Fair Winds Ahead Essay

Submitted By gpjames
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| Fair Winds Ahead | | Neuberger Berman’s Adaptive Organization Design |

| Fair Winds Ahead | | Neuberger Berman’s Adaptive Organization Design |

Gail James

October 28, 2012
Business 380 Section 2
Principles of Management

Gail James

October 28, 2012
Business 380 Section 2
Principles of Management

Fair Winds Ahead
Article Review
Neuberger Berman was founded in 1939 as a manager of private family wealth and it later added to the company with a small equity mutual fund array. The company at that time was ran as a partnership and based on a small horizontal team structure of wealth advisors and portfolio managers. It was run that way until it went public in 1999. In 2003, the company was absorbed by Lehman Brothers, who at that time was one of the top investment banks. Lehman had also acquired Lincoln Capital; a Chicago based institutional bond manager and merged them with the Neuberger group. A private equity shop called Crossroads was added a bit later and Lehman distributed all of these products through its global sales network. Neuberger’s time with Lehman was in a centralized company that used a more traditional vertical and functional structure. 2008 saw Lehman Brothers filing bankruptcy and attempting to find someone to buy out the Neuberger segment. Unfortunately for Lehman, the financial crisis left every offer falling short. This was however, a boon and the beginning of a new life for Neuberger Berman as its leaders improvised a buyout of its segment of the company by its employees.
This newly structured company based on service technology has thrived since being set adrift by the Lehman Brothers bankruptcy. They now have $200 billion in assets with 45% in equities, 45% in fixed income, and 10% in hedge funds and private equities. Its distribution channels are composed of 55% institutional, 25% third party advisor mutual funds, and 20% direct private-client accounts. Being such a large and profitable company, a person would expect posh Wall Street headquarters. Instead, the stability that characterized the firm since the beginning is reflected in its nondescript headquarters which are located just south of Grand Central Terminal in a very unfashionable part of Manhattan. The only things that reflect its success are the pictures and sculptures scattered around that are part of Roy Neuberger’s world class art collection. As George Walker, Neuberger’s Chief Executive stated, “Our mission is totally different as part of an employee-controlled partnership. Now, unlike most competitors, we measure success by how clients, partners and employees feel about the place.” Rather than growth for no other purpose, they can focus on being good stewards of the franchise and client capital.
Going from being under Lehman’s corporate umbrella to being one of the largest employee-owned asset managers was accomplished by a preferred stock issue in which the employees purchased 51% of the $920 million company. This all moved the company into a new flat structure with few hierarchical levels. Work specialization has been moved into a team-based structure similar to that of the original partnership and watched over by a central risk committee and by Neuberger’s President and Chief Investment Officer Joe Amato. There are 40 teams and each is known by the team leaders names and having its own…