Merrill Lynch Principles
A Model Code of Corporate Conduct
The Merrill Lynch Principles: As a statement of corporate values and standards, as well as a summary code of employee conduct, the Merrill Lynch Principles often have been cited as a model of brevity and clarity. Through most of the firm's history as an independent entity, the Principles offered a reliable window into its corporate culture for job seekers and potential clients alike.
Until the old Merrill Lynch culture was effectively dismantled in the wake of wholesale changes in senior executive management during 2001-02, these Principles were taken very seriously.
Prominently displayed on the walls of all company locations, and in lucite blocks on many employee desks, they were:
- Client Focus
- Respect for the Individual
- Responsible Citizenship
The official statement and exposition of the Principles evolved somewhat over time. The summaries appearing below (and in more detailed fashions behind the links above) are drawn from a 2002 release, back when Merrill Lynch was still an independent firm.
Bank of America Core Values: In 2010, Bank of America began supplanting the Merrill Lynch Core Principles with its own set of Core Values. These are:
- Trusting and Teamwork
- Inclusive Meritocracy
- Doing the Right Thing
Veteran Merrill Lynch employees objected strongly to this move. Among other things, they generally found the Bank of America Core Values to be less focused, clear and direct. As a result, the Merrill Lynch Principles gained some new life, and were for a time still displayed on the firm's website, though not prominently at all.
Client Focus: Clients are the driving force. Understand them. Anticipate and respond to their needs, but never compromise the integrity of Merrill Lynch. Provide the broadest range of high quality, easy to use products and services. Develop and maintain long-term relationships. Listen to client feedback.
Build trust and loyalty. Offer personal and individual service.
Respect for the Individual: Respect the dignity of each individual employee, shareholder, client or member of the general public, regardless of level or circumstance. Be sensitive to workloads and support balance between work and personal life. Ensure equal access to opportunities. Foster trust and openness. Argue positions fairly and objectively. Value contrary opinions. Understand others. Listen to their concerns and viewpoints. Explain issues and answer questions. Resolve problems respectfully.
Teamwork: Integrate services seamlessly. Clients must see only one Merrill Lynch. Share information candidly and openly. Cooperate and collaborate within and across workgroups and teams. Value individual differences in style, perspective, and background. Share successes and failures. Be responsible for helping others. Be dependable, reliable and contribute fully to the team. Recognize and reward individual and team accomplishments. Forge relationships with colleagues based on trust and respect, regardless of level.
Responsible Citizenship: Improve the quality of life in the communities where our employees live and work. Respect and adhere to all customs, norms, and laws where Merrill Lynch conducts business.
Support and encourage community involvement. Contribute time, talent and resources to make a difference in the lives of others.
Integrity: No one's personal bottom line is more important than the reputation of our company. Maintain the highest standards of personal and professional ethics. Be honest and open at all times. Stand up for your convictions and accept responsibility for your mistakes. Comply fully with the letter and spirit of the laws, rules, and practices that govern Merrill Lynch around the world. Be consistent between your words and actions.
History of The Merrill Lynch Principles: They had their origins in the business philosophy repeatedly enunciated by founder Charles E. Merrill as far back as 1914. Former SEC chairman Arthur Levitt once remarked that, of all the Wall Street firms, only Merrill Lynch had a soul.
Moreover, Merrill Lynch was long known for an unusually nurturing attitude towards employees compared to other firms in its industry and was fondly called "Mother Merrill" by many, both inside and outside the firm. The Principles were defining characteristics of the "soul" that Levitt once identified.
Besides Charles E. Merrill, another key figure in the development and promulgation of the Principles was Winthrop H. Smith. He joined Merrill Lynch in 1916, two years after its founding, and rose to be its managing partner, responsible for many key initiatives that fostered its rise to prominence. To honor his contributions, upon his retirement in 1958 the firm (still organized as a partnership at that time) changed its full name from Merrill Lynch, Pierce, Fenner & Beane to Merrill Lynch, Pierce, Fenner & Smith.
Smith's son, Winthrop H. Smith, Jr., also would have a long career as a Merrill Lynch executive, and he felt a highly personal connection to the Principles. In his 2014 book, Catching Lightning in a Bottle: How Merrill Lynch Revolutionized the Financial World, he described a late 2001 encounter during which he asked the (then) newly appointed CEO E. Stanley O'Neal about the latter's commitment to the Merrill Lynch Principles.
According to Win Smith Jr., O'Neal had a dismissive attitude towards the Principles, though the firm would continue to use them for public relations purposes. More generally, O'Neal was openly hostile towards the old "Mother Merrill" culture. He derided it as riddled with incompetence and nepotism. Actually, Merrill Lynch has had a long history as a major training ground for financial industry talent, with its alumni regularly moving on to become key players in other leading firms.
Win Smith Jr. quit the firm shortly thereafter, and attributes its near failure and subsequently forced sale to Bank of America in 2008 to O'Neal's abandonment of the Principles and his destruction of the firm's culture. In the years following the acquisition by Bank of America, Win Smith Jr. and former Chairman and CEO Daniel P. Tully attempted to assemble an investor group that would buy back Merrill Lynch and restore its independence. They were rebuffed by the bank's CEO.