Page 167 - Executive Warfare

The People You Have to Motivate

But one morning I learned that a handful of our salespeople were being
investigated for defrauding their viatical investors. Why hadn’t the people
supervising these salespeople warned me that they were selling viaticals?
Because my senior employees were
going to try to make it go away before I
found out.
EMPLOYEES WHO
As a result, I had to learn about this
COVER UP
problem another way—from our regu-
PROBLEMS CAN DO
lators. And so did my boss and the
SEVERE DAMAGE
entire board of directors. One of your
TO YOUR CAREER,
primary jobs as a senior executive is not
SO YOU HAVE TO
embarrassing your boss or your board.
MAKE PEOPLE FEEL
My employees had put me in the awk-
COMFORTABLE
ward position of doing just that because
ABOUT BRINGING
I didn’t know what was happening in
YOU BAD NEWS.
my own area. Employees who cover up
problems like this can do severe damage
to your career, so you have to make people feel comfortable about bring-
ing you bad news.
The most valuable employees are those willing to rain on your parade
when it’s necessary—willing even to rain on a parade they organized
themselves. For example, as one of Merrill Lynch’s top bond executives,
Jeffrey Kronthal had helped to make Merrill a leader in the market for
collateralized debt obligations, complicated investment vehicles that bun-
dle different kinds of debt and derivatives, including mortgage-backed
securities.
In 2006, however, according to the Wall Street Journal, Kronthal began
warning his bosses that the firm’s exposure to the mortgage market was
growing too large.Nonetheless,Merrill kept pushing its chips into mortgage-
related securities, and Kronthal was replaced. Then subprime borrowers
began defaulting on their loans in large numbers, and Merrill was forced to
take over $20 billion in related write-downs in the last half of 2007.

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