In the past month or so, the highly public tug-of-war over the future shape and direction of the financial industry has refocused from compensation to culture. The trend bears watching because it could subtly alter certain criteria by which financial institutions decide who to hire and promote.
A signal event is Harvard Business School's choice of Nitin Nohria as its new dean, effective July 1. A long-time advocate for emphasizing ethics in business education, Nohria was a prime mover behind the MBA Oath movement. Launched by HBS students last year, the MBA Oath now claims participants in 250 schools around the world.
"I've always maintained that business can be a wonderfully noble position," Nohria told The Wall Street Journal. Noting that "Society's trust in business has taken a hit," he contends "management education has been overly-focused on the principles of management" - presumably at the expense of short-circuiting any awareness of business's broader role in society. Other leading management educators remarked that having someone like Nohria head up an eminent insititution like HBS "gives added weight to the calls for change."
Goldman Sachs and Glengarry Glen Ross
Of course, it's hardly a given that influence will extend beyond the ivory tower to Wall Street. Talk of managing corporations in the best interests of "stakeholders" or society as a whole flies in the face of clear legal and institutional norms that give priority to the interests of shareholders and profitability.
Still, I think professionals looking to climb Wall Street's career ladder would be wise to consider the possibility that banking culture will bend, even if only slightly, toward the demands of industry critics. Economic considerations aside, the cultural gulf may simply be too wide to persist. Details emerging from the Goldman Sachs Abacus saga appear to cement the public's view of Wall Street as an amoral place where everyone is out to put something over on the next guy... even their own insitutional clients.
The obvious fictional parallel is Gordon Gekko, the villain of the original Wall Street movie of two decades ago who also appears in the sequel due for release later this year. Last week, Reuters' Matthew Goldstein raised another dramatic parallel: Glengarry Glen Ross. The mind-set exhibited by Goldman Sachs mortgage bond traders in e-mails released through the Senate's probe, Goldstein wrote, "would not be out of place" in that David Mamet play about dishonest real estate salesmen whose jobs forced them to "always be closing." One glaring example is executive Tom Montag praising salesman Cactus Raazi for persuading customers to lift Goldman's remaining inventory of a product that Montag himself had described with an expletive in another e-mail.
Admiration for 'Fabulous Fab'
While most of the public professes disgust for that sales-driven culture, bankers see no shame in it. In fact, more than a dozen young Wall Streeters interviewed by Newsweek voiced admiration for Fabrice Tourre, the structured products salesman who the SEC charged with fraud for his role in Goldman's Abacus sub-prime CDO deal.
One banker called him a political scapegoat. Another called him a hero...He's becoming a cultural icon to his contemporaries because they empathize with him...
To the bankers, Tourre's e-mails in which he expresses doubt about the validity of the products he's selling only make him that much more likable.
Perhaps most important of all, "Wall Street insiders predict he will easily find another job in the financial world."
A New Type of Interview Curve Ball?
That Newsweek story concludes Wall Street behavior isn't likely to change, beyond perhaps taking care not to say certain things in e-mails. I'm not convinced. If thought leaders from the MBA world are pushing for change - and Harvard's Nohria isn't alone in this respect - it could presage a new turn in corporate culture. Not a sea change to be sure, but a gradual one.
Here's one possibility: In interviews for banking jobs, the tone of questions might undergo a subtle shift toward greater focus on a candidate's ethics and social responsibility. Of course, some companies might tack the opposite way, angling to screen out candidates who come off as "too" principled. So the need to research the culture of the firm you're interviewing with is greater than ever.
All in all, financial professionals would be wise to keep a finger in the wind.