Lehman Brothers' final days as told by historical employee review data
Through historic Glassdoor data, we can look at the mindset of Lehman Brothers employees in 2008, and whether this data might have foreshadowed the collapse of what once was America's fourth largest bank.
Ten years ago in September, following the revelations of activity and involvement with the sub-prime mortgage crisis, Lehman Brothers endured a massive exodus of major clients, huge devaluation of its credit rating, and plummeting stock prices that forced the company to file for chapter 11 bankruptcy.
The failure has been credited with playing a major role in the late-2000's financial crash, and gave significant weight to the doctrine of "too big to fail" — that large banks are so interconnected that failure results in massive economic destabilization.
During this time, those who worked for Lehman Brothers saw their employer plummet to the ground, some receiving job offers from Barclays ($NYSE:BCS), the investment bank that purchased the core of Lehman Brothers' business, while others packed their belongings and headed home, unemployed.
An unusual rise in recommendations
In the first half of 2008, 73% of employees said they would recommend the bank as a workplace. When we compare this to the second half of 2008 and early 2009, the figure surprisingly rises; during this time period, 80% of employees reported that they would recommend the company.
Whether this could be the product of a sentimental attitude towards the failing investment bank or anything else, we're not sure, but since then, the figure fell to just over half of employees viewing the company as favorable. Out of all employee reviews, 62% of them recommended the company either while it was active or in retrospect.
Employees lose faith in CEO, senior management as bankruptcy looms
Another useful metric we can use to look back in time is the rating of Lehman Brothers CEO, a position that was held from 1994 to 2008 by American banker Richard S. Fuld, Jr.
Before September 2008, Fuld was well liked by those under his employ, with an average score from employees of 71%. At the time, only 10% of Lehman Brothers said they would not recommend Fuld to others as a CEO.
After September 2008, this all changed, and Lehman Brothers employees turned on their formerly favorable CEO after either losing their jobs or being sent over to Barclays.
Now, two thirds of his employees report a negative opinion of Fuld. Not surprising considering the state of the company in 2008.
However interesting this data is in hindsight, it seems to better paint a picture of the fallout, rather than give warning of what was to come.
Other metrics we can look at is the rating of senior management as a whole, and career opportunities for employees. Both potentially useful markers of a healthy workforce and business.
Looking at the rating of Senior Management, we can see the rating fluctuates strongly, but what we can see is a clear decline from July 2008 into August and then a clear plunge as the company files bankruptcy.
The pattern we saw in rating of Senior Management repeats when we look at employee scores for the career opportunities. As pressure mounted on the company in the summer of 2008, ratings plummet as employees seemingly lost their faith in progression with the company in the run up to collapse.
Essentially, the falling ratings of senior management, and employees scores for career progression could have hinted at increasing instability within the bank, and along with other public knowledge, pointed to the coming collapse.