Stan O'Neal Failed the First Rule of Leadership

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I've been following the recent troubles of Merrill Lynch CEO Stan O'Neal with interest, though not much sympathy. After reading an excellent article in the New York Post yesterday about "O'Neal's Hubris," chronicling how he systematically purged everyone who challenged him, I thought it might be a good time to rub a little salt in the wound. I first became aware of Stan O'Neal through my daughter, Beth, who was working as an intern at Merrill Lynch the summer that he took over from his predecessor, David Komansky. She could hardly believe how quickly and how completely the culture changed. Overnight a chill settled on the company. Komansky had made a point of eating lunch with his employees in the cafeteria from time to time. O'Neal never showed his face there. Beth and the other interns were given a strict set of rules governing how they should behave in the presence of the new CEO. If they saw him walking down the hall, they were to stay out of the way and not speak to him. If they were waiting for an elevator and the door opened and they saw him inside, they were not to get on. If they were already in the elevator and he got on, they were to step to the rear and keep their mouths shut. Given O'Neal's fear of interns, it's hardly surprising that he would fire Merrill Lynch's leading authority on asset- and mortgage-backed securities, Jeff Kronthal, when he dared warn about the risks the firm was running in that arena. Apparently, O'Neal never learned the most important rule of leadership as he made his way up the corporate ladder: A company is only as good as the people who work for it, and the CEO's main job is to create an environment in which they can thrive.

"Street Smarts" columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and grown six businesses. In 2008 he sold CitiStorage, a document-archive business based in Brooklyn, New York, for $110 million. Along with Bo Burlingham, Norm has chronicled his entrepreneurial journey in his column in Inc. and in the book The Knack: How Street-Smart Entrepreneurs Learn to Handle Whatever Comes Up. @normbrodsky