Memos from the Chairman by Alan C. Greenberg

Published on Author Kristoffer

This book is a collection of memos sent from Alan C. Greenberg while he was chairman of Bear Stearns. Communicating memos is a common practice throughout the business world but Greenberg set himself apart in the way he did it. The following quote from a memo by Greenberg is one of the best examples of this.

 “I was just shown the results for our first quarter. They were excellent. When mortals go through a prosperous period, it seems to be human nature for expenses to balloon. We are going to be the exception. I have just informed the purchasing department that they should no longer purchases paper clips. All of us receive documents every day with paper clips on them. If we save these paper clips, not only will we have enough for our own use, but we will also, in a short time, be awash in the little critters. Periodically, we will collect excess paper clips and sell them (since the cost to us is zero, the arbitrage Department tells me the return on capital will be above average). This action may seem a little petty, but anything we can do to make our people conscious of expenses is worthwhile.”

It is worthwhile noting that the values expressed in the book are far from generic among businesses. The memos are between 30-40 years old and many cannot be applied to the world we live in today. The key takeaways from this book are not the values expressed but rather how they are expressed by Greenberg.

This way of ensuring alignment of values throughout the organization is something, which can and should be implemented in any generation of business. This is why the book is still relevant to this day.

Main values expressed by Greenberg

  1. When results are good then increase your focus on expenses. “Thou will do well in commerce as long as thou does not believe thine own odor is perfume”
  2. Watch over each other. Greenberg continually asks employees to watch each other and report on suspicious behavior.
  3. Let your colleagues and boss know where you are and how you can be reached at any time.
  4. Hire based on personality and values which correspond with the company and not degrees
  5. Provide the best service to everyone
  6. Simplicity

Below are some of the best examples of how Greenberg communicated his values to the company.

Cost saving

“All of us use blue envelopes for sending written material around the office. Our team has done a great job of saving these envelops and reusing them but our scotch tape expenses has gone up. From this day on, instruct your secretary to lick only the left side of the flap when sending the envelope. The reason for this will amaze you, and make you wonder why you did not think of this yourself.

If the envelope is gently opened by the recipient, it can be used again and sealed, without using scotch tape, by your secretary licking the right side of the flap and then sealing it.

After all of us have become accustomed to accurate and precise licking, a further extension of this will be to lick only the left third, and then the middle for the next trip, and the right side for the penultimate voyage. If one has a small tongue and good coordination, an envelope could be opened and resealed ten times.”

Be available

“I have contacted marlin Perkins of the St. Louis Zoo and the next person that I have trouble finding will be fitted out with a radio collar. Please impress our policy on the people who work with and under you. The collars are bulky and not very attractive.”

Hire based on personality and not degree

 “Our first desire is to promote from within. If somebody with an MBA degree applies for a job, we will certainly not hold it against them, but we are really looking for people with PSD* degrees. They built this firm and there are plenty around because our competition seems to be restricting themselves to MBA’s

*PSD stands for poor, smart and a deep desire to become rich.”

Watch over each other

“We must always be on guard in dealing with new relationships and our associated must always be aware that we are watching the shop and them at all times. The best protection against in-house fraud is for management to have a great rapport with associates big and small. They will see aberrational behavior in a co-worker four years before internal audit spots the deception.”

“We have a very liberal policy of rewarding, with cash and promotions, personnel who help us improve this firm. If you want to become a lot richer, just give us information that will aid us in discovering employees who violates either of the two rules of behavior that I have just mentioned. Call your supervisor or me with any of your suspicions. You will never be criticized if your information proves to be inaccurate. The fable about the boy who cried “wolf” does not fit with Bear Stearns philosophy. Cry “wolf” at every opportunity. If your doubts prove to be false, you will still be thanked.”

“During the last two months, we have distributed two checks to people who reported mismarkings; the last one was for $65,000.00. In both cases the recipients were reporting certain issues of their bosses, so not only did they get a check, but they received an immediate promotion because their bosses no longer work for us”.

Provide the best service to anyone

”Remember one thing; today’s applicant could be next year’s client.”

Greenberg expressed this when encouraging employees to respond to job applicants even though they were rejected for the job.


“During the last few months the business community has been exposed to some new management tools. They are known by the cognoscenti as Total Quality Management (TQM), Continuous Improvement (CI), Business Process Reengineering (BPR) and Other Trading and Organizational Development Initiatives (OTAODI). Your executive Committee is always looking for ways to improve our performance, and those titles intrigued us.

We appointed a committee (C) consisting of Haimchinkle Malintz Anaynikal (HMA) and Itzhak Nanook Pumpernickanaylian (INP) to do a comprehensive study .We thought you might be interested in the results.From now on we will use the jargon of advanced management.

The “C” discovered that we have lost 90% of our competitors over the last 20 years. Most of those managements were precocious; they were using those catchy techniques years ago.

35% used TQM

25% used IC

20% used BPR

10% used OTAODI

The remaining 10% did not use any sophisticated management tools, they were just extra special stupid. The “C” suggested that we stick to common sense (CS) because catchy titles will never supplant “CS”.”

“The only statistic I care about is return on equity. After many sessions with some of our business school graduates (yes, we do have some), I think they have helped me understand the secret to improving our R.O.E It seems that if we increase revenues and cut expenses, return on equity goes up and that is what makes me happy. Please make me happy! I can be very unpleasant when I’m not.”

Additional cost saving memos

“I have instructed the Travel Department to reclaim all of the accrued mileage earned on firm-related business trips and use them towards all future Bear Stearns firm-related business trips.”

“Two important milestones were reached last week, McDonald’s sold their 70th billion hamburger and Bear Stearns bought their 10,000th FAX machine.

I do have some sad news to report. The FAX machine salesperson who has serviced the Bear Stearns account has retired. He is burnt out – he is 33 years old. He has purchased Donald Trump’s yacht, and the overworked soul just wants to cruise and take it easy for a while.

When we cut expenses, we have a direct, equal and positive impact on our bottom line. If we forget this fact, we will be a member of the “Losers Club” and stupid. That is one club that we are not joining.”

“All employees are encouraged to stay with relatives or friends while on company business. If weather permits, public areas such as parks and parking lots should be used for temporary lodging sites. Bridges may provide shelter in periods of inclement weather.”

“Hitchhiking in lieu of commercial transport is strictly encouraged. Luminescent safety vests will be issued to all employees prior to their departure on company business trips.”

“Expenditure for meals will be limited to the absolute minimum. It should be noted that certain grocery chains, such as General Nutrition Centers and Piggly Wiggly stores, often provide free samples of promotional items. Entire meals can often be obtained in this manner. Travelers should also become familiar with indigenous roots, berries and other protein sources available at their destination. If restaurants must be utilized, travelers should seek establishments offering “all you can eat” salad bars. This will be especially cost-effective to employees traveling together, as a single plate can be used to feed the entire group. Employees are also encouraged to bring their own food while on company business. Cans of tuna fish, Spam and Beefaroni can be conveniently consumed at your leisure, without the necessary bother of heating or other costly preparation.”

“Entertainment while on travel is strictly discouraged. If such extravagances are required on customer contacts, the customer should be encouraged to “pick up the tab.” Such action will save the company money, and also convince the customer that we are concerned about spending money on providing a good product, not on useless frivolities. The hospitality provided to our customers who visit our facility shall also be tasteful, yet cost-effective. In lieu of extravagant dinners, a picnic bench will be placed in the parking lots near the dumpster and a garden hose will be made available so that liquid refreshments can be provided for our guests.”

“All Employees are encouraged to employ innovative techniques in our team effort to save corporate dollars. One enterprising individual has already suggested that money could be raised during airport layover periods which could be used to defray travel costs. In support of this idea, Red Caps will be issued to all employees prior to departure so that they may earn tips by helping other traveler with their luggage during such periods. Small plastic roses will also be made available to employees so that sales may be made as time ceramists.”

“Some expenses are tough to cut but saving on electricity is easy, although it does require a little muscular coordination. Some non-athletes may have trouble making contract with a light switch while walking, but it can be done by almost anyone if you concentrate. In fact, after a little practice you will be able to throw a switch while walking fast. Make a game out of the ritual – see how many consecutive times you can flip the switch without missing.”

No excuses for not working

  1. Sickness: “No EXCUSE… We will no longer accept your doctor’s statement or note as proof. It is clear that if you are well enough to get to the doctor’s office, you are well enough to come to work.

  2. Leave of Absence (for an operation) : We are no longer allowing this practice. We wish to discourage our associates from exposing any part of their body to a knife. Knives cut and cuts cause blood and that is bad. We hired you as you are and to have anything removed would clearly make you less than we bargained for. Therefore, anyone having an operation risk termination.

  3. Death (Your own): This will continue to be a valid excuse, but we will now require a two-week notice since we will have to replace you.