The Leadership Moment – John Gutfreund and Salomon Inc.

The “King of Wall Street”, John Gutfreund of Salomon Inc. is the primary focus of chapter 7 in Michael Useem's “The Leadership Moment”. John and Salomon were involved in government bond trading. Whenever you are in the business with the government there are many rules and regulations that must be followed. One of these rules was that a dealer could purchase no more than 35% of a bond trading auction. This was to assure that no single dealer would corner the market.

John was the CEO and he had to make sure his staff abided by the rules. One of his staff was Paul Mozer. Paul while making tons of money for Salomon also continuously pushed the limit and on several occasions crossed the line. It was one of those occasions where Paul's actions were discovered and an investigation began. This in turn led to an internal investigation by Salomon.

This internal investigation quickly revealed some damaging news. The bottom line was that Paul had been consistently breaking the rules, this was not a one time incident. This is where the lesson began. John had a decision to make, the problem here was the amount of time it took him to make the decision and come forward with the information was three months. When he came forward, the press had a field day and John learned a hard lesson.

This lesson can best be described by a quote from this chapter:“Inaction can be as damaging to leadership as inept action.”

1/18/2011