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The Importance of Ethical Business Practices

Written by: Stuart Schneiderman

Article Overview: How do managers go about instilling good ethical behavior in their staff? And, how did it happen that a Bear Stearns banker once went out of his way to foster an aberrant culture where common courtesy was not to be tolerated?

The Importance of Ethical Business Practices

A little over ten years ago an investment banker was undergoing his first-year review.

In it he received words of praise and a very generous bonus. In return, he told his manager how grateful he was for the opportunity the job provided him.

To his shock and surprise this everyday expression of thanks elicited a vicious attack from his manager, in words that the New York Times considered unfit to print.

What crime had he committed? He had dared to express gratitude. At the now defunct Bear Stearns, this was considered to be beyond the pale.

Why would a manager want to inculcate the lesson that gratitude is bad? Did he want his staff to become like King Lear’s daughters? Did he feel that a grateful employee is less likely to be a vicious predator? Did he believe that a minimal gesture of civil behavior might compromise the banker’s violent and aggressive competitive spirit? Was the bank’s policy to do whatever it took to win, no matter the price, no matter the effect on human relationships?

If that is true… and I do not see very many other ways to interpret the policy… then surely the seeds of Bear Stearns’ demise lay in its corporate culture.

The firm was not devoting itself to responsible banking, to developing mutually beneficial relationships with clients. Not at all. It had gone over to the dark side and had decided that its sole purpose was to amass a fortune for itself, no matter what the consequences.

The strangest part of this is the fact that the Chairman and CEO of Bear Stearns, Ace Greenberg, was reputed to be one of the most trustworthy and honorable men in the banking industry. He was also a man who insisted that everyone be treated with respect, as evidenced by one of his more famous policy statements: “Return all phone calls promptly; even if they’re selling malaria.”

Surely, returning phone calls promptly shows respect and consideration. How could a firm being run by Ace Greenberg have descended into the moral cesspool where managers felt that they had to make a special point of repressing their banker’s normal human tendency to express gratitude?

I don’t know the answer, but surely it needs to be addressed by those who consider questions of corporate culture and leadership.

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Article Tags: banking industry, bear stearns, beneficial relationships, cesspool, corporate culture, demise, everyday expression, greenberg, honorable men, human relationships, investment banker, king lear, malaria, new york times, policy statements, respect and consideration, sole purpose, vicious attack, vicious predator, words of praise



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