Duncan Niederauer: Communication Is Key in Changing Culture
The New York Stock Exchange CEO explains that accelerating a slow-moving company to light speed requires stating—and repeating—a clear vision.
Assuming the top spot at NYSE Euronext in late 2007, Duncan L. Niederauer knew that he and his top executives would need a big outreach effort to employees to convey his vision for the company. “We communicated, communicated, and then we communicated some more,” he told a Stanford Graduate School of Business student audience. “And when we were pretty sure we’d over-communicated, we communicated a little bit more.”
“You were asking a company that had changed at a really slow velocity to change at light speed, and you had to let [employees] know we weren’t going to change our minds - it was going to be in bite-sized chunks — let’s go and we’re with you,” said Niederauer. He regarded the NYSE prior to his arrival as “far from dynamic” and needing more open but firm dialogue among executives and other employees.
Speaking at Stanford GSB on Dec. 2, Niederauer reflected on his management of the 218-year-old NYSE, the world’s largest equities exchange group. After his talk, hundreds of MBA students and other members of the business school community gathered in a courtyard to symbolically ring the bell ending the stock exchange trading day. Neiderauer and business school Dean Garth Saloner joined in ringing small red bells for an event broadcast live to the stock exchange floor via a video feed.
Niederauer’s strategic initiatives, which he calls “the four pillars,” were aggressive by any standard: From the start, the CEO aimed to change the NYSE’s culture, flatten the management structure, revamp its computer backbone to allow the company to become a technology-services provider, and seek other new sources of revenue. To try to win over employees, “We articulated those four pillars to the entire team,” he said. “We kept repeating that plan.”
Niederauer also changed some ways in which employees interact and communicate with each other. NYSE staffers traditionally had held meetings only with people of their own managerial level, slowing down decision making, Niederauer said. “It was all much more hierarchical, so we blew that up almost right away,” he said, adding that he began emphasizing that “if you’re going to come to a meeting, we’re here to make decisions because frankly, we don’t have time not to.” Niederauer also banned “meetings after the meeting” where, he said, some managers would decide on their own to ignore plans and decisions from earlier gatherings. “We tried to instill in the culture that if you’re going to say you’re going to do something, then you’re going to do it,” he said.
Not all employees accepted his changes. Niederauer recalled one individual who said to his face that he’d outlast the CEO at the company. Calling that person an “active resistor,” Niederauer recalled that he fired that person on the spot. “If people are in there trying to undermine the culture you’re trying to create, you give them every chance to stay,” he said. “If they want to fight it, they just can’t stay, because it’s not fair to the people who are trying to change it and trying to move forward.”
Now, three years into the job, Niederauer noted accomplishments, in particular building an information-technology services division that he said is expected to post between $500 million and $600 million in revenue next year. (The NYSE’s total gross revenue last year was about $4.3 billion.) Niederauer also pointed to the executive team he assembled, including a French national he hired to oversee the company’s human-resources duties. Early on, that job was responsible for overseeing staff cuts in Europe, where labor laws make downsizing unusually difficult. Asking a European national to handle that touchy task was a “purposeful” decision, the CEO said.
Asked how his management of the NYSE might change, the CEO replied that in the coming two years, leading the company is “not going to be this high-velocity transformation through a financial crisis; it’ll be less frenetic.” Ultimately, Niederauer said, he aims to leave the company “better than I found it.” The NYSE has a rich history, but “if we just rest on our laurels and rely only on that history, we’re not going to be successful in the 21st century. That requires innovation,” he said.
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