News & Views

By Liz Wolgemuth
Posted March 31, 2008

JPMorgan Chase's Fed-led Bear Stearns bailout was intended to save the financial markets, but it remains to be seen if JPMorgan can save the firm. As the two banks prepare to merge, the collision of corporate cultures promises a considerable challenge for Bear employees.

The companies certainly have different histories. While Bear had managed to remain an independent firm throughout its 85-year-old history, JPMorgan Chase is the result of many mergers. Chemical Banking Corp., Manufacturers Hanover, Chase Manhattan, JP Morgan, First Chicago, and Bank One have all become one under the JPMorgan Chase name.

Bear Stearns's culture stood out on Wall Street, says Rick Peterson, a Houston-based recruiter for the brokerage industry. The firm catered to very high net-worth clients, and individual brokers were able to move quickly on clients' requests, he says.

On the other hand, like other U.S. banks, Peterson says, JPMorgan tends to be "extremely cautious, ultra-conservative," and bureaucratic. This, he says, is the main difference between the two companies: "JPMorgan expects its employees to do as told, when told. Bear Stearns brokers are not used to being told anything. They're used to doing the telling themselves."

The accomplishments or qualities that organizations reward in their employees tend to be very telling of their culture, Sherriton says. Some companies reward employees who toe the line, while others reward entrepreneurship.

Nomi Prins, author of Other People's Money: The Corporate Mugging of America, worked at Bear Stearns for seven years, and, in a recent story for Mother Jones, describes it as "a colorful place" that was generally considered by employees and outsiders to be a firm that didn't fit the mold. "It was the oddball amongst investment banks from the standpoint of 'corporate culture'—a 'maverick,' the Wild West of banking," Prins writes. "We actually left our desks to eat lunch. Some of the sales-force drank theirs."

In an interview, Prins said Bear's culture prized directness. "You kind of did things, as opposed to talked about doing things," she says. Her time at Bear was followed by a stint at investment bank Goldman Sachs, a place that—for better or worse—relied more on meetings. Prins withholds judgment of either culture but admits she never became totally comfortable at Goldman and suspects Bear employees may have a difficult time transitioning to another firm.

While some Bear brokers are looking to jump ship, Peterson says, others will stay at JPMorgan to test the firm's new culture. JPMorgan will continue using the Bear Stearns name and will keep Bear brokers separate from its own high-net-worth group, Bloomberg quoted an unnamed source as saying last week. Top Bear brokers were also offered a retention deal aimed at keeping them with JPMorgan.

Mergers can require such flexibility from employees that it's not unlike starting a new job, says Jim Stern, Sherriton's colleague at Corporate Management Developers and the consultancy's vice president. How staffers are held accountable can be a major difference between companies. Some employers keep workers on a short leash by docking pay and cutting bonuses, while others tend to be more laissez-faire. "Unless you're able to conform to that new culture of accountability, you're not going to be successful," Stern says.

The post-merger environment can be tricky to navigate for any company. Consider the much-watched YouTube video of a Bank of America corporate gathering in 2006, following the bank's merger with MBNA. An employee expertly croons U2's "One," albeit with somewhat altered lyrics. The verses, an awkwardly forced celebration of bank unity, include such feel-good phrasing as: "One spirit. We get to share it. Leading us all to higher standards."

When JPMorgan CEO Jamie Dimon addressed Bear Stearns employees this month, he did not serenade them, but he did ask for their support.

In 2007, KeyStone donated seven percent of partner income - in addition to hundreds of hours of volunteer leadership - to the following local non-profit organizations:

• Mixed Blood Theatre
• American Red Cross Twin Cities Area Chapter
• Fraser
• Jeremiah Program
• Artspace Projects
• Hill Cities
• Hope Academy
• Special Olympics of Minnesota
• Crisis Connection
• Sharing and Caring Hands
• RESOLVE - Minnesota Chapter
• Animal Humane Society
• CaringBridge
• Citizens League

Non-profits interested in being considered for funding support may direct inquiries to KeyStone co-founders Mike Frommelt or Bob Schoenbaum.

Dec. 7, 2007 -- Over fifty executives gathered to listen, learn, and discuss cutting-edge crisis management strategies in a forum hosted by KeyStone Search, the Twin Cities Area American Red Cross, and Roberts & more, LLC, a leading Minnesota-based public relations firm.

Red Cross CEO Jan McDaniel and CMO Ted Canova detailed their response to the 35W bridge collapse and the coordination of local, national and international communications.

Participants also heard from Roberts & more founder Chris Roberts about building strategies for crisis communication.

KeyStone Search is committed to providing timely and relevant executive education forums, and welcomes ideas, suggestions, or feedback for future education outreach. Ideas may be directed to any member of the KeyStone team.

Bain Survey of More Than 1,200 International Executives Shows Significant Shift in Focus to Corporate Culture, Environmental Protection and Knowledge Management

Results of Bain & Company's Management Tools & Trends 2007 study find that softer management issues, such as corporate culture, environmental protection and knowledge management, have now moved to the forefront of executive thinking. According to a survey of more than 1,200 international executives by the global business management consulting firm:

• 9 of 10 believe that corporate culture is as important as strategy for business success.
• 7 of 10 consider environmentally-friendly products and practices as an important part of their mission. This environmental focus is even more important to executives in emerging market countries (77 percent) than to those in established market countries (59 percent).
• Knowledge management, for the first time, ranks among the top-10 "most used" tools.

"Executives are actively addressing higher order needs, changing the rules and the tools of management," said Darrell Rigby, senior Bain & Company partner and author of the Management Tools & Trends study. "Organizational culture and so-called softer issues are now top of mind. Executives are clearly looking beyond cost-cutting for success."

Launched in 1993 and now in its 11th edition, the Management Tools & Trends study examines executive attitudes toward management and industry trends, and evaluates the use and satisfaction with management tools. [Note to Editors: Survey methodology is explained in more detail at the end of this announcement.]

The top-10 "most used" tools globally in Bain's Management Tools & Trends 2007 study are strategic planning (1st place), customer relationship management (2nd), customer segmentation (3rd), benchmarking (4th), core competencies, mission & vision statements (tied for 5th), outsourcing (7th), and business process reengineering, knowledge management, and scenario & contingency planning (tied for 8th).

When asked to consider both usage and satisfaction with management tools, the executives overall give strategic planning, customer relationship management, core competencies and customer segmentation "above average" rankings. Conversely, RFID, corporate blogs, consumer ethnography, loyalty management and shared service centers all score "below average" in both usage and satisfaction.

At a time when public attention and debate on outsourcing continues to grow, the Management Tools & Trends study shows the tool losing some luster among executives. When compared to results from the previous report in 2005, outsourcing drops from 3rd to 7th place in usage. Offshoring - a form of outsourcing - fell from 7th to 16th place in satisfaction. Offshoring also now has the 6th highest "defection rate" in terms of the relative occurrence of companies who have stopped using it as a management tool.

Other highlights from the 2007 study include:

• Economic pessimism in China: 45 percent of executives in China are bracing for an economic slowdown compared to 27 percent in North America, 18 percent in other Asia-Pacific countries, 15 percent in Europe and 10 percent in Latin America.
• Continued globalization: 42 percent agree that cross-border acquisitions will be critical to achieving growth objectives in the next five years; 53 percent say working with China and India will be vital to success over that same period; nearly two-thirds say innovation could be boosted dramatically by collaborating with "outsiders, even competitors."
• Emerging vs. Established Markets: Executives in emerging markets tend to use the following management tools more often than their counterparts in established markets: total quality management, supply chain management, six sigma, corporate blogs, shared service centers and consumer ethnography. Executives in established markets are more apt to use mergers and acquisitions, offshoring, benchmarking, scenario and contingency planning and strategic alliances.
• Private vs. Public: 43 percent agree and 25 percent disagree that their companies would have better long-term results if privately owned; 39 percent would rather work for a privately owned company, while 27 percent would not.
• Expectation vs. Reality: 87 percent agree that information technology can create significant advantages; at the same time one-third of the executives also believe that expected paybacks from IT investments are rarely achieved.

"In evaluating the Management Tools & Trends 2007 survey, we are keenly aware that management attitudes often shift faster than results do," added Paul Rogers, a London-based Bain partner and head of the firm's global organization practice. "While corporate culture, for example, is receiving considerably more management attention than in previous years, Bain research shows that fewer than 10 percent of companies currently succeed at building high-performance cultures."

For more information about Bain's Management Tools & Trends 2007 or to schedule an interview with Darrell Rigby or Paul Rogers, please contact Cheryl Krauss at email: cheryl.krauss@bain.com or 646-562-7863, or Frank Pinto at email: frank.pinto@bain.com or frank.pinto@atwoodpartners.com or 917-309-1065.

About Management Tools & Trends 2007
In 1993, Bain launched its series of research projects about management tools and trends. The objective is two-fold: to provide managers with information they need to identify and integrate tools that will improve bottom-line results, and to understand how global executives view their strategic challenges and priorities.

Over the past 14 years, 11 surveys have been completed - assembling a database that now includes 8,504 respondents from more than 70 countries in North America, Europe, Asia, Africa, the Middle East and Latin America.

The 2007 survey included 1221 completed surveys from a broad range of international executives. Tools were defined in a booklet, Management Tools 2007, An Executive's Guide, mailed with the surveys to senior executives around the world. Personal follow-up interviews were conducted to further probe the circumstances where tools are most likely to produce desired results.

About Bain & Company, Inc.
Bain & Company, a leading global business consulting firm, serves clients on issues of strategy, operations, technology, organization and mergers and acquisitions. The firm was founded in 1973 on the principle that Bain consultants must measure their success by their clients' financial results. Bain clients have outperformed the stock market 4 to 1. With offices in all major cities, Bain has worked with over 3,300 major multinational, private equity and other corporations across every economic sector. For more information visit: www.bain.com.