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Richard Fuld Leadership


  • Introduction
  • Leadership concepts and Ineffective leadership
  • Richard Fuld’s Leadership-Success (1994-2007)
  • Richard Fuld’s Leadership-Downfall
  • Conclusion
  • Works Cited


This essay presents an analysis on leadership of Richard Fuld using framework provided by Darling and Leffel. Richard Fuld was once considered as most influential and powerful CEO of Wall Street. But things changed when Lehman Brothers filed for bankruptcy and it was found out that decisions of Richard Fuld were major reason behind it.

Richard Fuld became CEO of Lehman Brothers in 1994 and he kept this position till 2008. He was longest tenured CEO of Wall Street. Bank gained a lot of profit in his tenure but everything came down in 2008. When Fuld was CEO bank showed profit for straight 14 years. Fuld managed to steer bank in 1997 Asian Financial crisis. However he is considered as one of the persons responsible for downfall of Lehman Brothers and 2008 economy crisis.

Leadership Concepts and Ineffective leadership

Leadership is considered as a process where an individual inspires, motivate and influence a team for a common goal. There are many theories and definitions of leadership. Warren Bennis said “Leadership is capacity to translate vision into reality”. John Maxwell suggested that “Leadership is influence- nothing more, nothing less”. So, different people have their different definitions of leadership but everyone agree that leadership is different from managing. These are definitions of effective leadership however; in this essay we are focusing Richard Fuld who proved to be an ineffective leader. Ineffective leadership is opposite of all these definitions. An ineffective leader can lead his team to huge disasters as Richard Fuld did. (Darling & Bebe)

There are multiple reasons for someone being ineffective leader such as narcissism, failure to influence, failure to convey clearly and lack of trust. Narcissistic leader is a leader who is only interested about himself and he thinks that others are there to serve him. Such leaders use view people as objects to be used for their own advantage. (Moccoby)

Different leaders have different leadership styles. John Darling and Anita Leffel found that there four leadership styles. They are Creator, Director, Analyzer and Connector (Darling & Leffel). Leaders who have director style are usually firm, less emotional and task oriented. Connector are usually more responsive but less assertive. Leaders with creative style usually take new challenges and risks. Analyzers are considered as less assertive and less responsive leaders.

Richard Fuld’s Leadership-Success (1994-2007)

Richard Fuld can be regarded as director and analyzer according to leadership styles mentioned in Daring and Leffel 2010. Richard Fuld became CEO of Lehman Brothers in 1994. When he took charge of the Lehman Brothers as CEO, firm was known for internal feuds in Wall Street. He built a new team and expanded investment banking. He was nicknamed as “gorrila” because of his aggressive leadership style. Till 2006, share price of Lehman Brothers had risen almost by 800%. In 2007 firm gained $ 4.2 billion profit. In 2008, it reported loss of $ 2.8 billion and later filed for bankruptcy. (CEO Richard Fuld on Lehman Brothers’ Evolution from Internal Turmoil to Teamwork, 2007)

Richard Fuld analyzed the problems of Lehman Brothers and came up with systematic approach. When he became the CEO, firm was known for internal feuds. He developed a culture of teamwork. He introduced equity awards which were related to the performance. In 2006, Fuld revealed that there were almost 200 people in organization who have $ 10 million in stock. These people were part of the firm from early days. Fuld wanted his team to act and think like owners. Moreover, he hired new people in his firm. He expanded operations of his firm internationally. (CEO Richard Fuld on Lehman Brothers’ Evolution from Internal Turmoil to Teamwork, 2007)

Richard also had director style of leadership. He was intimidating, aggressive and independent. He was famous for his aggressive business style, that’s why he was known as “gorilla” in Wall Street. He was efficient in making decisions and he stick to his decisions unless he was wrong. In 1998 financial crisis, there were rumors about his firm. He asked his managers to avoid media. This resulted in decline in share price of the firm. Finally he was forced to change his decision of not talking to media. Company tried to explain things to encounter rumors.

Richard Fuld’s Leadership-Downfall

Aggressive and narcissistic approach of Richard Fuld was reasons of downfall of his firm. In 2010, “The Times” called him unapologetic mogul of Wall Street who is straight forward but doesn’t appreciate straight listening. His greediness for quick high returns was a major reason behind his downfall. His director style approach didn’t help him neither he could analyze the severe nature of financial crisis. For example in Annual meeting of firm in 2008, he said: “The worst of the impact of financial service industry is behind us”. However, after two months his company showed $ 2.8 billion loss. (Latifi)

His narcissistic approach and failure to listen to others was another reason for his downfall. In his company, most of his critics were quickly eliminated. A lot of people realized and explained that firm was heading towards serious trouble but no one was taken seriously. Mike Gelband was global head of fixed income department and he was the first person who realized the threat. However, higher authorities didn’t listen to him and it was believed that Mike had developed some kind of attitude problem. Fuld didn’t had knowledge of new technical instruments such as CDOs and CDs (Robinson, 2009). His over confidence was also a reason. He thought they were too big to fall. He also thought they’ll get a rescue plan. But that didn’t happen and this resulted in downfall of his firma and it initiated world financial crisis. Fuld used to move people on different positions so they wouldn’t be create a threat for his position. Last but not least, firm didn’t have risk management enterprise or risk management system.


Leadership style is most important thing towards the success of an organization. A terrific leader can achieve huge success with an ordinary team but an ordinary leader can’t do that even if he has a team of talented people. Richard Fuld steered Lehman Brothers in such a way that firm gained profit for more than a decade. He introduced equity pay structure and expanded operations of his firm. However, his aggressive attitude, narcissistic approach, greediness and failure to see threat were reasons of his downfall.

Works Cited
  • CEO Richard Fuld on Lehman Brothers’ Evolution from Internal Turmoil to Teamwork. (2007). Retrieved from https://knowledge.wharton.upenn.edu: https://knowledge.wharton.upenn.edu/article/ceo-richard-fuld-on-lehman-brothers-evolution-from-internal-turmoil-to-teamwork/
  • Darling, J. R., & Bebe, S. A. Enhancing Entrepreneurial Leadership:A Focus on Key Communication Priorities.
  • Darling, J., & Leffel, A. Developing the Leadership Team in an Entrepreneurial Venture: A Case Focusing on the Importance of Styles.
  • Latifi, P. Lehman Brothers’ rise and fall: From hero to dust.
  • Moccoby, M. Narcissistic Leaders: The Incredible Pros, the Inevitable Cons.
  • Robinson, P. (2009). A Colossal Failure of Common Sense.

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