Case study write-up on

The Methodical John Thain Takes Over at Merrill

Submitted to

Ms. Jaskiran Kaur

Submitted by Ayub Abdikani Mohamed

11717761

LOVELY PROFESIONAL UNIVERSITY

Introduction

This case illustrates among many other points, that after a company has been through a crisis
based somewhat on the negative behavior and characteristics of the previous leader, the company
will seek a replacement who appears to have outstanding personal qualities.

The New York Stock Exchange (NYSE) is the oldest stock exchange in the United States, and
it's located on Wall Street in lower Manhattan. It is the world's largest stock exchange by market
capitalization of listed companies ($13.39 trillion as of March 2011). The NYSE is an auction
market where brokers and specialists buy and sell securities for people by matching the highest
bidding price with the lowest selling price. This is one of the most distinguishing characteristics
of the NYSE; the NYSE has an actual trading floor at 11 Wall Street in New York

Company called Merrill Lynch & Co, appointed the chief of NYSE (The New York Stock
Exchange) John Thain who studied electrical engineering and has a Harvard MBA. The 52 year
old spent twenty-four years at Goldman holding varous jobs from mortgage bond-trader to chief
financial officer before rising to president in 1999. He took the NYSE job to have a chance to
take a CEO role and work to turn around an important financial institution facing governance
and technological challenges.

The NYSE was in a state of turmoil and risky expansion which is caused by his predecessor Stan
O’Neal who was known for driving away potential challengers and firing executives who were a
treat to his power.
Problem identification

The belief that certain personal characteristics and skills contribute to leadership effectiveness in
many situations is the trait-based perspective on leadership. Traits tend to help us understand
leadership behavior and effectiveness when integrated in meaningful ways.

Possessing certain characteristics contributes to leadership effectiveness in many situations as

long as the leader’s style fits the situation reasonably well.

Becoming a CEO takes hard work and dedication. It isn't for the faint of heart. However, it
seems once the magical title is bestowed upon someone, they can forget a lot of traits they
admired in their successor. Effective leadership is the most important aspect of a company and
its team's success. A CEO must possess these certain traits to truly become a great leader which
includes Ability to learn from the past, strong communication skills, building relationships and
realistic optimism and many more.

The predecessor of Thain O'Neal was criticized for his performance during his tenure as chief
executive at Merrill Lynch, where he oversaw the deterioration of the firm's stability and capital
position, which resulted in his ouster in September 2007.

SOLUTION

Merrill had experienced an enormous financial loss. In addition, the reputation of the firm
probably suffered. To help rebuild Merrill’s reputation, Thain would have to emphasize honesty
and minimize high-risk investments. He should display high-level cognitive skills by finding a
way to restore Merrill to profitability.
QUESTIONS

1. What traits and characteristics of Thain are revealed by this story?

Ans: The degrees Thain obtained at MIT and Harvard suggest high-level cognitive skills,
as does the fact that he concentrates on details, and that he is perceived as being cerebral.
Thain’s “robotic personality” suggests that he does not project much enthusiasm or
charisma. The fact that Thain defends his interpersonal skills suggests that many people
do not perceive him as being warm.

2. What emphasis did the Merrill board place on cognitive characteristics in their selection
of Thain?

Ans: The Merrill board heavily emphasized cognitive characteristics in their selection of
Thain. He had developed a reputation for understanding the details of the New York
Stock Exchange business, and he had considerable experience with mortgage bond
trading

3. Based on the information presented, what advice can you offer John Thain about
emphasizing the right traits to be successful as the head of Merrill?

Ans: Merrill had experienced an enormous financial loss. In addition, the reputation of
the firm probably suffered. To help rebuild Merrill’s reputation, Thain would have to
emphasize honesty and minimize high-risk investments. He should display high-level
cognitive skills by finding a way to restore Merrill to profitability.

4. How strong does Thain’s power motive appear to be?

Ans: Thain appears to have the highest-level power motive. His intense desire for power
is reflected in his accepting the position as the CEO of the New York Stock Exchange
and the Merrill position. His first-year compensation at Merrill was approximately $78
million even with the firm lost billions of dollars—giving more indication of Thain’s
grabbing for power.