John Thain to deepen 'team work' at Merrill Lynch

“Thain plans overhaul of Merrill Lynch management culture to better emulate Goldman Sachs”

Thain, stated that he believed there was insufficient co-operation between senior Merrill executives. “Merrill has a strong culture but they don’t have the same teamwork at the senior level,” Thain said. “It needs a more co-operative team approach.” Goldman Sachs has long operated on a consensus basis style that dates back to its history as a private partnership firm.

Consensus Style: Effective strategic leaders know how to get everyone involved in policy making and build consensus in the process. Within large complex organizations, whether public or private, consensus is the engine that sustains policy decisions. No strategic leader can succeed unless he or she can build such consensus. Thus, the search for consensus among peers, allies, and even competitors becomes a requirement for shared commitment to a national policy, and to corporate, business policy.

Challenges of Decision Making ...

A team leader has two overriding responsibilities: First, the leader is accountable for the effective functioning of the team. The leader monitors team performance and takes action to improve team effectiveness. Teams tend to perform best when responsibilities are shared and leadership tasks are distributed among members. Empowered team members are more likely to take responsibility for team success. Second, the leader is responsible for developing a stable leadership structure. Many decision-making teams tend to be more effective when the framework for leadership is clear. These teams tend to work more efficiently, have fewer interpersonal problems, and produce better outputs. Common observations of the strategic decision making process that contribute to the leadership challenge include:

Diverse Team Membership
Lack of Policy Guidance
Low Team Authority
Internal Politics
Organisation Inertia
Lack of Integration
Gaps and Ambiguities

Given these difficulties, it should be no surprise that team meetings can be a journey into foreign territory for each team member. By adopting a "consensus style" of leadership, some of these problems can be eliminated.

Strategic Teams
A strategic team's goal is to make decisions that best reflect the thinking of its members, thus 'forging' consensus. One can easily confuse what consensus is and isn't. Here are some guidelines (Scholtes 1988)

Consensus is having a shared vision for change and common ground found through understanding and negotiation. The framework for consensus is

* Set an agenda for change.
* Build networks and coalitions.
* Conduct bargaining and negotiations.

Consensus Team Decision Making Model (CTDM) identifies factors that distinguish high-performing teams from less productive ones:

* High Conceptual Level
* Prudent Consensus Approach
* Vigilant Decision Management.

CTDM portrays a thinking, collective group capable of high performance. Within the three pillars, there are 14 success factors critical to excellence in team decision making.

CONSENSUS is
* both process & outcome. Consensus is a process in which everyone has their say.
* agreement, but not necessarily complete agreement.

CONSENSUS is not
* authoritarian, perfect, conformist, or bland.
* the team leader imposing decisions & team members complying.
* a perfect team agreement representing first priorities of all team members.
* a unanimous decision.
* majority vote.
* "groupthink,"
* a bland, watered-down proposal having no substance, and entailing no risks.

A consensus decision is one that all team members can support.(Brilhart and Galanes 1989). Effective consensus falls somewhere on a continuum between perfect agreement and total discord.(Priem 1990).

Strategic decision-making teams must operate at the proper conceptual level. This means employing multiple frames of reference and "staying out of the weeds." They search for consensus among themselves, within their organizations, among interested groups, and with the public. Finally, strategic teams avoid consuming limited resources or prolonging action, thereby missing strategic opportunities.

* What is the success factor?
* Why is it critical to strategic teams?
* How do high-performing teams exercise the factor?
* How do less productive teams fail to apply the factor?
* What methods help strategic teams improve?

How you make decisions at the strategic level is just as important as the decision itself. The best decision in the world is nothing without a powerful consensus for action. The most perfect consensus in the world is useless unless it has produced a decision that is good for the organization. At the front end of the entire consensus team decision making process is something called "inputs." People who enter into a consensus decision making must come armed with critical and creative thinking skills that will allow them to efficiently and effectively function at the strategic level.

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Who will be the next CEO of Merrill Lynch

“Contenders in the running for Stan O’Neal job at Merrill's”

Gregory Fleming

The co-president of Merrill Lynch is well liked in the group and was a key architect of its takeover of BlackRock. He made his name at Merrill doing financial deals, such as the $14.5 billion merger between Wachovia and First Union. However, he does not have the operational experience of running a large investment bank

Laurence Fink

The king of Wall Street’s chief executive shortlist, Mr Fink has previously been viewed as a key contender for the top jobs at Morgan Stanley and Citigroup. Mr Fink runs the BlackRock investment firm, which is 49 per cent-owned by Merrill Lynch. It has extensive interests in mortgage-backed bonds, the main source of the group’s woes and in which it has lost a number of senior executives

John Thain

The chief executive of Euronext NYSE would appear to be the top external candidate for the job. He is a well-regarded chief executive with experience running a big company on Wall Street. He is also a former president of Goldman Sachs, one of the most formidable operations in the financial world

Bob McCann

As head of Merrill’s brokerage unit, Mr McCann has not been tainted by the bond fiasco and retains his credibility. He is well liked within the firm, although he does not have Mr Fink’s deep knowledge of the bond market

Source: Times

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Merrill Lynch chief Stan O'Neal is toppled in wake of $7.9bn writedown

“The knives are out, but who's next for the chop?”

Merrill Lynch, one of the world’s most powerful banks, is preparing to announce the resignation of its chief executive after Stan O’Neal finally succumbed to pressure from the group’s board to leave. The bank’s board has yet to decide on Mr O’Neal’s successor despite being locked in talks over the weekend about the management of the group.

Source: Times October 29, 2007.

Mr O’Neal’s departure comes after the bank announced its worst quarterly loss last week and after his secret merger approach towards Wachovia, a bank almost double its size, without telling the rest of the board.

It is thought that one of Mr O’Neal’s main assassins was Armando Codina, the Cuban billionaire, close ally of President Bush and chairman of Merrill Lynch’s nominating and corporate governance committee.

Mr O’Neal is said to have spent yesterday afternoon negotiating departure terms. Although he is not contractually entitled to a severance package, he is expected to walk away with at least $159 million (£77 million). Merrill Lynch’s compensation committee also has discretion to offer severance pay.

Mr O’Neal, who is 56, is entitled to a retirement benefits fund of $30 million and $120 million in shares and share options. It is estimated that in his five years as chief executive Mr O’Neal has received about $160 million.

It is thought that the Merrill Lynch board will seek a replacement for Mr O’Neal within and outside the bank. Laurence Fink, head of BlackRock, the fund manager part-owned by Merrill, has been named as a favoured candidate but he is not thought to have had many formal conversations with the board as yet about his candidacy.

Gregory Fleming, the Merrill Lynch co-president, has also been named, as has Bob McCann, head of the bank’s brokerage arm.

Externally, John Thain, chief executive of the New York Stock Exchange, is seen as an attractive candidate because of his past experience as co-president of Goldman Sachs.

Mr O’Neal was reported on Friday to have been expecting to be out of a job this weekend. Merrill executives were thought to have been livid that Mr O’Neal had telephoned Ken Thompson, the head of Wachovia, about a possible merger that would have valued the combined group at about $140 billion, with Wachovia by far the bigger partner. The rest of Merrill’s board were not informed of Mr O’Neal’s intention to approach Wachovia. Although a number of the executives on the board were appointed by Mr O’Neal, there is believed to be a sense of frustration about the bank’s losses and Mr O’Neal’s role.

Merrill Lynch shares have lost about a third of their value since the beginning of the year. Last week the bank admitted that bad investment decisions – primarily in bonds backed by sub-prime mortgages – had forced it to write off $7.9 billion, plunging it into its biggest quarterly loss. Wall Street analysts reckon that losses will deepen as the market for the mortgage-backed debt deteriotates.

Daniel Tully, a retired chief executive of Merrill, yesterday described its predicament as sickening. He said: “I’ve been in touch with many, many of our fellow employees and ex-employees and they’re sick, everyone is sick about it, as I am too. It’s awful.”

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