The very best information about what’s happening in any organization rests with the employees on the frontline. If you want to zero in on accounting fraud, pay a visit to the loading dock. If the employees have a 32-day month that they use for shipping records, well, you have an accounting problem. And if you want to know if a company used customer money for hedging, go to the back-office employees at MF Global. Investigators finally did, and lo and behold, they found what they needed. In the week before MF Global’s bankruptcy, those back-office employees were raising red flags to try and stop the misuse of customer funds. Their warnings went
unheeded because, well, Jon Corzine was like a financial god who was not to be challenged. No CEO is above the expressed concerns of employees who have to do the physical transfers of funds.
And then there is Chase. The two traders involved in the $2-$3-billion loss the bank faces (in addition to the $30-billion-plus loss in share value) had some peculiar habits that did not go unnoticed by their fellow employees. Any time one of your fellow co-workers is wearing the same clothes at work for days, you might want to ask a few
questions about why he isn’t going home.
The classic “never leaves on vacation†was writ large at Chase by the London traders. One, Bruno Michel Iksil, was not forthcoming with his supervisors about the details of his positions. Another, Achilles Machris, had a history of being difficult. Sometimes those HR problems have their roots in other issues, such as a rogue trading philosophy for which they were being rewarded but about which they were not forthcoming. Hence, the hostility as fellow employees wondered, “How are they getting away with this?†The names “Voldemort†and “London Whale†were not spun out of whole cloth. And the employees saw Jamie Dimon as the savviest risk manager on the Street. No one is invincible, except maybe the frontline.
Trust the frontline. Listen to the frontline. Recognize the wisdom of the frontline when they speak up – they know whereof they speak. And most of them change their clothes each day.
