Corporate organizational behavior

Individuals bring a number of differences to work. They have a variety of personalities, values, and attitudes. When they enter into organizations, their stable or transient characteristics affect how they behave and perform. Moreover, companies hire people with the expectation that they have certain knowledge, skills, abilities, personalities, and values.

Building and cultivating relationships is an integral part of any career strategy. Whether you are a job seeker, manager or entrepreneur, you are in the relationship business. When it comes to building relationships you must start with self knowledge, and that starts with personality.

The study of personality is fundamentally about asking: Who am I? I know it sounds cliché, but before you can effectively reach outward to others, you have to be able to look inward. The study of personality provides some great insights into how to do this.  

Personality can be tough to define; from the four temperaments of Hippocrates (choleric, melancholic, sanguine, and phlegmatic) to Freud’s theory of the unconscious there have been countless attempts at nailing down this highly abstract thing we call personality.

According to personality expert, Professor John Mayer, “personality is the organized, developing, system within the individual that represents the collective action of that individual’s major psychological subsystems.” In layman’s terms, I like to think of personality as that inherent driver of how we act. It’s that natural disposition we fall back on when all those other forces of the outside world are accounted for.

A great way to describe personality is to use a popular model called the Big Five.

The five factor model, more popularly known as the Big Five, is one of the most researched models of personality. The model provides a great overview of everyday personality and how it relates to the workplace. Compared to other models, the Big Five enjoys a fairly high level of academic consensus as well as empirical support. The theory being that there are five major trait categories that describe our personality. According to the Big Five, we all consistently fall somewhere along each of the following five continuums that I like to remember as OCEAN.

* Openness to Experience: At the open end, individuals are highly interested in experiencing new things and are flexible in their thinking, whereas at the opposite end, individuals are more closed minded and rigid in how they approach new experiences.

* Conscientiousness: Those who are high in conscientiousness tend to be diligent and dutiful in the way the approach work and life. Individuals who are lower on the conscientiousness scale tend to be big picture thinkers and less interested in the details of how things get done.

* Extraversion/Introversion: Probably the most recognizable personality trait is extroversion because it’s easy to see. Extraverts are socially assertive and gain energy from performing for and interacting with others. Introverts draw energy from reflection and tend to prefer working alone or in small groups.

* Agreeableness: This scale looks at the level of friendliness versus hostility that someone tends to display when interacting with others. Those high in agreeableness are more trusting and modest whereas those low in agreeableness are more suspicious and oppositional.

* Neuroticism (Emotional Stability): Those who are highly neurotic tend to be less stable and frequently demonstrate negative emotions. Those who are more emotionally stable are generally pleasant and tend to be resistant to stress.

When thinking about and observing personality I always caution people to keep two things in mind: behavior and intent.

Behavior vs. Personality: Behavior is what we observe in others as bystanders. We all learn about others and make attributions based on what we see. However, personality is not the only driver of behavior, there are always external forces operating to influence how we behave. Thus, we have to be careful about the attributions we make based on limited observations within certain contexts.

It is important to remember that we all have the ability to act counter to our preferences, which is often referred to as acting out of character. When trying to get a sense of someone, look for consistent behaviors as opposed to unusual behaviors.

Intent and Personality: A frequent complaint I hear from clients is that one of their colleagues is intentionally holding back and not asserting himself. In their mind, this person is actively going against the grain. The issue is not that the person is trying to be different than you; he/she is actually different from you! Understanding individual differences is critical in managing teams. Diversity of personality is often a key component to building a successful team. The trick is to understand how to harness the power of personality differences for success.

Understanding your own personality and the personalities of those around you is critical to success. Keep in mind personality is only one of many drivers of behavior, but it is one that is consistent over time.  

Boiler Room (2000) is an American drama movie based on financial crimes that take place through various stock brokerage houses across the globe. As defined by U.S. Securities and Exchange Commission (SEC), “the name Boiler Room refers to large-scale operations designed to lure in as many investors to an investment scam as possible, often using high-pressure sales tactics. Boiler room scheme operators may cold-call investors or solicit investors through emails, text messages, social media, and other means.” The movie gives a very good perspective of how greed clouds the thought processing ability in many investors and gives rise to such schemes.

The wolf of wall streets: Early into the film, the audience is introduced to a variety of Jordan’s addictions: drugs, sex, and, most importantly, money. Categorizing Jordan’s motivation proved to be a simple task, as McClelland’s Theory of Needs, particularly the need for power and achievement, defined Jordan’s ambitions. One could argue that his need for achievement subsequently developed his need for power. As he rose through the ranks of stockbrokers on Wall St, his motivation shifted from becoming a successful securities broker to becoming THE one and only most successful securities broker. This motivation ultimately led him to develop a Machiavellian-esque personality, where he saw employees and customers as cogs in his ponzi-scheme.  

An example of this can be seen in two instances, the first is with the customers he chooses to focus on. When the brokerage first opened, Jordan provided an exact script for his employees to use when on the phone with potential customers, but not without first proving its effectiveness. In this particular scene Jordan cold called an individual, who Jordan deemed as wealthy, and proceeded to recite the deceitful script, manipulating the customer into purchasing stock about which he knew nothing about. This act of persuasion truly highlights the manipulative nature of Jordan Belfort and is further highlighted in the next example.

One can see how Jordan manipulated his employees by his management style. He chose to lead through example. How does one lead through example? In the case of Jordan he simply insisted that their employees live outside their means and do whatever it takes to solely focus on shallow and materialistic possessions. This is evident in the IPO monologue delivered by Jordan prior to the release of Steve Madden. He urged his employees to focus on “big tits”, and “$10,000 suits and gold watches”. At this point, employees were not interested in whether the means to an end were ethical; but rather how they could live up to Jordan’s expectations. Why this is so detrimental to an organization is because:

“Ethical behavior is needed in an organization because employees are likely to regard their employing organizations as the legitimate source of right and wrong within the business environment. As a consequence, ethical behavior will be defined using the organization as the arbiter of what is morally correct.”

An organization, such as Stratton, who blatantly disregards ethical behavior often run the risk of destroying their business. Examples of this can be seen with Enron in 2001 and the Lehman Brothers scandal in 2008.

Employees were ambitiously engaged in such extent that did not realized the way they were associated in morally wrong actions. They would follow every step Jordan and the other leaders would take. Jordan hammered home his point by stating “If you say that I’m materialistic go work for McDonalds, you worthless (expletive).” By having his employees live outside their means it enabled him to motivate them to work harder and continue working ruthlessly to maintain their standard of living. Ultimately, one can see the inherent flaws with Jordan’s managing style. This management style was not one of camaraderie and employee satisfaction. Jordans management style was used to further his personal ambitions and to manipulate his employees into thinking that they were helping themselves, rather than solely benefitting him.

Now one must ask, “Were there negative repercussions of this management style on his employees?” The simple answer is, yes. Due to Jordan’s manipulative nature, he was able to persuade his employees that they were the makers of their own destiny and that through his expertise they could live the quote-un-quote “rich life”. Because of this, employees joined Stratton and took on large sums of debt to buy cars, clothes, etc to live this lavish lifestyle promoted by Jordan. As a result of this the employees were trapped. They could continue to work and live a life they could not afford, or quit and default on the loans they had taken out. Unfortunately, due to their lack of education and experience in the industry, they were oblivious. Scorsese alludes to this in the penny stock scene when Jordan talks about motives for getting on the phone. Jordan is well aware of his band of misfits financial situation, but does nothing to stop it. In the eyes of the employees, they were making tons of money and living the American dream; in reality it was the paycheck from Jordan that kept them afloat.  

In addition to persuading employees to live a lavish lifestyle, Jordan’s type A personality and manipulative management style pushed employees to be competitive, impatient, and aggressive. Employees were focused on making as much money as possible and they didn’t like the idea of leisure time. Jordan’s impact on his employees is exemplified in the Steve Madden IPO scene. During the scene, one employee was cleaning his fish bowl a few minutes before Steve Madden Co. was to be publicly traded. The senior vice president, Donnie Azoff, approached him and yelled at him for taking leisure time even though he had finished all his work. This scene successfully portrays how Jordan’s personality impacted his employees.

Jordan’s personality not only impacted the behavior of his employees, Jordan’s personality also shaped employee perceptions of themselves. Employees deemed themselves much more important in their new office locations than they felt when they were working in the garage. Jordan was able to change employee perceptions of self worth by transforming employees from average salesmen to potential CEO’s. Jordan told his employees that their hard work would lead them to own their own brokerage companies under his guidance. Additionally, Jordan had his employees suit up in order to change their perceptions of their jobs. He even allowed tailors to come to the office.

The organizational culture at Stratton Oakmont is easily identifiable given the strong characteristics that conform it. As mentioned previously, the Stratton Oakmont management team sought to create a culture that is shaped by a high encouragement to innovate and maximize outcomes. Undoubtedly, ambition plays an important role in the values that mold the employees attitudes. By disregarding the smallest sign of unethical practices, they continued to take risks driven by the obsession for money: A means to an end. This self-interested approach of working was inherited by Jordan Belfort and the co-founders. The managers jointly introduced a passion for exponentially growing their profits by doing whatever it was necessary. With such a strong personality coming from upper management, the employees’ perception of the company’s culture was easily influenced and adapted to suit the overall set of goals. Since organizational culture “refers to a system of shared meaning held by members that distinguish the organization from other organizations”, at Stratton Oakmont it gave a strong personality that rapidly caught the attention of the market. This strong culture became the unbreakable link that everyone within the company shared; and that eventually developed devotion and unconditional loyalty. This sentiment grew by the effects of organizational climate, reinforced by a common perception towards Stratton Oakmont.

Stratton Oakmont’s organizational culture also played an important role in the continuous development of the company. A strong organizational culture is one where the majority of employees hold the same basic beliefs and values towards their respective organization. A strong culture that engages employees and changes their view of work will bring extreme amount of benefits to the organization. Employees with high, core self-evaluations believe in their inner worth and work ability. These employees will have higher job satisfaction since they are more likely attracted to a challenging job with their ambition. Stronger companies with constructive cultures often have a strong sense of unity and vision within the company.

Ritual is another key to reinforce values of the organization. It creates a shared identity among employees of an organization. In the movie, Mark Hanna meets Jordan for lunch and performs a ritual by humming and beating his chest. This performance is considered a warm up ritual for Mark that serves as a source of encouragement and motivation for Mark and his employees.

Rewards can also serve as encouragement for employees. Rewarding employees helps to create a positive organizational culture and outcome. Janja Lalich argues that,

“Cult leaders also make it difficult for people to leave. They set up interlocking systems of influence and control that keep followers obedient and prevent them from thinking about their own needs. Cult leaders may offer “rewards” – sometimes material, more often ephemeral – that keep followers committed to the leader and to the organization’s goals.”

In the movie, Jordan makes sure to encourage his employees with rewards. He encourages his employees by rewarding them with a grand celebration after they achieve a new goal. For instance, in the beginning of the movie, Jordan throws a celebration party with midgets, women, and other entertainment features. Not only did this celebration act as a reward for the employees, the celebration served as a way to reinstate the peculiar personality of Stratton Oakmont.

This celebration party also emphasizes the loyalty and dedication of the employees within the company. During the party, the secretary agrees to shave her head for $10,000. The secretary was willing to shave her head because she needed the $10,000 for plastic surgery. Throughout the scene, the woman is holding the money in her hands as her head is unevenly shaved. Ultimately, this scene exemplifies how effective leadership can enhance the performance and job satisfaction of subordinates through motivation. Jordan Belfort enjoyed the process of persuading employees, from query to trust. His ultimate goal was to control his employees with supreme power. In this scene, the woman expresses how satisfied she is with her job. This job satisfaction gives her the courage to make the decision to shave her head. In the end, her decision is based on her faith and trust in Jordan and the company.

An excellent example of the employees’ devotion to the organization and worship to its’ leaders is found towards the end of the movie when Jordan gave his resignation speech. In this scene, Jordan starts by saying that the day has come when he has to move on. From the beginning of the speech, the spectator can automatically infer that Stratton Oakmont’s employees are not pleased with the decision the CEO seems to have made. Nevertheless, they show approval of the direction the company will go and the managerial adjustments made. As the speech takes an extremely sentimental path, sentiments of confidence and trust start to flourish while applauses and tears are noticed among the crowd. Suddenly, Jordan retracts himself by deciding not to leave the company triggering an explosive and collective reaction of euphoric celebration. Although there are several scenes in this move where strong positive sentiments towards the company are evidenced, this one in specific seems to expose them with greater emphasis.

As described in the aforementioned sections, we see the inherent flaws associated with Jordan Belfort’s management style.  In response to this we have provided a suggestion to point Stratton Oakmont’s moral compass in the right direction. Our suggestion would be to implement a board of directors or overseers to watch over the direction that senior management is taking the company. This board of directors would be responsible for approving: all company business transactions; weekly, monthly, and yearly brokerage sales meetings and speeches; and lastly company sponsored events. This would ultimately reduce the ability of management (Jordan) to influence the workforce. Diminishing Jordan’s influence on the sales staff would take away Jordan’s confidence, bringing him back to the state in which he entered Wall Street. Monica M. Sharif and Terri A. Scandura state that,

“Research has found ethical leadership to predict employee satisfaction with the supervisor, dedication, willingness to report job problems to management, and perceived leader effectiveness.”

This finding supports our recommendation to hire a board of directors . Ultimately, if employees are no longer under the manipulative control of Jordan, they would realize the implications of their business practices and could work to make appropriate changes.

Due to Jordan’s autonomous nature and sole ownership of Stratton Oakmont, it is unlikely that our suggested solutions would be successfully implemented. It is unlikely that Jordan would be willing to step back as a leader and allow a board of directors to micromanage his company. Although, a board of directors may provide the best route for Stratton Oakmont, Jordan’s self-pride is likely to get in the way.

To conclude, Jordan’s manipulative management style had a huge impact on the company’s employees, as well as, the company’s culture. Jordan was able to lead by example and train his employees to follow in his footsteps. Employees were led to live lavish lifestyles and were taught that money is the answer to all problems. These lavish lifestyles led employees to become dependant on their jobs which fueled employees loyalty to Jordan and Stratton Oakmont. Our analysis concludes with one final point. Ultimately, Jordan’s manipulative management style caused many ethical, as well as, legal implications that led to the demise of Stratton Oakmont.