Page last updated at 23:27 GMT, Tuesday, 9 December 2008

Did poor management fail Wall Street?

By Bill Baker
Executive-in-Residence, Columbia Business School, New York

When the global financial crisis hit, many Wall Street bosses said they didn't know that trouble was brewing.

There is a good chance that they were speaking the truth. Studies show that 58% of workers with "bully" bosses don't speak openly and candidly with their boss, as opposed to 19% of those with "kind" bosses.

Bill Baker
Mr Baker says management style didn't help Wall Street
Similarly 64% of those managed by "bully" bosses report that their bosses do not listen to what they say, as opposed to a tiny 7% with "kind" bosses.

Might this give you some idea as to how so-called smart leaders drove their Wall Street firms off the proverbial cliff, creating the biggest economic crisis the world has seen since the Great Depression?

Superior results

Our research at the American Management Association has shown us some significant results: "kind" bosses get truly superior results. This has been documented time and time again in industrial psychological theory, and more importantly in practice.

Such companies often have superior results reflected in high productivity, happy employees, more creative problem solving and better bottom lines. Witness companies like Google, Eileen Fisher, Pitney Bowes, Smuckers, Rodale and hundreds of others.

This generation is working in a non-factory America where knowledge workers provide the company a competitive advantage and information that keeps them afloat. This generation is not locked to one employer for life and is prepared to quickly move if they are not managed with respect and even kindness.

I'd argue that there is a sea change in US culture spurred by this millennial generation; something akin to what happened with the boomer generation during the 1960s. This generation will have an effect on everything that happens in the culture including business.

Most major business schools have detected a strong shift in the interests of current students: away from only making money to one questioning if there may be something more like values, helping others, doing good.

The new boss

Kind bosses are not doormats, nice guys/women who are walked over by their employees. Rather they conduct themselves like respectful, knowledgeable parents having qualities like compassion, integrity and clear boundaries.

In the current financial meltdown, although many of these kind bosses will be stressed to the maximum, their style will allow them to institute layoffs in a respectful and humane manner.

Some new cost reduction models may develop in America not previously seen on this side of the Atlantic, but operational in countries like Germany and Israel.

US companies have rarely cut salaries, choosing instead to terminate a worker under the belief that they will be so demotivated by a cut that they will be rendered useless. Other countries' experiences have shown that not to be the case.

Under correct leadership whole workforces can be made to feel like a family and willingly tighten their personal belts if top management does the same. So America should be watching what happens during this very difficult time.

Bill Baker, a professor at Fordham University and executive-in-residence at Columbia Business School, is the co-author of the book Leading With Kindness

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