Book Report Part 3

                For this section of my book report on “Liar’s Poker” by Michael Lewis, I will be focusing on the fourth and fifth chapters of the book.  I chose to pair these two chapters together because once again, I felt that they discussed the culture of Solomon Brothers, and are easily relatable to what we have discussed in class regarding culture.

                Chapter four, which is entitled “Adult Education,” talks about what the author has learned so far in his training group at Solomon Brothers.  The group of trainees regularly has employees of the firm come in as guest speakers.   These speakers are all members of higher management, and their main goal in speaking with the group of trainees is to show them what the culture at Solomon Brothers is really like.  Since these guest speakers are all very high-ranking individuals within the company, they are all rude, ignorant, and conceited by nature.  During these presentations, they make sure they really push these characteristics so the trainees know exactly how they need to act in order to survive as a bond trader at Solomon.  One speaker distinguished between a bond trader and a bond salesman, by saying that salesmen are ruled by the traders, and that bond salesmen compare in no way to bond traders.  As the author was listening to this presentation, he accepted the fact that he was destined to be a bond salesman, because he felt that he did not have the rough and tough personality that bond traders needed.  This thought was solidified when a newly hired bond trader came to speak to them in the final weeks of training.  Richard O’Grady told of an experience where he needed to obtain a sheet of bond prices for a client from another employee within the company.  When O’Grady asked nicely for what he needed, the trader told him that he was busy and told O’Grady to go pound sand.  After this reaction, O’Grady responded by hovering over the employee and screaming at him for the papers he needed (this screaming included a copious amount of swearing).  Surely enough, the employee gave O’Grady the papers he needed not two minutes after O’Grady took the aggressive route.  Again, the author realized that he could never act like this, and knew he was going to have to settle for the bond salesman position.

                I think this chapter is a nice compliment to what we discussed about culture in class.  Obviously, culture is a huge part of any company.  Likewise, the company wants to hire individuals that it feels will be a perfect match for the culture that the company has already established.  In this chapter, this is why the company sent some executives of the company to talk to the new trainees.  These executives have been with the company the longest, and know the culture better than any other.  If there was anyone who could show how cut-throat and crude the culture within Solomon Brothers is, it was one of the company’s executives.  Also, I think this chapter shows the process of deselction that we previously discussed in class.  Deselection is the process of removing oneself from the employment selection process because the individual does not blend well with the culture of the position or company.   Once the author saw the personality comparison between bond traders and salesmen, he immediately knew that he did not fit the job description, and deselected himself from the bond trader recruitment and focused instead on the bond salesman recruitment.

                Chapter 5 discusses the creation of a mortgage bond department within the company.  Bob Dall, a partner of Solomon Brothers,  was the lead advocate in the creation of this department.  He felt the creation of a mortgage bond department would greatly benefit the company because he predicted that there was going to be a drastic increase in the demand for mortgage bonds.  Not long after the formation of the department, Bob Dall was replaced by Lewie Ranieri, who was considered more energetic and popular within the company.  In the beginning stages of the department, not much trading took place, which resulted in minimal profits.  This department was also highly discriminatory when it came to recruiting employees.  Almost all of the employees in this department were Italian or Jewish, and Ranieri worked hard to keep it that way.  As a result, tensions arose between the mortgage bond department and other departments within the company.  As a result,  the mortgage bond department no longer targeted Wall Street as its enemy, but Solomon Bothers itself.

                Again, this chapter coincides well with the subject of company culture.  The company as a whole has a very snobbish culture, where everyone thinks they are better than everyone else.  This new department is no exception.  This department took the snobbish culture of Solomon Brothers to a new level, and actually targeted the company as its enemy.  It is understandable that Lewie wanted his new department to be up-to-speed  with the company’s culture, but he took it one step too far by stating that the company is the enemy of his department.

Deselection in the Accounting World

At the end of Wednesday's class we briefly talked about deselection, which is the process where a candidate for a job takes them self out of the recruitment process because after being exposed to the company and its employees.  Some candidates choose to deselect themselves because they feel that they do not fit in with the company culture.  This past month, as I have had second round interviews/office visits with many accounting firms, I realized just how important culture is to accounting firms, and witnessed deselection first-hand.  When I went to PricewaterhouseCooper's Harrisburg office for my second round interview, it was blatantly obvious they were trying to see how well the candidates coincided with the very laid back and social culture of the Harrisburg office.  Each candidate had a "host" that took you on a tour of the office, where the company strategically placed groups of individuals all around the office so while on the tour, you were forced to interact with them.  Also, the firm took us to lunch at a very fancy restaurant across the street.  Here, the candidates dined with several employees, who were seeing how well the candidates engaged in conversation with the employees.  At the end of the office visit, one of the candidates, who appeared to be very shy, told me that he was taking himself out of the recruitment process because he felt that he was not social enough to fit it with the culture of the Harrisburg office.  I did not realize it then, but I now know that individual engaged in the process of deselection.

Wal Mart Greeter Wearing a Suit?

In class this past Wednesday we spent the majority of time talking about Wal Mart, and how they implemented new uniforms for their employees.  The company eliminated the traditional blue smock that employees had to hear, and replaced it with a blue polo and khakis.  The article that discussed this issue said that Wal Mart did this so that it would appear more "classy," as it is now priding itself on more expensive items such as high-end consumer electronics.  By doing so, they can better compete with stores such as Best Buy, since it’s newly dressed employees look like they know about the high end electronics that Wal Mart is now selling. 

This article was particularly interesting to me because while I was in State College last weekend, I noticed the greeter at the Wal Mart there was dressed in a full suit, complete with a shirt and tie.  This was the first time I ever saw a Wal Mart greeter that dressed up, and I was utterly confused by this.  Once I read this article, seeing the greeter dressed like that started to make more sense.  If Wal Mart switched to polo’s and khakis to become more classy, maybe they wanted to look even more classy by having their greeters dress in professional attire.  Since the greeter is the first thing a customer sees when they enter the store, maybe Wal Mart executives thought that if customers see this greeter dressed in a fancy suit, they will think that the store, and the company in general, are just as classy.  On the other hand, the guy may have just loved his job and did that on his own.  Let me know what you think!

NFL Lockout

For my team's project, we chose the NFL lockout.  We decided upon this topic because it covers a great deal of organizational behavior topics that were previously discussed in class.  For example, conflict is obviously the key focal point because the league and the players union were pitted against one another.  With the conflict also comes negotiation, and how the conflict can be resolved.  Communication is our second key focal point, as both groups had to find ways to effectively communicate with each other.  Individuals of each group had to also effectively communicate with the others members of their group.  Finally, our third focal point is leadership, and the different relationships between representatives and members of each side.

So I chose to blog about this because I feel that even though the project is in its very beginning stages, our teamwork can already be linked to several past readings.  We had to all agree on this topic, so that tested our ability to stand up to groupthink.  Next, we established a common goal among all group members, which distinguished us from a working group.  Finally, during class in the library on Wednesday, we had to designate individuals to search for articles in each of the three areas we want to focus on for our paper.  By doing so, this eliminated the conflict of group members finding and summarizing the same articles as another group member.  Finally, at the end of the class it appeared as though leaders arose, as they were responsible for the designation of research areas.  All in all, these signs are very promising, and I feel that they are an accurate representation that my team will have no problem working together to complete the project.

Heuristics and the Headache of Choosing Professors

  

For this post, I wanted to briefly comment on the "quiz" we took at the beginning of Monday's class.  At first, I thought the quiz was really pointless.  However, once we started discussing the questions, it became obvious to me that the exercise was actually a good lesson in how to, and how not to make decisions.  The central idea of the quiz was how heuristics effect the decision making process.  Having had a psychology class last spring, I have heard of heuristics before, but did not even think to relate them to the in-class quiz.  After discussing the results, I learned just how prevalent heuristics are in an individual’s decision making process, and how biased a person's decision can be because of them.  I feel the availability heuristic is the most prevalent in my life at the moment, as I am deciding which professors I want to take for my classes next semester.  I have talked to many friends who have had the available professors, and have read reviews online to try and ease my decision making process.  Utilizing a tool such as online reviews and ratings brings the availability heuristic into play.  For example, if I am looking for a professor who is very structured, and decide not to choose a professor because of the negative reviews and ratings he or she received, I am a victim of the availability heuristic.  The professor may be very structured, but received the negative reviews as a result of some other factor, such as not being available outside of the classroom.  Ergo, if I do decide not to take this professor, I am making that decision for the wrong reasons. As scheduling is rapidly approaching, I'm sure many of you are in the same boat with me.  Hopefully now that we know about the presence of heuristics in decision making, we can refine our decision making process and arrive at the right decision with greater ease. 

Book Report Part 2

For this section of my book report on “Liar’s Poker” by Michael Lewis, I will be focusing on the second and third chapters of the book.  I chose to pair these two chapters together because I felt that they both discussed the culture of Solomon Brothers that Michael was exposed to. 

                Chapter 2, which is titled “Never Mention Money,” starts out with Michael telling how exactly he was first introduced to Solomon Brothers.  While finishing a master’s degree in economics in London, he received an invitation to dine with the Queen Mother.  Once he arrived at the dinner, he realized that he was seated between the wives of two Solomon Brother’s managing directors.  Throughout the course of dinner, one of the wives discovered that Michael was about to begin searching for a job in the investment banking field.  After this point, she turned the rest of the dinner into a round-about interview.  At the conclusion of the dinner, the managing director’s wife promised she would talk to her husband about getting Michael a job, and sure enough he was later invited by her husband to the London Solomon Brothers Office.  He had a successful office visit, and was later invited to a business breakfast with the managing director later in the week.  Despite how successful both of these events were for Michael, he was astounded by the fact he did not receive a formal job offer.  Eventually, Michael learned that Solomon did not make formal offers.  Instead, they gave hints that they wanted to hire an individual.  Knowing this, Michael called the managing director, and told him that he accepts, and the managing director replied with, “Glad to have you on board.”  Michael loved the fact that many bankers at Solomon brothers were crude, rude, and socially unacceptable.  In the later part of the chapter, he tells how he previously interviewed with Lehman Brothers.  During the interview, he said the only reason he wanted to become an investment banker was because of the money, and the Lehman Brothers interviewer said that money was not the driving force behind the investment banking industry.  Consequently, Lehman Brothers went out of business years later, and Michael felt that it may have been caused by the firm not admitting that its sole purpose was to make money.  For this reason, he named the chapter “Never Mention Money.”

                As I am going through the internship interview process, I can definitely relate to the boldness that Michael exhibited during his Solomon Brothers interviewing days.  If it was not for him boldly calling the managing director and saying he accepts their offer based on the hints they were giving, he would have never got hired by the firm.  I can relate this to a similar situation I was in when interviewing for an internship position for the spring of 2012.  After forty minutes of intense conversation and countless questions, the interviewer asked me if I had any final questions.  I responded by basically asking for the position by asking what else I could do to help secure my internship for the spring of 2012.  Impressed by my boldness, the interviewer responded by saying that I could help secure the position by attending the final round of interviews, and then proceeded to give me the when and where of the final interviews.  I then attended the final interview, and received the spring internship offer that I wanted.  If I did not act boldly at the end of my first round interview, much like Michael did after his meetings with the managing director, I do not know if I would have gotten the position I wanted, just as Michael would not have gotten the position he wanted if he had not called and said that he accepted.

                Chapter three is entitled “Learning to Love Your Corporate Culture,” and discusses Michael’s first days with the firm in regards to the training sessions he was required to attend.  It was at these sessions that he learned what the corporate culture of the investment banking world was really like.  The chapter starts with Michael giving an overview of why Solomon Brothers was so successful in the 1980’s, and how exactly they operated to achieve this success.  He then goes on to describe the training he and 127 other new hires had to endure.  He described the training room in a way that relates to a typical classroom, where there were the very attentive individuals in the first few rows, followed by those less attentive individuals in the back row.  He then went on to say that the training process was the equivalent of being beaten by the neighborhood bully every day.  Also, the leader of the training denounced each trainee by saying that once they hit the trading floor, they will be at the bottom of the food chain, regardless of how much of a big shot they think they are.  At the end of the training, a diagram was posted on the board that showed which individuals were assigned to which office.  Once this chart was posted, the trainees immediately attempted to befriend a managing director, so that they could be traded to the office they truly wanted to work at.  At the end of the chapter, Michael discussed how Solomon brothers relied on its training program to make the trainees more like the rest of the employees, ergo establishing a common culture.  Michael, along with the rest of the trainees, was constantly told that he was not nearly as special as he thought he was, and that on the trading floor, he was the absolute bottom.  This “brainwashing” helped establish the rude and crude common culture that is shared among employees of Solomon Brothers.

                This idea of corporate culture is relatable to the subject of organizational behavior.  IF a new hire does not fit the established culture of a company, conflict will arise between the individual and the employer.  This is represented by the Wal-Mart discrimination case that we read about in class earlier in the semester.  Many women were upset because they felt that they were not given the same opportunities for advancement as the men were.  Whether Wal-Mart was guilty of this or not, they have gained a reputation over the years of discriminating against certain employees.  Prior to this, the company was in trouble for pay and benefit discrimination against certain minorities.  Now, they are discriminating against women in terms of advancement opportunities.  It can be said that Wal-Mart has developed a discriminating culture over the years, whether they want to admit it or not.  With that being said, employees should be aware of this fact before seeking employment with the company.  If they do not like this culture, as many women in the reading did not, conflict will arise, which is shown in the reading by the lawsuits that resulted from the cultural differences between the company and certain employees.

Using Integrative Negioation to Solve the Pemberton Prisoners Dilemma

For this blog post, I wanted to touch on two concepts discussed during Wednesday's class, and relate them to the Pemberton activity done in class a few weeks ago.  First, we received a more detailed description of the prisoners’ dilemma diagram.  We discussed a new chart that shows how well we understand the other party to the game bases on our decisions to compete or cooperate.  In the Pemberton stores activity, my group and the group representing the other store both chose to cooperate by remaining closed every Sunday.  According to the new prisoners’ dilemma chart we discussed in class, this means that both groups understood each other, which resulted in joint problem solving.  I feel this is accurate because we realized early what the goals of the opposing were, and coincidently, they were the same as the opposing group.  We understood that each store wanted to make as much as they could in the safest way possible, which led us to jointly solve the problem by agreeing to remain closed every Sunday, which resulted in a $20,000 profit every round.  This understanding of each other also led us to engage in integrative negotiation, where we had to focus on the interests of the other group in order to reap the best results for ourselves.  Similar to the orange example in class, each group wanted to make the most money in the safest ways possible.  We invented an option to achieve this desired mutual gain by deciding to remain closed very round.  As a result, both groups received a very hefty profit, while other groups who did not engage in integrative negotiation received much smaller profits.

Pemberton In Class Activity

For this blog post, I wanted to briefly comment on the Pemberton activity where we assumed the role of owners of a local general store, and had to negotiate with another general store on which store, if any, was going to be open for business on Sundays.  Previously, town ordinances prevented any store from being open on Sundays.  Due to increased competition from a nearby mall, the thought of being open became a primary concern for both local stores.  During the activity, my partner and I noticed that many of the competing groups wanted to agree to remain closed for all remaining rounds, so both stores could earn a profit of $20,000.  While most of the agreements to stay closed help up, a few teams decided to betray the other store by switching to open in the last round, resulting in them receiving a substantially high profit, while the other team suffered a substantial loss.  During negotiation, my team, and the team we were matched up with, devised a solution to this problem.  Both of our teams also decided to remain closed to benefit each other. To ensure each team stayed loyal, we filled out our score sheets for the remaining rounds during the negotiation, so that way no team could go against their word of remaining closed.  This prevented the other team from quickly changing their sign during the revealing period, because their score sheet already had closed for every round.  If a team wanted to take the safe route of remaining closed every round after negotiation, I think if they would have used the same strategy, they would have been guaranteed they outcome they wanted.

AccelMedia In Class Activity

For this blog post, I would like to elaborate on the in class project involving Accelmedia and GTechnica.  As soon as I read my part of the article, I couldn't wait to start the negotiation in class the next day.  I assumed the part of an Accelmedia employee, whose job was to negotiate an offer for a crucial component for one of our products.  My goal was to get the lowest price per unit, while not going above $35 per unit.  My boss was then going to evaluate my performance based on the negotiated price per unit.  Going into the negotiation, my plans was to come out low, and if necessary, raise my offer in small increments.  Once I met with the other side of the negotiation, I made an initial offer of $22 per unit, which was countered by an offer around $60.  Once I realized he wanted to play hardball, I knew I had to be much more aggressive in my negotiations.  We battled back and forth, making threats of ending the negotiation with no deal.  After a great deal of haggling, we reached a price per unit of $28.  This price was reasonable for me because it was under my boss's limit of $35.  I learned a great deal from this exercise.  I learned that if you are the seller in the situation, you want to make an extremely high first offer.  If one uses this approach, they will either create the "ballpark" and gain authority in the negotiation, or set the floor high for negotiation.  If you end up creating the ballpark, you might even get you initial extreme offer.  On the other hand, your extreme offer could be completely ineffective.  On the other hand, if you are the buyer, you want to make an extremely low first offer.  I think this idea of extreme initial offers is a key strategy in the television shoe Pawn Stars on The History Channel.  When someone brings an item to the shop that they want to sell, he or she usually says they want to receive an amount that is extremely high, thus trying to create the ballpark.  The pawn shop employee will then counter with an extremely low offer to get the seller to cooperate, and essentially lower the negotiation. When all is said and done, the seller usually gets paid an amount way under what they asked for, thus benefiting the pawn shop because they can resell the item at the price the seller initially wanted, and make a grotesque profit.

Book Report 1

For my book report, I am reading “Liar’s Poker,” written by Michael Lewis.  For my first part of my book report, I will be summarizing and analyzing the first chapter of the book.  While the chapter is short, it pretty much describes the subject of the rest of the book, and I feel that it is necessary for it to have its own report.  The rest of the chapters are more inter-related, and ergo will be the subject of later reports.  The first chapter of the book is entitled “Liar’s Poker,” and starts by introducing the setting of the chapter, which was Wall Street in Ney York City in 1986.  The author, who is an employee of Salomon Brothers, one of New York’s biggest investment banks, tells a story he will never forget; a story of what exactly liar’s poker is.  The author gives the profile of John Gutfreund, the chairmen of Salomon Brothers.  One day he decided to challenge John Meriwether to one hand of a game called Liar’s poker.  Meriwether was considered the cream-of-the-crop in terms of bond salesmen within the company, and in the entire city of New York.  In addition to this prestigious title, he also served on the board of Solomon Brothers, and was considered the king of Liar’s Poker.  He made hundreds of millions of dollars for the firm from trading bonds.  His astounding success can be credited to his daring personality, and ability to hide his state of mind. 

The author then describes what exactly Liar’s Poker is.  Each participant would hold a dollar bill against their chest, and try to fool the other players as to what the serial numbers on the dollar are.  A player would start by making an initial bid by saying something like “three fives.”  This means that every bill that is being held has at least three fives in the serial number.  The next bidder can either bid higher by saying something like , “three eights, or five fives,” or challenge the pervious player’s bid.  Bidding persists until all players agree to challenge one individuals bid (Liar’s Poker 17). Ultimately, players want to bluff others into believing  they have don’t have a good hand, when they actually do, or bluff that they have a good hand when they really don’t.   Players have to determine probabilities, risks, and profitability when making decisions during the game.

 Gutfreund entered Meriwether’s office and challenged him to a hand of Liar’s Poker, with the loser to pay $1 million to the winner.  Meriwether was quite shocked by Gutfreund’s offer, since Gutfreund was always an outsider to the game.  Meriwether decided to subliminally  play Liar’s Poker with Gutfreund by raising the stakes of Gutfreund’s offer from $1 million to $10 million.  Clearly Meriwether was bluffing, but since Gutfreund was an amateur Liar’s Poker player, he was quickly defeated by Meriwether and decided to reject his offer.

As I read this chapter, I could not help but think that the game of Liar’s poker possesses many characteristics that the Carter Racing Case had.  In the game, players have to calculate probabilities of winning, just as we had to calculate probabilities of certain outcomes such as obtaining the tire sponsorship, or retaining the oil sponsorship.  We evaluated the probability of success fully obtaining the desired results.   We also had to decide if out decisions were smart risks, just as players of Liar’s poker have to.  Players of Liar’s Poker also have to decide who is bluffing, and who isn’t, much like how we had to decide which information in the case was reliable, and which was not.  In the case, each team had to decide whether the mechanic’s data relating to his prediction as to why our engine had previously blown up was legitimate or not.  Most groups determined that data was irrelevant, which would represent a bluff in Liar’s Poker.  I would venture to say that even the choice to play Liar’s Poker is similar to the decision we had to make in the racing case.  If one chooses to play Liar’s Poker, he or she is risking a sum of money in hopes to earn even more money.  If one chooses not to play, they are taking the safe route and are comfortable with the fact that they will not make any extra money.  Similarly, in the racing case each team had to decide whether to negate the possibility of engine failure by risking everything and racing, or decide to  play it safe by not racing and accepting their current financial situation.  I feel that in terms of my group, we would all choose to accept Meriwether’s new Liar’s Poker offer because we all decided that the best decision the team in the racing case could make was to risk everything and race