The Fall of the House of Grasso

From reading the article, “The Fall of the House of Grasso,” Dick Grasso seems to attain his power from four sources. These include referent, expert, legitimate and coercive.

Grasso attained referent power by developing interpersonal relationships with others and influencing through charisma. By gaining this referent power, he was able to influence by personal appeal, ingratiation, and coalition. He was quoted saying, “You need to move to an area where the people around you are the people you do business with. That way, even in your downtime, you’re in your uptime.” This shows how important it was for Grasso to build a network of relationships and his image. “Gradually he came to know everyone and everything about the institution, cultivating hundreds of personal relationships that would later prove invaluable.”

Grasso’s expert power was attained by developing skills and knowledge that others valued. He became the “unquestioned master of the trading floor” even before he became CEO. A brokerage executive who served on the board’s search committee said Grasso was viewed as “the inside guy in the skunkworks who always made things work.” These statements illustrate Grasso great knowledge for everything involved in the New York Stock Exchange.

Legitimate power was the toughest for Grasso to develop. He was passed over for promotions on several occasions. In response, Grasso raised his profile. He testified in Washington, gave speeches and became more active in charities. When he eventually earned his promotion to CEO, “he made every decision, large and small. He was the unquestioned boss.”

Coerciveness was the biggest source of power for Grasso that stood out to me from this article. He had the ability to threat and punish. Sarah Telsik, executive director of the Council of Institutional Investors, criticized the NYSE’s role in recommending fees for a proxy solicitation firm. That year she got no bonus. Her board advised her that she should be nicer to the NYSE. Telsik later found out that Grasso tried to get her fired. She says, “You cross Dick Grasso, you better have a working spouse.” Subordinates who failed to meet his exacting standards received brutal tongue lashings. These examples show that Grasso had such great connections and influence in the business world that he could bring you close to unemployment if you challenged him. Many insiders reported that they feared him because he was good at destroying people.

Overall, Dick Grasso was a very influential person during his time at the NYSE. He drew power from four major sources: referent, expert, legitimate, and coercive. Toward the end of his career it seems as though he used his coercive power more than anything.

Influence: The Power of Reciprocation and Liking

The power of reciprocation is very strong in human society. It has to do with person one doing something for person two. Person two feels ‘indebted’ to person one. Therefore, anytime person one asks person two to do something for them, person two feels obligated (regardless of the size of the request). This concept of reciprocation is common in all human society. It is something that is taught in early childhood and has social consequences if not abided by. For example, an Olive Garden server asked if I wanted to try a free sample of wine. Free wine? Of course I would like a sample. After checking my ID, he pours me about one fourth of a glass. A couple minutes later he comes back and asks if I like it. I said yes. Then he asked if I would like a glass with dinner. I responded no (it was kind of awkward). After placing our orders, my boyfriend promptly lectured me that I shouldn’t have taken the free wine if I didn’t want to pay for a glass. I ended up feeling guilty,  I had gone against the reciprocation rule.

During breaks from school I work at a small health club in York. I work the front desk. Basically I answer the phone and give tours. Each time I give a tour, I ask the person or group what they are looking for in a gym. When they respond, I imply that I like the same things and explain and show how our health club can meet their needs (indicating that I know from personal experience). I try to build a liking based on similarity so that at the end of the tour, they are more willing to sign a one year contract and I can make my commission. Unfortunately this does not always work for me. I attribute that partially to the high membership prices, partially to the sluggish economy, and partially to the fact that I’m not a pushy salesperson.

It makes sense that we let people that we like influence us. Also, a “free” gift triggers a "click, whirr" response. It is in human nature to practice the reciprocation rule. We are consciously and subconsciously influenced everyday by people using these tactics.

Women in Leadership

It is evident that women are not equally represented in the upper leadership ranks of the corporate, political, and non-profit worlds. Sheryl Sandberg, COO of Facebook, suggests that this is due to three reasons, which I agree with.

First of all, women don’t ‘sit at the table’. This infers that women underestimate their abilities compared to men. Secondly, women need to ‘make their partner a real partner’. This means that all of the household responsibilities should not fall on the woman of the house. These responsibilities need to be equated so that women have the chance to work outside of the home and be successful in it. Lastly, women shouldn’t ‘make decisions too far in advance’. Too many times, women plan out their lives and worry about how children will fit into them. Women feel the need to make room and decide too far in advance what this decision will be. Sandberg suggests that women should ‘keep their foot on the gas pedal until the decision needs to be made’.

Sandberg put the responsibility on the women. I think that this is reasonable.  In this modern society, women in the workforce are accepted. There is no reason that a woman shouldn’t be able to attain upper leadership positions. Although it is evident that there is inequality in upper leadership, I don’t think that there is an injustice because these opportunities are available to everyone. It depends on each person’s priorities as to whether they will take advantage of these opportunities. I think that the inequality of men to women in upper leadership positions is due to women’s priorities. A lot of women fear that if they have a child and a full time job, the child will be raised by someone else and the mother will miss important years of their child’s life that they won’t ever get to experience again.

I think that the best solution to this problem is finding a work environment that allows flex time. I think this is most important for a working mother so that she can be involved in her child’s life helping at school functions and being present at sporting events. On-site child care would definitely be an advantage as well. This would make the mother feel like she is still a large part of her child’s life because she can check on them any time.

I can relate to one cause of the lack of women in upper leadership positions. Specifically, I make decisions too far in advance. Lately, I’ve been contemplating getting my MBA a couple years after graduation. However, the more I think about it, the more I’m not sure that the benefits will outweigh the costs. Basically, I’m unsure that I will get full use of the MBA because I fully intend on having a family and I think that I would want to be in a less demanding position or exit the workforce while I raise children.

All in all, I think that women have the abilities and opportunities to attain upper leadership status. I think it all comes down to each individual’s priorities.

Leadership v. Management

While leading and managing are both essential to organizations, they are vastly different. As we learned in class and from the article, “What Leaders Really Do”, leaders cope with change. They set a direction, align people and motivate them. On the other hand, managers cope with complexity. They plan and budget, organize and staff, and control and problem solve.  I have experienced and observed this in two different situations in my life. 

This past summer I worked as a part time floating bank teller at a local bank in York. The term ‘floating’ means that I would travel to all branches in York, depending on which branches were short staffed. My supervisor at the bank displayed more of a manager role. Banks have many policies and practices that need to be followed which are set by the law and by corporate guidelines. Managers are expected to enforce these policies. For example, anything that is done in a bank vault is supposed to be ‘dual controlled’. This means that we were allowed access to the vault if we had at least one other employee with us.  At one particular branch, the vault was opened with two different combinations and the key box opened with two different keys. So, before I worked an opening shift at that branch, the manager needed to make sure that I had access to a five digit combination and one key to open the key box. This shows that the manager had to deal with complexities and conform to policies. This manager was also very safe when making decisions. One time an account holder wanted to deposit a check that her dog had literally chewed up and spit out. The check was severely crinkled, but all necessary numbers were visible. To be on the safe side, the manager refused to accept the check even though it technically could have been processed. When it came to following policies, she 'would rather be safe than sorry’.

My boyfriend, Nate, is an entrepreneur and started Xtreme Archery in York. His business consists of archery retail, service, and an indoor 3D target range.  Being an entrepreneur, he has a different way of looking at things and treating his employees. I have observed him take on more of a leadership role in his business. His direction for the business is simple; he wants to be the ‘go-to’ archery shop in York and surrounding areas. His strategy is to treat his customers to quality customer service and hope that they tell their friends, family and co-workers about their great experience. He is very imaginative in that hosting a sportsman’s yard sale in the parking lot, where people can buy and sell their used sporting equipment, is his way to increase community awareness. He made a goal to motivate his employees. If they collectively sold a certain number of new bows by the end of the year, they would all get to go to the highly anticipated Archery Trade Association (ATA) trade show in Columbus, Ohio this past January, all expenses paid. Needless to say, the motivational technique worked.

Looking at this experience and observation, I realize that part of the difference in leadership and management depends on the type of organization. Clearly Nate has more room to be a leader because he is his own boss. On the other hand, the bank manager has many policies and regulations to comply with and less freedom to make decisions.