A few years after taking over the fixed income division of Morgan Stanley, John Mack was flying back to New York with his wife Christy from a skiing trip in Utah.
He happened to sit next to a professor from Brigham Young University named Tom DeLong who was headed to speak to AT&T executives about leadership.
DeLong was mumbling, practicing his upcoming speech.
“Could you speak a little louder?” Mack asked. “I’m seriously interested in what you’re saying.”
DeLong explained he did research on why organizations are dysfunctional.
Two weeks later, Mack invited DeLong to visit and later hired him, according to Mack’s recently published biography: Up Close & All In: Life Lessons from a Wall Street Warrior.
It’s amazing to think about the serendipity of Mack sitting next to DeLong and the impact it had on both men, as well as the firm. Mack would use many of DeLong’s recommendations in his effort to build a more collaborative culture. Mack spent 34 years at Morgan Stanley, retiring as CEO in 2011.
“Tom comes in and he interviews my senior group,” Mack told Barry Ritholz on the Masters of Business podcast. “Here’s what people think, to get ahead in this division, they have to be your friend. That may not be reality, but that’s what they all believe.”
DeLong pinpointed one of the most commonplace and challenging issues for leaders and one of the hardest both to recognize and address: a natural bias to favor people you like.
Mack said he was committed to bending the aggressive culture of a Wall Street firm to operate more as one team. To his credit, he realized it would take a structural change.
DeLong recommended Mack set up an independent committee to evaluate employees for promotions and raises.
“Let them make a presentation to you of the talent that should be promoted. If you have a strong objection, you can say that, but by and large, you should accept what they put in front of you,” Mack told Ritholz.
“That move really changed the culture of the division,” he said. It meant “you don’t have to be Mack’s friend. It’s about being professional, direct and honest. And your peers would do the evaluation on how you’re doing, what you’re doing and what you should be doing.”
The evaluation process also included anonymous 360 reviews of managers which Mack said helped him identify some who “were not setting the right tone.”
Some of the managers were reluctant to “go out with salesmen and help them entertain clients,” he said. “It put more pressure on managers to be involved and not just sit in an office.”
Mack’s biography is filled with stories about his life set in the context of how globalization and technology transformed Wall Street over the past several decades. It’s well worth reading.