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.