Lehman Brothers: Decline of the Equity Research Department Sample Essay
The chief job discussed in the Harvard instance survey. “Lehman Brothers: Decline of the Equity Research Department” is the slow death of Lehman’s Equity Research Department. The department’s painful ruin begins when the equity’s division caput Jack Rivkin. a leader who was loved and well-respected among his squad. was replaced by Paul William. a fixed-income director who was unfamiliar and unqualified to cover with equities. To some employees in the section. William’s assignment was a “slap in the face.
” Once Lehman gained independency from American Express. force per unit areas to cut costs and downsize became evident. doing Lehman to put off 1000s of employees within a 5-year timespan. Besides puting off some of the company’s best analysts. of those who were spared. many of them take to go forth the company and joined viing houses. In add-on to legion unit of ammunitions of lay-offs that Lehman Brothers implemented. a big ball of support was cut from the equity research section.
which finally lowered their public presentation ranking. Although many efforts to recover grip in equities were made. such as the restructuring of direction and rehiring star analysts who had originally left the house. those efforts seemed to make little to assist convey Lehman to where they one time were.
TheoryThe instance of Lehman Brothers is a great illustration of the effects of organisational committedness. Many of the employees in the equity research section had affectional committednesss. as they had an emotional fond regard and engagement with their leaders. Jack Rivkin. Fred Fraenkel. and Stephen Balog. and their section genuinely worked as a squad. During their leading. the research section had the focal point of committedness of being a squad and ranking at the top of the Institutional Investors. However. once these great leaders were replaced by people who were nescient to equity research or neglected to prosecute and organize relationships with their subsidiaries. the researchers’ committedness to the section dwindled. In add-on. Lehman’s downsizing created a immense alteration in the employee-employer relationship. and employee morale took a bend for the worse. Huge cuts in the budget. in return. made employees experience that their worth was non being recognized. Many cardinal star analysts felt that their psychological. transactional. and relational contracts were non being fulfilled. doing them to leap ship and quit. Ultimately. trueness to the Lehman Brothers in the equity research section diminished and its public presentation faltered.
EvidenceThe first grounds in the lessening of the staff’s affectional committednesss occurs one time Paul Williams replaced Jack Rivkin as caput of the equity division. It was a daze to the equity research section. and they felt that Williams had no hint on how equities worked or how to run the division. To equity staff members. it seemed that the fixed-income people of Lehman Brothers thought that the equity research division offered really small value to the company. Williams seemed uninterested in the research section. while Carolyn Moses’s aggressive worrying proved unsuccessful. As Lehman continued to downsize. many of the employees began to reassess their state of affairs. Many felt that their value was non being recognized as their wage and growing stagnated. which caused many star analysts to go forth the house. Besides. the morale in the section reached an all-time low as lasting members feared for their occupations. particularly every bit high executing analysts were being booted around them. Because upper direction neglected to carry through the petitions from those who knew best in the equity research division. the company continued to underachieve in institutional rankings. doing a negative rippling consequence in other sections at Lehman Brothers.
ActionLehman Brothers needs a complete inspection and repair and restructuring of their senior direction. Those who presently hold high-level places need to be replaced. as they have proven unable to efficaciously take and pull off the organisation. Once these places have been filled by competent leaders. a realignment of vision and committedness demands to be implemented. The first measure to this would be to discontinue the continuation of lay-offs. as retrenchment has shown to hold a big figure of negative effects such as a decrease of trueness and committedness among staff members. and an addition in the fright of occupation loss. which may. in bend. lead to gnawing behaviours and do employees to discontinue. Besides. Lehman Brothers needs to organize team-building schemes to recover the trust of its employees and to convey back its sense of integrity and teamwork. Besides. alternatively of merely offering pecuniary inducements. other signifiers of motivational factors should be implemented. such as constructions in topographic point for employees to set up professional growing.