A New York Times article yesterday quoted the founder of Citadel, Kenneth Griffin, as follows:
"On top of that, many chief executives of big universal banks, the ones that combine all sorts of financial services under one roof, 'only understand a small part of the business,' Mr. Griffin said, suggesting too many of them come from sales backgrounds. Put those two things together, the traders and the chiefs, and you have the making of an outright debacle."
The primary focus of the article was Mr. Griffin's point that many relatively senior professionals have only modest experience with bad times. But I find the small mention of a sales background as a problem more interesting -- not because it seems correct (I've thought it many times and trust that Mr. Griffin is far smarter than I so even if I didn't agree, would assume it is correct) -- but because it is an indictment of many chiefs (see, for example, James Cayne).
Unfortunately, I think that the situation is unlikely to change. Sales people tend to rise to the top (both because they likely have strong personal/political skills and their performance is more easily quantified). However, the ability to sell isn't highly correlated with the intellectual skills needed to run a complex business. And sales, because usually structured as a percentage of revenue (not profits), often creates a bias towards unprofitable growth and corner cutting.
Of course, this phenomenon is not limited to financial institutions...