Stephen Schwarzman, Blackstone Group's CEO

Today, cell phones, computers, and the Internet dominate the communication world. Top executives are using these technological innovations to communicate results of the company. These innovations are quick, efficient, and decrease time spent in the office. However, there are some very successful leaders that still rely on interpersonal communication to present their results because they understand the importance of having everyone know what is going on within the company.

Although his name may sound unfamiliar, Stephen Schwarzman is one of today’s top financial leaders. Currently, he is the CEO of The Blackstone Group which is a prominent private equity firm located in New York City. The company controls “47 companies, with more than $85 billion in revenue from wildly different businesses” (Schwartz). Even though the Blackstone Group has evolved into a large multi-billion dollar corporation, Schwarzman has maintained his personal vision throughout the development of the company. He is effectively able to communicate both results and goals to all employees. In particular, every Monday, Schwarzman holds a variety of meetings to help keep everyone informed: “the mindset here is that everyone at the top must know exactly what's going on” (Schwartz). Schwarzman wants to keep a “close knit” environment so that all executives understand the direction in which the company is heading and then pass the information on to lower-leveled employees. By having Schwarzman and other top executive verbally describe what is occurring within the company, less information is lost in transactions. In addition, this promotes open communication between individuals, which allows everyone to understand events within the company.

“The meeting always starts with private equity before moving quickly to Blackstone's newer divisions - real estate at 10:30, followed by hedge funds at 2 P.M. in another conference room, and finishing up with Blackstone's debt business at 4. ‘We go over every client situation, every deal,’ says Schwarzman. And what about lunch? ‘You must be kidding. We don't have time for lunch,’ he jokes, echoing the fictional avatar of 1980s Wall Street, Gordon Gekko. In fact, thanks to a kitchen adjoining the boardroom, ample supplies of Perrier and coffee are an arm's reach away.”

(http://money.cnn.com/magazines/fortune/fortune_archive/2007/03/05/8401261/index.htm)

As shown in this example, Schwarzman places high value on operational key metrics. Schwarzman has been successful in communicating operations because he understands his role as the leader and is able to separate his ego from his job. As stated by Hamm, “effective leaders, by contrast, understand that their role is to bring out the answers in others. They do this by very clearly and explicitly seeking contributions, challenges, and collaboration from the people who report to them, using their positional power not to dominate by rather to drive the decision-making process” (Hamm). It is during the weekly meetings where Schwarzman allows all level executives answer and ask questions. Schwarzman recognizes the fact that he must utilize all of his employees if he wants to continue the success of The Blackstone Group. If he did not inform other individuals, the Blackstone Group would likely fail. In fact, even though he is the top leader, he usually remains passive at executive meetings and allows others to give input.

Because The Blackstone Group is not yet a publicly traded company, it was difficult to find any information about the communication of financial results. However, the company website is very detailed and offers a lot of insight into the organization’s vision and goals as well as a complete breakdown of the different sectors of the company. This helps the public understand the direction in which the company is headed. Please visit the company website if you want to learn more in-depth information about The Blackstone Group: http://www.blackstone.com/.

Resources:

Hamm, J. (2006). The Five Messages Leaders Must Manage. Harvard Business Review (May).

Schwartz article, see link above

Level 5 Leader - Alan Greenspan

When thinking of great financial leaders, one name comes to mind: Alan Greenspan. Not only was he the Chairman of the Board of Governors of the Federal Reserve of the United States, but also he was and continues to be a prominent influence in the financial world. Greenspan worked eighteen years as the Chairman of the Federal Reserve, beginning in 1987 and ending in 2006 when he retired and was replaced by Ben Bernanke. He was appointed as Chairman five consecutive times; therefore, it is obvious that he did something right as a financial leader. Throughout his long career, Greenspan developed and possessed many qualities attributed to Level 5 Leadership described in the book Good to Great by Jim Collins. In fact, Greenspan displays both qualities in the two sides of Level 5 Leadership: personal will and personal humility.

Personal Will: First, Greenspan "demonstrated an unwavering resolve to do whatever must be done to produce the best long term result" (Collins). As the Chairman of the Federal Reserve, Greenspan faced enormous pressures because he controlled the stability and soundness of the U.S. economy. Therefore, he always had to perform at his utmost ability and do whatever it took to keep the economy stable. Throughout his career as Chairman, Greenspan experienced many ups and downs. Edmund Andrews once said, "Mr. Greenspan's approach to such challenges was to roll with the punches, basing his management of the economy on a refusal to believe in firm rules, doctrines, or models." Greenspan is considered to be responsible for the economic boom in the 1990s. As stated by Stephen Roach, "Greenspan's leadership in monetary policy undoubtedly played an important role in fostering the conditions that allowed the U.S. economy to surge in the 1990s." Other accomplishments that define Greenspan's leadership are: lowering inflation, preventing a stock market meltdown, and maintaining a strong U.S. dollar. In addition, Greenspan had the unique ability to foresee future events. For example, in the mid 90s when there was a productivity slump, although many thought otherwise, Greenspan predicted that the economy would change for the better. He stuck with his belief and within the next couple grew, the U.S. economy prospered. When asked about Greenspan's legacy, Brett Fromson from ABC News responded: "He is the ultimate guru, the Uber-analyst. No one else frames the economic trends with the authority he does. No one else is perceived to have his finger on the economic pulse like Greenspan. He seems to be able to hear the economic mood music like a dog hears a high-pitched whistle." Because Greenspan has been so successful, people hang on every word he says. Investors are confident that whatever Greenspan says, will happen and that he would never make a problem worse.

Personal Humility: Alan Greenspan "demonstrated a compelling modesty, shunned public adulation, and was never boastful" (Collins). While holding office as Chairman, Greenspan was known as a quiet, humble man: "His tone [was] soothing and the phrasing wonderfully euphemistic" (Fromson). For a man who controlled the successes of the economy, Greenspan never took any credit. He simply performed his job to the best of his ability. In addition, Greenspan "channeled ambition into the Federal Reserve and set up successors for even greater success in the future" (Collins). Although Greenspan could not appoint a successor (President appoints new Chairman), his legacy served as an example of what qualities the successor should possess. In fact, when Greenspan retired in 2006, many believed that the market would fall and his new successor would not be able to "fill his shoes." When he retired, Greenspan made sure that he left the economy in good shape so that his successor did not immediately face problems. In conclusion, for a man who many consider to be more powerful than the President, Alan Greenspan displayed many Level 5 Leadership qualities throughout his career that helped him become the well-known leader he is today.

For more information on the legacy of Alan Greenspan, go to:
http://www.usnews.com/usnews/news/articles/051024/24greenspan.htm?track=rss

My Ideal Leader

Soon, I will be entering the workforce and begin working for a variety of different leaders. I am sure that I will encounter both good and bad leaders throughout my career ranging from the arrogant boss who only cares about his/her gains to the sensitive boss who is more of a friend than a leader. However, in the world of blogging, I am able to create the "ideal" leader for whom I would like to work for some day. There are many different characteristics, qualities, and skills that make up my "ideal" leader. My leader would balance all four lines of development quadrants (personal, organizational, knowledge, and cultural). Although they would be balanced in all four quadrants, they would have certain strengths that would help define their qualities as leader.

Personal:
In the personal quadrant, my ideal leader would have the ability to listen and understand. I, personally, believe this particular line of development is a characteristic that helps define the quality of a leader. By being able to listen and understand, my ideal leader would be able to gain input from all levels of employees. This not only gives respect to other employees, but also empowers them to perform at their highest potential. Employees would feel comfortable talking to the leader and offering their personal opinion, thus making employees feel as if they are essential to the success of the organization. This quality is particularly important in the financial field. Because there is so much information and data travelling around the organization, the leader must be able to understand and synthesize the information so he/she can make quality decisions. This quality would allow my ideal leader to be able to relate with me on a personal level.

Organizational:
As for the organizational quadrant, my ideal leader would have the strength of creating relevance for all employees. Today, so many working individual despise going to work because they do not like their job. However, I believe this is a result of ineffective leadership. An ideal leader is able to organize his/her employees in such a way that makes them feel empowered. By creating relevance, a leader gives reason why an individual should want to do his/her job. If an employee is going to reach their full potential, they must be able to understand why their job is important.

Knowledge:
In the knowledge quadrant, my ideal leader possesses a strong understanding of finance and the industry. As a result of my ideal leader knowing the industry, I would feel more confident and assured of my leader's decisions. In addition to feeling confident about my leader's abilities, I believe I would be able to learn from his/her knowledge. My ideal leader would have a large amount of experience in the financial industry, which will allow them to make better, more knowledgeable decisions.

Cultural:
Lastly, in the cultural quadrant, I believe an ideal leader should have a strong sense of vision. Personally, I think this is that quality that separates successful leaders from the rest. By having a vision and defining goals and objectives, employees as well as consumers can understand the direction in which the organization is going. My ideal leader would be able to use his/her knowledge of the industry and envision a path for future success. In addition to being able to have vision, I believe my ideal leader would be able to effectively communicate his/her vision and goals with the entire organization. This would help keep the organization together and headed in the same direction.

In conclusion, my ideal leader would be balanced in all four line of development quadrants. Just like any successful leader, my ideal leader would be charismatic, organized, and innovative. However, I believe there are certain lines of development in each quadrant that are particularly important in the financial field. Overall, it is difficult to describe my ideal financial leader because I have had no working experience with any sort of financial CEO. Therefore, many of my ideal leader characteristics are very general and broad. Who knows, maybe after working a few years in the financial field, my ideal leader will be very strict, difficult to please, and impersonal. But until then, I can only describe qualities that I think make up any good leader in any career field.

Blog Entry #1

Dear Visitors,

Welcome to my HOD 2700 blog on leadership! In particular, my blog deals with the subject area of finance. I chose this topic because in the future I want to work with finances and investments. Also, this subject area parallels with my two college majors: Human and Organizational Development (HOD) and Economics. Therefore, I will be able to use aspects from economics and apply them with HOD concepts and theories. Finally, I believe that finance has and will continue to be a major part of the business world. Many leaders have arisen from the financial field. Although their names may seem unfamiliar, they each display outstanding leadership abilities.
One individual that stands out in my mind as a prominent leader in the financial industry is Goldman Sachs' CEO, Lloyd Blankfein. Lloyd has been the CEO since May 31, 2006. He became CEO as a result of Hank Paulson, the previous CEO, being promoted to Secretary of the Treasury. Because of his knowledge and leadership skills, Blankfein is now the highest pain financial executive. In fact, his 2006 end of the year bonus was $53.4 million! Blankfein is different from other leaders who hold similar positions. Instead of just spending the majority of his day in his office, he often interacts with lower-level employees. He has a high attention to detail and likes to know what is going on in every sector of the company. In addition to his strong relations with other employees, Blankfein also has a vast amount of specialized knowledge about finance. As a result of his knowledge base, Blankfein represents the Economic leadership archetype. The Economic archetype is defined by the importance of purchasing power, trade, inventions, sanctions, and the development of markets. Blankfein has this type of leadership archetype as a result of the type of business in he works. Many elements of investment banking correlate with attributes of the Economics archetype. Therefore, Blankfein must possess knowledge of the archetype characteristics in order to be successful in his industry. Although he has not been CEO for a long time, he has a large amount of experience in the financial field. In addition, Blankfein embodies the integral leadership style. This leadership style is representative of the twenty-first century. It requires many different aspects of leadership such as charisma, anticipation, and valuing all members. However, this style of leadership is time and space dependent. Blankfein displays this style of leadership in many ways. First, he interacts with all employees, which shows his transformational leadership. Secondly, as a result of working in the financial industry, he anticipates change and understands the financial world around him. Lastly, because of his position, Blankfein sets goals and direction for Goldman Sachs. Overall, Blankfein's knowledge and leadership skills have helped Goldman Sachs become one of the world's largest, most successful investment banks.