In the 40 years that Richard S. Fuld, Jr., 60, has been with Lehman Brothers, he has seen the Firm undergo many changes. But to Fuld, the Firm’s chairman and chief executive officer, no change has been more important than building Lehman Brothers’ “One Firm” culture. However, even in an organization where teamwork is key, Fuld’s leadership abilities stand out. In the speech he gave last week as part of Harvard Business School’s Distinguished Speaker Series, Fuld described the five critical qualities he believes every leader must have.
“Real leaders earn the right to lead,” Fuld said, referring to his first quality of leadership, understanding the business and mechanics of one’s own organization replica breitling. To Fuld, this means doing one’s homework, connecting the dots and learning how the pieces fit together. “When you know what you are talking about, others will follow you,” Fuld said.
A leader must also be committed to a strategy, and show that commitment. To this end, Fuld believes a leader must pick a strategy and stick with it. However, as he pointed out, if that strategy turns out to be wrong, a leader must have the guts to admit it. Fuld offered an example of when his strategy has proved wrong. In 1998, rumors swirled that Lehman Brothers was in trouble. Fuld stayed true to his strategy of staying away from the press, believing that the rumors would die down. When they did not, Fuld admitted that his strategy had been wrong and took an aggressive approach in refuting the rumors to the press, investors and ratings agencies. By changing his strategy, Fuld was able to prove publicly that the Firm was strong.
The Firm has remained strong. In 2006, Lehman Brothers was ranked the #1 company on the Barron’s 500; was profiled in the Fortune 500; and recently posted its best third quarter results ever. Additionally, Fuld was named to Barron’s “World’s Most Respected CEOs” list in 2006; he has made the list each of the two years it has been published.
Fuld is quick to share the credit for such successes. The CEO’s third quality of leadership, knowing how to leverage teamwork, is central to Lehman Brothers’ culture and focuses on the belief that one person cannot deliver the whole Firm. For Fuld, this belief was cemented in 1984, when the Firm was forced to sell because of a lack of teamwork – as documented in the book “Greed and Glory on Wall Street: The Rise and Fall of the House of Lehman”, which Fuld referenced in his speech. Fuld witnessed firsthand a culture in which people were only looking out for themselves. To Fuld, this destroyed the glue of a partnership. Ultimately, the Firm’s Capital Markets and Investment Banking divisions could not find a way to partner with each other. “We lost the Firm,” Fuld said.
As a result, when Fuld became chairman, nearly a decade later, the first thing he did was build the current “One Firm” culture, where teamwork is critical and goals are shared replica watches uk. To do so, he follows a very simple formula: hire great people who will work together, give them the tools and training they need to be successful, hold people accountable, pay them fairly, and expect them to think, act and behave like owners. Fuld backs this last step by paying all employees partly in Lehman Brothers stock, creating a culture of ownership.
Fuld believes so strongly in surrounding himself with the best people that he considers it another critical quality of leadership. According to Fuld, a leader cannot be afraid that he or she might look bad when others look good. “When you want an ‘A’ job done and when you want to run an ‘A’ firm, ‘B’ people are not good enough,” said Fuld.
Fuld believes that leaders set the tone, which is why his fifth and final quality of leadership is to lead by example. Fuld said that in addition to his responsibility to the client and to the transaction, he has another responsibility-to teach others. He expects his senior people to do the same throughout the Firm, creating a culture of responsibility and driving results.
Fuld closed by saying that the reward for a leader lies in others’ achievements and that a true leader gets people to perform at a higher, more productive level, benefiting the whole organization. Fuld then opened the floor to questions from the many future leaders seated before him.