Case Study of Salomon Brothers

Case Study of Salomon Brothers Group D 1

Case Study – Salomon Brothers

Group D

Kirk Baringer, Luke Elliot, Joseph Martinez, Kay Metzinger

A Paper Presented in Partial Fulfillment

Of the Requirements of

LEAD505 – Organizational Leadership and Ethics

October 2011

Southwestern College Professional Studies

Salomon Brothers Group D 2

Abstract

Reviewing the Case Study of the Salomon Brothers, the following research defines ethical

behavior, how the company’s ethical standards were maintained, where the Salomon Brothers

leadership turned to crisis for the company, and how they managed this crisis. Exploring the

concerns of this crisis, this paper examines how management of the company changed, with new

leadership taking over with Deryck Maughan, supported by Warren Buffett. The paper also

looks at how the new leadership was able to review and maintain ethical standards, the major

consequences of the Treasury auction, and discusses whether Salomon Brothers should have

pleaded guilty to minor criminal charges. The paper uses Schein’s Five Primary Mechanisms

(1985) and discusses how it relates to the Salomon Case and how leaders can use these

mechanisms in other organizations. Finally, group members will discuss how what they have

learned from this case study and how it relates their personal and professional experiences.

Salomon Brothers Group D 3

Introduction

In this reality show friendly world, financial scandals are entertaining and frightening at

the same time, especially when they involve the fall and stumble of such highly visible leaders

such as Salomon Brothers head, John Gutfreund, and his crew. This is even more engaging when

you see the rise of, Mr. Integrity himself, billionaire Warren Buffett, who came in and saved the

day. But after we stopped looking at this real life drama about Mr. Gutfreund's grievous fall, we

have to go back and investigate the events as to how it happened and why. Four leadership

students from Southwestern...