Lessons from Lehman Brothers: Will We Ever Learn?

Lessons from Lehman Brothers: Will we ever learn?

There has been other financial crisis along the time, but the one that caused when Lehman Brothers filed for bankruptcy in 2008 was one of the worst economic downfalls in recent times, it affected the financial system globally and resulted millions of dollars in losses, people lost their jobs, their money, and their homes. Although Lehman Brothers was not the only firm that caused the situation, it was the size and relevance of the company in the global market that caused the fear and uncertainty that dominated during the whole situation. For this assignment we will discuss some of issues that lead to Lehman Brothers decay.

(NATHAN) 2. What was the culture at Lehman Brothers like? How did this culture contribute to the company’s downfall? Lehman Brothers culture was to reward and encourage unnecessary risks by openly laud and reward people who took them, even when the deals or decisions where on the fringe of the illegal. What happened was that Lehman Brothers’ employees were not only encouraged by their bosses and peers to take those risks, its reward structure was made in a way that people were handsomely rewarded if they took those risks; and oppose to that, when people tried to report or act against risky decisions they were usually ignored.

It is known that when a company sets control measures to determine performance, employees will be more focus on them as their priority. This was part of why Lehman Brothers culture contributed to the company’s downfall, because it was measuring success based on bold decisions; hence employees were looking for audacious deals that win their bosses good deed, even if the action was of questionable ethic behavior.

(NICOLE) 3. What role did Lehman’s executives play in the company’s collapse? Were they being responsible and ethical? The Lehman brothers did not act ethically. The executives took a lot of