Two Executives Leave Nasdaq As Greifeld Assumes the Reins
Wall Street Journal, May 13, 2003
Get the right people on board.
That was number one on the list of priorities I had presented to the Nasdaq Board in my interview. The right people leverage everything else in a business—even more so when you are undergoing a turnaround and cultural shift. Business, like life, is unpredictable. No matter how good your strategies, you can be sure you will face unexpected challenges, new opportunities will arise, and shifting market conditions will take you by surprise. You can’t control circumstances, but what you can do is to ensure that you have the best people in place so that when the world changes around them, they can adapt, respond, and step up. That’s why my motto has always been people first.
In management circles, we talk a lot about engagement. If you have workers who show up every day merely because they’re getting a salary, your company is unlikely to thrive in the long term. Engaged employees come to work for more than a paycheck. They show up with purpose and even passion. They want to work hard and are connected to the mission of the organization. That’s the type of workforce a thriving business needs. In the early days of any culture change, the critical first step is to find the people who want to work in that new culture—and to part ways with the people who don’t.
When corporate leaders say, “People come first” or “People are our most important assets,” the message may seem warm and fuzzy. But it’s not always a line that a CEO can deliver with a hug and a smile. There is another side to the “people first” principle. Just as the right people are extremely important to the success of any given business, the wrong people—individuals who do not fit, for whatever reason—need to be let go. And letting people go is never easy.
The first firings during my tenure happened immediately. I had done my homework, evaluated the executive team, and already knew several changes in senior management that needed to be made. It was still early morning when the first person came in. This was an individual with a long history at the company. I considered him part of the old Nasdaq and knew that he was not a good fit for a company embarking on the changes I had planned. I needed someone who could get out ahead of our issues; he seemed only able to analyze what went wrong after the fact. It was the right step to take; there was no benefit in dragging it out. “We’re taking Nasdaq in a different direction,” I explained, “and we don’t think your skill sets are aligned with where we want to go. We might as well part ways now and give you time to go look for something else.”
He was surprised, of course. Perhaps he’d had an inkling that this might happen, but I could see he wasn’t expecting it before 8 a.m. on my first day. Nor were the other two people I let go in that first hour. Around the office, as staff arrived, there was a palpable sense of shock at the events of the day and how quickly they were unfolding. As word got out that personnel changes were already underway, not surprisingly, people were reluctant to come into my office.
Personnel changes can be painful—there’s no way around it. The people I said good-bye to on that first day, along with the nearly three hundred I let go in my first year, weren’t faceless cogs in a machine; they were colleagues and teammates. Change had come to them uninvited. In these situations, I was glad Nasdaq had the resources to be generous with severance packages. After all, many of these employees weren’t leaving because of underperformance in relation to the original expectations of their job. Rather, the expectations had suddenly and dramatically shifted.
I knew that these changes would temporarily impact morale. But I kept in mind a great piece of advice I’d received from a friend and business associate, Vinnie Viola: “Good morale in a bad organization isn’t worth much.” He is absolutely right. What use is a contented workforce if the business is failing? I was willing to temporarily sacrifice morale if that’s what it took to achieve the goal—good morale and a great organization.
I also saved myself a lot of time and struggle by acting clearly and decisively from the moment I arrived. The message was immediately and effectively communicated: We’re in a new world, and there’s nothing to be gained by digging in and defending the old one. It saved us all countless hours of meetings and long, drawn-out culture wars. I didn’t want to constantly hear the phrase “This is how we’ve always done it.”
Transparency builds trust and minimizes drama. If you tell people what you are about, right from day one, then when they see you follow through on your intentions and act accordingly—even if that involves making difficult decisions—on some level they’ll appreciate that you were up front and honest with them. That will create confidence in your leadership and encourage clarity and transparency in return. If you’re not transparent, you set the stage for all kinds of negative drama. There will be gossip, innuendo, and distrust, none of which helps anyone get their job done.
The bottom line was, those changes had to happen if Nasdaq was to survive. Yes, this was an emotionally difficult part of the job, but as I told my team at the time, “We can’t operate like a charity. If we don’t do the right thing—and make the necessary changes to adjust to financial realities—somebody will acquire Nasdaq and do the right thing for us.” As a public company, you’re always for sale. The sale price is published every day on the ticker. And if you’re running a 20 percent margin business when you really should be running a 35 percent margin business, someone is going to take notice and make a change.
Who’s on the Bus?
Most business leaders understand the impact of a bad hire. Zappos CEO Tony Hsieh has said that bad hires have cost his company over $100 million since he opened for business.1 A study by the Society for Human Resources Management suggested that the cost of a bad hire can reach as high as five times that person’s annual salary.2 A bad hire disrupts productivity, saps morale, and can negatively impact the performance of others as well. Plus, the opportunity costs of not having the right person in the role are incalculable. Unfortunately, having the wrong person already occupying a position is similar to making a bad hire. That’s why I believe that the same concern and attention that is often brought to the hiring process should always be applied to existing personnel at the start of a turnaround. Indeed, it’s helpful to imagine that you are hiring for a new company, one that will exist only when the change process is complete. That will lead you to look at your existing staff freshly, with eyes on the future of the organization.
“I felt like I was interviewing for my job,” Adena Friedman told me later, describing our first meeting. “Then, at a certain point, I realized that was exactly what I was doing!” You might recognize her name—she would become CEO of Nasdaq after I decided to move on in 2016, and that role still rests in her capable hands as of this writing. In 2017, Forbes would rank her as one of the most powerful women in the world. In 2003, she was a smart young executive with tons of potential. She’d been with Nasdaq for a decade, and exuded dedication, passion, and competency. I quickly recognized that she had no cause to fear for her job in the reorganization. Adena soon became a critical member of my inner circle. A highly effective manager and tough financial negotiator, she would go on to lead a number of strategic acquisitions.
In addition to Adena, there was another executive who would become a central figure in Nasdaq’s turnaround: Chris Concannon, my new EVP of Strategy. Industry insiders may know him as the current President and COO of MarketAxess, a large electronic bond-trading platform. In 2003, Chris was an outsider like myself, one of the two people I brought with me to Nasdaq. He had previously worked at an ECN called Island, and then as an executive at its parent company, Instinet, so he was deeply familiar with the ways in which technology was changing the trading landscape. As upstart executives and leaders of ECNs, both Chris and I were disruptors when it came to the Nasdaq marketplace.
Chris was smart, creative, and independent. He had an irreverent, wise-guy personality that brought some welcome levity to our executive team. He didn’t just follow directions. He liked to second-guess things. His thoughts on Nasdaq’s various projects and business strategies were already proving invaluable in the organizational overhaul, and his skills nicely complemented mine. Indeed, I believe that any good team should supplement each other’s skills, abilities, and expertise, not replicate them. I think of this as “checkerboarding your skill sets.” Chris would go on to become a thought leader in the organization, who deeply understood how markets and exchanges work, and he helped us shepherd the Nasdaq marketplace into its next phase. I take pride in having helped Adena, Chris, and many others develop from talented young executives with great potential into seasoned leaders who are shaping the future of the financial industry even today.
During my initial days and weeks on the job I would continue to evaluate my management team. Some clearly brought a lot of value to the table, like EVP of the Global Index Group John Jacobs, or General Counsel Ed Knight. I was fortunate to have them on board. However, I ended up parting ways with several others. And instead of immediately searching outside the company for their replacements, my preferred strategy was to look more closely at the people already around me. I was rewarded by the discovery of real talent at Nasdaq that had been unrecognized, undeveloped, or underutilized before I arrived.
Sometimes it’s necessary to go outside the company to find the right person for a role. But don’t make that a default move. Promoting from within builds morale, incentivizes higher performance, and avoids many of the risks associated with outside hires. The hiring process is unscientific, and interviews last hours at best. People can sound good in an interview, but it’s hard to know for sure. I’ve found that eloquence is often overrewarded in corporate contexts. Internal candidates, by contrast, have essentially been interviewing for years. They are also familiar with company culture, which accelerates the onboarding process. Wherever possible, promote before you recruit.
If you find that you can’t follow this rule, you may need to do some honest self-examination. If you’ve been doing your job as a leader in an established company, you should be developing the talent you need. When I couldn’t find an internal candidate for a key role, I’d ask myself, What am I doing wrong? We invested a lot in developing talent over time for this reason. Of course, sometimes new blood is a good thing, and you don’t want to become entirely insular, but as a general guidepost, I like to keep the ratio of promotion to outside recruitment at around 80:20.
Over and over again, I sought out hidden gems at Nasdaq and elevated in-house talent. When I let go of the head of our listings business, a prominent position that required a unique mix of relationship-management skills, marketing talents, and public relations expertise, I didn’t just call an executive search agency. Soon enough, on a trip to our office in San Francisco, I met Bruce Aust, a young, charismatic executive with that exact skill set, along with an impressive roster of relationships with key figures in Silicon Valley. There was just one problem: Bruce was a Vice President, two rungs down the ladder of the Nasdaq hierarchy. In order to lead the Corporate Client Group, he’d need to leap over the Senior Vice President and into Executive Vice President territory. Such leapfrogging was virtually unheard-of at the company. In the old Nasdaq culture, you ascended to VP, you put in your two to four years, then you might be considered for SVP positions. Put in another several years, and perhaps an EVP role would be in reach for the lucky few. It was more about time and experience, less about merit and performance. There is value in seniority, of course, but I wanted meritocracy to become a fundamental value at Nasdaq as well. And as I surveyed the existing EVPs, I saw no one with the qualities that I found in this young VP.
My intuition about him was confirmed when I made my first trip as CEO to the West Coast. Bruce organized a dinner with nearly every key player in tech and venture capital in attendance—exactly the sort of people with whom Nasdaq needed to connect in order to position itself as the marketplace of the up-and-coming tech world. The listings business is all about connections. Indeed, the reason I’d parted ways with the former EVP was because he spent too much time sitting in his office: He was a conference room pilot, not a relationship builder. In contrast, it was clear that the organizer of that dinner was more connected than most.
The next evening, after a marathon series of meetings, I cajoled Bruce into taking me to a track meet at Stanford to watch my favorite sport. As we sat in the stands, he turned to me with a serious expression and said, “Bob, as you’re making this EVP decision, there’s something you should know.”
My heart sank; I’d been almost ready to break with tradition and offer him the job—was he going to give me a reason to reconsider?
“I’m gay,” he said.
I breathed a sigh of relief. “Bruce, the only thing I care about is that you do a great job!”
Given the climate of the time, I guess he felt it was important to be up front about it. He didn’t have to, but I appreciated his transparency. This was 2003, and even in the short time that has elapsed since then, things have changed a great deal in the culture of corporate America—for the better.
Bruce’s strengths were clearly compatible with the job he wanted, so I invited him to leapfrog the SVP title and take the EVP job. While I generally do believe in the value of “spending time in the seat,” extraordinary times call for extraordinary measures. He was the right person to take over that role, despite not having the ideal management experience. Moreover, his appointment reinforced the culture change I wanted to communicate to Nasdaq: Don’t cling to tradition. This is an era of change. I myself hadn’t risen through executive ranks the conventional way, and I wasn’t going to let tradition trump talent. Bruce would end up owning that key role for the next decade.
Little by little, I was filling the crucial seats on the organizational bus. If the bus analogy sounds familiar, it may be because it’s borrowed from Jim Collins’s best seller Good to Great. Success in transitioning companies from moderately successful to world-class, Collins argues, begins with getting the right people on the bus. I was particularly fond of that image because, as readers of Good to Great may remember, Collins’s metaphor was inspired, at least partially, by Tom Wolfe’s The Electric Kool-Aid Acid Test, the classic book describing the exploits of Ken Kesey and the Merry Pranksters in the late fifties and sixties. Kesey had loved to employ the phrase “You’re either on the bus or off the bus” in his leadership of that countercultural tribe. The driver of Kesey’s bus was in fact none other than Neal Cassady, the hero of Jack Kerouac’s On the Road. There was something irresistible about a metaphor that connected my role as driver of the Nasdaq bus to the great Beat poets I’d loved in school—though I hoped I was a safer driver than Cassady!
Poetic associations aside, Collins’s advice was sound. His research suggested that leaders are best advised to “begin with ‘who,’ rather than ‘what.’”3 A rock-solid team, he discovered, seemed to be the key first step in any good-to-great transition. The marketplace will shift, strategies will change, but a great team can respond to it all. I had a sense of the type of company I wanted to build, but I knew that inevitably there would be unexpected twists and turns (and bumps) in the road ahead, and exciting new destinations to aim for as well. Having the right people on board would allow Nasdaq to adapt to all those challenges and respond to the opportunities effectively.
People first. To drive the point home, I actually had a couple thousand little toy buses made up and handed out to the Nasdaq staff along with copies of Good to Great. The not-so-subtle hint: The wheels of change were turning.
New People for a New Culture
Anytime a company culture dramatically changes, the filtering system for talent will inevitably be affected. To use an evolutionary term, the selection pressures in the organization will be reset, and this shift will reverberate throughout the corporate ecosystem. Often, the people who are right for the new culture are not individuals who thrived under the previous regime. Change the culture, and inevitably, people with skill sets more apropos to the next context suddenly stand out.
Good performers can become great performers when the conditions are right. Over and over again I saw B players become A players when the game changed. My experience is that people want to achieve, to contribute, to help the organization thrive. If you clearly define the mission, remove the bureaucracy and organizational inertia, provide clarity about what is needed in each role, and put in place a good reward and incentive structure, you’ll be amazed at how people step up. As the environment shifts, the people come into focus. When we began to make organizational changes at Nasdaq, I immediately noticed that there were certain people whose eyes would light up, who would walk down the hall with a new bounce in their step, who would work a little harder and go the extra mile. They felt uplifted by what was occurring.
Nasdaq’s culture was shaped by its history. The company had long been a nonprofit, in the cultural mode of its parent organization, NASD, which is a regulator. People worked there for the good salary, regular working hours, stability, predictable workflow, and good benefits. There is nothing inherently wrong with a culture like that—if the culture fits the mission. But my mandate and mission were different. I wanted Nasdaq to fully embrace the competitive, for-profit world, to be a leader and an innovator in the financial industry. I wanted it to grow, expand, and become the premier equities exchange in the world. To do that, we were going to have to slim down and become much leaner and faster, more nimble and more competitive. We needed a change of mind-set and skill set. It would be disruptive, no doubt, and some would embrace that change wholeheartedly and thrive in that new culture, while others would find it unpleasant. It was up to me, in those first days, to send a clear message about the nature of that change.
I made it clear from the start that Nasdaq’s new direction wouldn’t be right for everyone. My message was straightforward: “This place is changing. It’s going from a nonprofit environment to one that has a faster pace, higher stakes, higher pressure, and greater potential rewards. We’re building a performance-driven meritocracy. The energy, the expectations, and the culture will all change. If this new culture doesn’t appeal to you, I suggest that you self-select and move on now because eventually that mismatch is going to become clear. Please find another place that is a better fit.” It was Nasdaq’s great sorting.
In the first year, we cut around a quarter of our staff. Some of that was due to the need to slim down and reduce costs. Some of it was a result of closing unprofitable lines of business. But much of it was driven by the specific cultural change I was focused on. There were plenty of people on staff who liked the old culture—nine-to-five, process-centric, few surprises. Nasdaq, as a human ecosystem, had to function at a higher frequency if it was going to thrive in the fast-moving, rapidly changing ecosystem of global financial markets. The right people for the culture I was determined to create were not necessarily just smart people. It wasn’t just about IQ—though I obviously wanted to work with intelligent, capable men and women. IQ is just table stakes; it gets you in the game. Motivation, drive, flexibility, and emotional intelligence are also important attributes that contribute to a company’s success. “Bandwidth,” for lack of a better word, is another. By that I mean the capacity to fruitfully focus one’s attention on multiple areas. That’s a critical talent for successful organizational leadership, where a lot comes at you thick and fast. Many people struggle with bandwidth issues, and this can also be true for higher IQ types, who sometimes prefer very specialized domains of expertise. Of course, in certain occupations, like programming, a narrowly focused approach is an enormous value-add, but when it comes to management, bandwidth matters.
When You Have Good People, Listen to Them
Knowing who to bring on board, who to promote, and who to let go is critical in any turnaround. But a people-first strategy means much more than hiring and firing. Any CEO can swing the ax; that doesn’t take much talent. Building great companies requires interacting with your team members in a highly productive way, one that encourages creativity, autonomy, focus, and discipline.
In corporate America, we pay well for smart managers. But if you’re going to pay for talent and high IQ, be sure to use it. Seek input and honest feedback from your team. And get them involved in your decision-making processes.
One of the ways I sought input for critical decisions was by running a series of head-to-head debates among my executive team. Authentic debate isn’t always easy to manage, but it’s necessary if you’re going to hear what you need to hear in the decision-making process. No issue is black-and-white, and each perspective contains relevant truths. Debate helps to illuminate the inevitable trade-offs and help you make smart and well-informed choices. I liked to mix up our debates by assigning counterintuitive roles. If the topic of the day was, for example, “Nasdaq Japan: Should we keep it or close it?” I might even assign the pro-Japan executive to take the anti-Japan position. It made for some spirited contests. People knew better than to make a weak argument for a position they didn’t support; it was clear they were being judged on the quality of their reasoning, not just the content. I firmly believe that most positions stem from rational presumptions, at least from the perspective of the person holding them. Rather than simply dismissing a position we don’t agree with, it is valuable to make the effort to understand its underlying rationale, even if we eventually choose another path.
Of course, it’s important to not let debate descend into a free-for-all. You don’t want shouting in the halls. A culture of argument is distracting. Our debates had structure and rules. They took place in our conference room, and each had an audience of about a dozen additional executives. People argued with passion. At the end, if necessary, I’d give a thumbs-up or thumbs-down to the decision at hand, but often, by that stage, the right answer had become clear to everyone. Occasionally, however, I had to make an executive decision that went against the prevailing winds. After all, the point of the debate wasn’t to enact a perfectly democratic ideal. It was to achieve better clarity on all of the issues involved so everyone understood the reasons for proposed changes, and my decision-making was both transparent and much better informed.
This approach was especially critical during my first hundred days as CEO. Nasdaq in 2003 was awash in dead-end projects. The firm had exercised little discipline in this area—it had a process for saying yes to new initiatives, but no processes for tracking their effectiveness or pulling the plug if needed. Certainly, no one had been planning for a downturn in the market when many of them were approved. As often happens in such situations, constituencies within the firm had arisen that protected, or at least were advocates for, many of these projects. I was aware of more than one person who had made a career managing his or her little section of the company without regard to whether that project was critical to Nasdaq’s overarching mission, or even profitable. Pruning the project list was a high priority. Still, I didn’t want to lose good projects just because I was committed to closing underperforming ones. I wanted to safeguard against overzealousness on my part. The transparent, objective debate style was my chosen method.
I could have handled this in a much quieter fashion. For example, both sides could have created presentations or memos and then submitted them to me for a ruling, and it would have all been done simply and soundlessly. But that method bypasses important aspects of human nature and discounts the reality that people want to be heard. Debate creates energy around a topic. And whether a project lived or died, everyone could be satisfied that a case for its continuation had been well made. That helped to get a deeper level of buy-in from the executive team and ensure that in the aftermath of any decision, we were all rowing together in the same direction.
Input from my team was not limited to these staged debates. In fact, I made sure to communicate to everyone that I wanted them to be honest with me, even when the news was bad. It’s natural for people to want to give the CEO the good news, but that’s not very helpful. In fact, it can be downright toxic, as was demonstrated all too clearly during the downfall of General Electric, which was helped along by an internal “success theater,” as some inside the company called it—the practice of always emphasizing the positive elements of the business and the most optimistic narratives. Enabled by executives throughout the organization, the GE culture became dangerously disconnected from the reality of the business, and it served to keep management from addressing its decline.4 People won’t tell you what you need to hear unless you ask for it, and most important, reward it. Leaders have to counteract people’s natural inclination to make reality seem rosier than it is.
It’s not enough to hope people will be honest with you. Sometimes you have to create explicit avenues for feedback. It was common for me to open a meeting with “Tell me the problems” or “Give me the bad news.” And I didn’t want the honesty to be limited to top management. We also instituted regular “town halls” and would invite questions from the general staff for a live Q&A. That gave people a chance to ask anything, and it was a chance for me to interact with our staff in a group setting. Even then, the tougher questions tended to arrive through email.
I also had regular employee lunches. Seven people would join me for a meal, each time from a different area of the organization. I would solicit their feedback, asking “What are we doing well?” and “What are we doing poorly?” And they could ask me anything they wanted. Usually, I found it took about a half hour of conversation before they would get comfortable enough to open up, ask honest questions, and give direct feedback. I found those lunches invaluable and tried to do one a week.
There were several key moments when I had reason to be grateful for one of my team knowing more than I did about a given area of the business. The controversy over MarketSite, Nasdaq’s iconic piece of real estate right in the center of Times Square, was a case in point.
For many people, MarketSite is Nasdaq’s public face. It is a cylindrical office and event space located in the heart of Manhattan. With its wraparound digital display featuring market news and highlights that appears in the background of practically any event filmed in Times Square, it is natural that many see it as Nasdaq’s epicenter. CNBC currently films two of its shows—Squawk Box and Fast Money—in the main room. Companies celebrate IPOs there, transmitting the opening-bell excitement from the main studio space to Bloomberg, Fox Business, and CNBC. Bloomberg conducts interviews using the MarketSite studio. Companies advertise on the cylindrical tower. Over the years, it’s become a major media center and a symbol of American economic vitality.
Early in my tenure, I made a visit to MarketSite. No doubt it had to do with my fiscally oriented perspective at that time, but what I saw was not an iconic expression of Nasdaq’s global brand. I saw a gaping money pit. The space had its own photography staff on retainer costing a cool quarter million a year. It had fresh flowers costing us $1,000 a week. It had lavish catering for every event and a round-the-clock party atmosphere. I told John Jacobs, who had recently taken over the Chief Marketing Officer role, that it was a waste of money.
“Close it down.”
“Are you telling me to close it,” he inquired, “or are you asking for options?”
“You can get me options,” I conceded, “but my inclination is to close it.” I was imagining the significant amount of money we could save, envisioning all the employees and projects we might be able to keep without that extra cash burn. I just didn’t see how this side party, as nice as it might be from a branding perspective, was going to survive a clear-eyed fiscal audit. At this point, fiscal discipline was first and foremost in my mind. Still, I reminded myself that I’d given John this role because he knew things I didn’t, so I was willing to hear him out.
Some of the questions surrounding MarketSite were related to the role of the listings business within Nasdaq. It’s the public-facing business, what most people associate with the brand of the company. It’s profitable, but it’s not a growth engine. At that time, Nasdaq’s core business was transaction-processing—and that business was failing. Without turning that around, nothing else was going to work. I came from that technology and transaction world and was hyperfocused on getting that business into shape. I knew it was easy for the CEO of Nasdaq (or NYSE, for that matter) to get caught up in the ceremonial glow of leading a national stock market, to fly above the trees, enjoy the limelight, and leave the details to others. But that was not what I was hired to do. Indeed, part of my concern about MarketSite stemmed simply from the urgent need to not get distracted by the shimmer and glow of noncore activities.
Those instincts were correct, but the suggestion to close it down, I eventually realized, was not. In my zeal to reenergize Nasdaq’s core transaction business, I didn’t appreciate how critical MarketSite was to the listings business, how much it meant to our companies, and how much, by extension, it meant to the Nasdaq brand. This was brought home to me in my first conversations with CEOs of Nasdaq-listed companies. In those calls, I wanted to tell them about how we were revamping the transactions business to be best in breed and upgrading Nasdaq’s service and technology. They wanted to talk about ringing the opening bell in Times Square. They would talk about bringing their mother and father to the ceremony and how great it was. Moments like that were symbolically meaningful to our customers. Business is not all boardrooms and budgets, customers and clients, products and services. It’s also that feeling of having a moment in the spotlight to celebrate the culmination of years and years of hard work. MarketSite, I realized, was far more important than the bottom line might indicate.
In the end, we didn’t shut down MarketSite. Instead, it was revamped and transformed into a leaner operation, without so many high-priced trappings and perks, but with all the drama and emotion that made it so popular with Nasdaq-listed companies. While the decorations were toned down, MarketSite retained its status as a place to gather and celebrate the achievements of our listed companies (and in February 2018 Nasdaq would announce its intention to make the building its headquarters). We also began to rent out this unique space to others for high-profile events—another way to limit its fiscal impact. This new version of MarketSite could still uplift our brand and provide a powerful publicity boost for our public companies with less drag on our bottom line. That was a decision I didn’t expect to make, but my team helped me see the wisdom of keeping it. There is no point in having great people around you unless you trust them to come up with good solutions, even ones that surprise you. Sometimes the right people are the ones who tell you what you don’t already know.
Don’t Double Down on a Bad Hire
Early one morning, a few months after I started as CEO, I burst into Chris Concannon’s office.
“I can’t take it anymore,” I declared.
“What are you talking about?” Chris asked, surprised by my dramatic entrance. He was starting to appreciate that I tended to be straight, even blunt if necessary, and was not inclined to beat around the bush.
“We have to let him go. We can’t keep going like this.”
Now Chris knew exactly what I was talking about. One of the two outside hires that I had made when I started at Nasdaq had turned out to be a mistake. His résumé looked great, and he came with stellar references, but it had quickly become clear that it was not going to be a successful placement. Despite being likable, even charming, with an impressive background, he was failing to grasp the intricacies of the job. Everyone knew it. Several months into my tenure, I had to acknowledge that I’d been wrong to hire him and figure out what to do.
“Look, I can imagine it’s difficult to let him go, given that you just hired him. It looks bad,” Chris acknowledged. “If you’d like, I can work with him, help him out, cover for him where necessary.”
“Not a chance. That’s not going to work. Covering for him is not a realistic plan.” I appreciated Chris’s willingness to help, but I was not going to compromise our team so I could save face. “That’s not how I work,” I explained. “There is no getting around it. We’ve got to pull the Band-Aid off.”
Needless to say, this was not an easy move to make. I’ve heard Athletic Directors or General Managers of sports teams say that it’s much harder to fire a coach they hired than one their predecessor hired. The same principle applies in business. That reticence may be human nature, but it’s very important not to let your ego get in the way of doing what needs to be done. Be prepared to admit you were wrong. Face the reality that you will make mistakes, and don’t compound them by avoiding them.
I made the move quickly and didn’t let the poor choice linger. My advice to leaders in a similar situation is: Don’t defend yourself when it comes to incorrect hires or other faulty personnel decisions. Don’t pretend that you should be above such errors. If you made a wrong choice, make the switch.
On the positive side, letting him go was a popular decision in the company. It communicated that I didn’t just have “my people” to whom I would be loyal regardless of performance. This wasn’t going to be a regime of subtle cronyism; it was a genuine meritocracy. Performance matters—and people know who’s not pulling their weight. While this was far from a personal highlight in my career, in retrospect it was actually one of the most important things I did in those early days to win support.
At the end of our conversation that morning, Chris asked, “What are we going to do about his job?”
I looked at him and smiled. “You’re going to take it.”
And he did. Chris became EVP of Transaction Services, a job that he performed with distinction for the next six years.
People are the lifeblood of any successful business, whether it’s an established organization like Nasdaq undergoing a turnaround or a fast-growing startup like so many of the companies that choose to list with us. Listen to entrepreneurs talk about building their businesses and you’ll often hear them praise the team they worked with, the joy of getting up every day and creating something with a group of smart, passionate people all focused on one mission. Nasdaq wasn’t a startup, but in the transition we were going through, we were definitely starting a new phase of its existence. By the time my first year as CEO concluded, our head count was dramatically down, but the bus was brimming with talent, expertise, and enthusiasm. We were ready to put it in gear.
LEADERSHIP LESSONS
• People First. You can’t predict the future, but what you can do is ensure that you have the best people in place so that when the world changes around them, they can adapt, respond, and step up.
• Transparency Builds Trust. If you tell people what you are about, right from day one, it builds trust in your leadership even when you are making tough decisions.
• Promote Before You Recruit. If you’ve been doing your job as a leader, you should be developing most of the talent you need in-house. Look carefully at your existing people before hiring from outside the company.
• Encourage Healthy Debate. It’s necessary if you’re going to hear what you need to hear in the decision-making process and take into account all the important perspectives.
• Seek Honest Feedback. Leaders need to counteract people’s natural inclination to make reality seem rosy by seeking out and incentivizing honest feedback and creating explicit avenues for its delivery.