direct with him, be honest, and try to change him, but if none of that works, he has to leave.” Mack applied these lessons to real life in the case of former CSFB technology banker Frank Quattrone, currently making headlines on a daily basis as his trial proceeds through the Federal courts. “I like Frank, I trust Frank, and I don’t think that Frank did anything wrong. But I told him, if it comes between you and the firm, the firm comes first. One or two people do not make a firm, no matter who it is.”

Mack also offered some insights into the current state of the banking industry. He sees a future for the industry in which technology is used as a competitive weapon, regulatory oversight has a much more direct impact on the actions of the firms, and a new paradigm emerges for the equity markets, which he believes will become more commoditized. As investment banks become more alike in the services that they offer, and margins continue to contract, Mack predicts that the long-term differentiator across firms will be its management. Given his record of success and his passion to do more, Mack appears to be fully engaged in keeping CSFB on the right track.

October 27, 2003
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