Running head: BLOOMBERG L.P. 1

Case Study on Bloomberg L.P. by Jeremy B. Dann

Kayla Conklin

Cristal Fortino

Stephanie Shaffer

McDaniel College

BLOOMBERG L.P. 2

Abstract

An examination of the Bloomberg, L.P. organization was completed to analyze the impact of

their restructuring efforts and human resource function. The paper follows the organization from

its beginning in a flat structure to its standardized, formal structure as employee numbers grew.

Changes in recruitment strategies, training programs, and the implementation of an in-house

human resource department all contributed to the restructuring effort at Bloomberg L.P.

Changes in the original culture and structure arguably caused the increase in turnover during the

late 90’s. The changes made were determined to be a necessary evil as they were the result of

the organizations attempt to stay competitive in a changing market. Despite the inability to

remain structurally the same, Bloomberg L.P. was still able to keep their small company feel

through simple tactics like close working quarters and activity around food.

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Spanning two decades, Michael Bloomberg and his staff worked hard to react to market

demands while striving to keep the defined, unique culture of Bloomberg L.P. Larry, Greiner, an

organizational behavior theorist believes that “the inability of management to understand its

organization development problems can result in a company becoming ‘frozen’ in its present

stage of evolution or, ultimately, in failure, regardless of market opportunities.” Bloomberg L.P.

overcame that challenge as it constantly evolved into the next best Bloomberg L.P. it could be,

learning from its mistakes, and keeping a consistent theme around its culture.

The Early Days

Michael Bloomberg founded Innovative Market Systems, later Bloomberg L.P., on his

experience and credibility (Dann, 1999). Mr. Bloomberg’s competitive edge when establishing

his business was he “had more knowledge of the securities and investment industries and of how

technology could help” his potential clients (Dann, 1999, p. 2). Only through a strong work ethic

and innovative risk taking did Mr. Bloomberg penetrate the market and introduce his terminal

sales and financial news business. Michael Bloomberg could not have been the only forward

leaning Bloomberg L.P. employee; he needed all employees to take on his hard working, agile

approach to the business through the 1980’s.

When the Bloomberg L.P. organization began, it was purposefully designed to be flat. In

1986, there were fifty employees and there was little organizational planning done by Mr.

Bloomberg. At the time, production skills trumped management skills (Dann, 1999). Mr.

Bloomberg wanted to avoid a hierarchical, bureaucratic structure that was typical of other firms

at the time. Bloomberg L.P. started as a “virtual organization,” which is defined as a small

company that outsources most of its business functions with little, or no, departmentalization

(Robbins, 2012). This tactic seemed to make sense for Bloomberg L.P.’s needs at the time. The

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few individuals employed at the organization were able to focus on the core business bottom

line, while their lack of departmental support was taken care of through outsourced work.

In the first ten years of its existence, Bloomberg L.P. only hired people with prior

experience. Employees needed to onboard and hit the ground running at the fast paced, terminal

sales focused company. Job candidates at Bloomberg L.P. were interviewed by the executives

on attitude, ability to be a team player, and desire to get their hands dirty (Dann, 1999).

Bloomberg L.P. had no room for employees who did not want to get involved in the nuts and

bolts. The company’s success relied “more of hard work than any set of established practices,”

(Dann, 1999, p. 7). At the time, performance targets did not exist, however, the employees had

the autonomy, and were encouraged, to make improvements as they saw fit. According to

Michael Bloomberg, the mid 1980s were a time when “if you thought you had a better way, you

just tried it; you didn’t need to ask” (Dann, 1999, p. 7).

As a way to facilitate collaboration, inhibit informal communication, and lessen the need

for formal training or acclimatization, all of the employees, new hires and Michael Bloomberg

alike, worked within a “few thousand square feet of office space” (Dann, 1999, p. 7). Employees

were able to share ideas and stay abreast of the latest happenings at Bloomberg L.P. as a result of

the close quarters. The “open policy, open door” approach enabled employees to take their

recommendations or issues directly to Michael Bloomberg himself (Dann, 1999).

A strong, dominant organizational culture is one which has core values that are intensely

held and widely shared by the majority of the organization’s members (Robbins, 2012, p. 219-

220). Bloomberg’s culture described above and summarized as the “frontier mentality,” was

based on its organic structure, team orientation, and innovative risk taking cultural characteristics

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(Dann, 1999, p. 7). The employees worked together to build the Bloomberg L.P. brand without

any formalization or standardization.

The Changing HR Function

“During the second half of the 1990s, the U.S. experienced the continuation of one of the

longest economic expansions,” (Jermann & Quadrini, 2010, p.2). As an organization serving the

financial market, Bloomberg, L.P. needed to provide a higher level of support to its clients

during the flourishing times. One of the first places that Bloomberg L.P. saw changes due to the

market conditions was in its own HR Department. Although the Chief Administrative Officer,

Susan Friedlander, was responsible for overseeing the HR functions beginning in the late 1980s,

the organization’s historical lack of formal structure resulted in HR functions being handled by

the operational managers, and further supported by outside consultants. With the growth of the

1990s, Bloomberg L.P. realized the need to create a dedicated HR Department in 1995. The

CAO refocused her efforts on terminal installations as a new HR Director was hired to oversee

the department. After a short tenure, the Director left and an internal candidate that had no

formal HR experience, but a strong background in systems and processes, took over (Dann,

1999). This specific personnel movement re-enforced Bloomberg L.P.’s dedication to an

outcome oriented culture. Although both of the previous HR leaders could have done the job,

the Bloomberg L.P. executives were confident that the newest leader could make organizational

changes while keeping the culture intact.

Historically, Bloomberg L.P. had outsourced many of its operational functions such as

payroll and benefits. With the growth the organization experienced, it needed to bring those

functions in-house. The upside to insourcing, specifically utilizing Peoplesoft’s tools, was that

the organization could become more efficient. The challenges faced by the HR Department,

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brought on by insourcing, included those involving globalization and policy. Bloomberg L.P.’s

HR Department had not formerly dealt with handling visa and transfer situations. In 1996, the

HR Department produced Bloomberg L.P.’s first employee handbook, which superseded email

newsletters on the organizations do’s and don’ts (Dann, 1999). Eventually, the handbook

became electronic for all employees to see, making it easy to update as changes occurred.

Insourcing the HR functions enabled the organization to standardize and formalize its policies

and procedures however, it happened with plenty of resistance from employees and managers, as

well as financial burden.

Growth

To increase its headcount quickly, Bloomberg L.P. began to hire inexperienced

employees via major recruiting events such as cocktail parties and head hunters (Dann, 1999).

The events allowed for both Bloomberg L.P. to evaluate the candidate and the candidate to have

a semi-real job preview. While the events produced the most highly qualified candidates, the

next step of the process included a thorough and time consuming interview process which

heavily burdened the HR and hiring teams. Conversely, the use of head hunters was a

disadvantage for Bloomberg L.P. because it lost control of the traditional recruiting tactics. The

HR Department saw more turn over with the candidates hired through head hunter services

because they were less connected to Michael Bloomberg’s energy and entrepreneurship and,

additionally they were not as knowledgeable in the special compensation plan at Bloomberg L.P.

(Dann, 1999). Exiting an employee, let alone 12.5% of all employees like Bloomberg did in

1998, creates a lot of work for the HR Department (Dann, 1999). One could argue that

Bloomberg L.P.’s breakdown in the hiring process led to lower productivity and a weaker

culture.

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As a result of more employees onboarding with Bloomberg L.P., many of whom were

inexperienced, the organization saw the need to implement training programs; one of Bloomberg

L.P.’s first major changes. When the large amount of new employees began their employment at

Bloomberg L.P., there was a need for more space; not everyone could fit in the same, small

space as they did before. Once Bloomberg L.P. acquired more space, all of the new employees

sat together. This change had a major impact on the culture. No longer could a new employee

learn “on the fly” by watching how experienced workers handled customer relations (Dann,

1999, p. 8). The community feel at Bloomberg L.P. was quickly vanishing and the need for

formal training was approaching. In 1999, the HR Department’s number one priority was to

create a centralized formal training program to provide the employees with the skills and

knowledge to be successful. Integrating existing training efforts developed by individual

departments, overcoming change resistance from the department heads, gaining a seat at the C-

suite table, and standardization would need to be the focus of the program development to ensure

its success.

The initial training was a four week program that consisted of long sessions in a crowded,

uncomfortable room only made to accommodate 10 people. The curriculum, at first, was a

blanket approach to success for employees at Bloomberg L.P. After lots of pushback and

resistance from department managers who had previously developed their own training

curriculums, the HR Department worked to integrate the modules into one program. The

program required a lot of the new employees, as it lasted from “8 a.m. to 6 p.m., with a test each

morning, and homework each night” (Dann, 1999, p. 8). After the four weeks was complete, the

employees were still required to participate in all-day sessions on Fridays. Scheduling training

sessions on Fridays tends to decrease retention of information among trainees as they are ready

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for the weekend. One could argue that while Bloomberg L.P.’s new training initiative was

necessary for the business, it likely did not promote positive organizational change. The new

employees were entering the organization and required to participate in a recently created,

widely unaccepted training program. This experience could have negatively affected the

employees’ view of the organization, and the overall corporate culture, as far as to increase the

turnover. On the other hand, this training initiative provided the employee with a real experience

in how Bloomberg L.P. expected its employees to hit the ground running and be heavily

involved in the business’ success.

In the case of Bloomberg L.P., 1999 brought about the issue of increased turnover with

many of its new recruits because they did not feel as if they impacted the business. To

counteract these issues, Bloomberg L.P. corporately employed a system it had been using for the

duration of its existence. The successful implementation of a terminal required replication of

information flow, accountability, and high service levels. To mimic these systems, employees

were crossed trained as a way to become more approachable better contributors. This change left

the employees feeling as if they were making an impact to the business; a feeling that they had

not felt during the turbulent times of growth.

Performance metrics needed to make their debut in Bloomberg L.P. as the need to

provide a higher level of service existed. No longer could management count on the experience

of their employees as proof that they would have positive performance results. By 1998,

Bloomberg L.P. had instituted performance metrics that enabled employees to track and gauge

their team’s metrics which reflected the consistent autonomous culture of Bloomberg L.P.

(Dann, 1999, p. 12). For the HR Department, this introduction of performance metrics meant

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that there would be an increased need to handle performance issues. However, it would be easier

to identify performance issues because there were metrics to justify a performance complaint.

In addition to the financial market changes in the 1990s, Bloomberg L.P. faced two other

external forces that influenced transformation at the organization – technology and competition.

Bloomberg L.P. was a technology based organization, with their main products being digital

systems and information technology. The organization was directly affected as technology

changed from the eighties to the late nineties. During that decade, the field of technology rapidly

expanded which caused many technology-based organizations to make changes to keep up with

the market place. Although the technological advances were out of Bloomberg L.P.’s control,

the organization needed to adapt to keep its market share. Increasing the number of skilled

technology workers, and training those without experience, was needed to increase production.

Structural Change

The rapid growth of the technology industry directly affected the competition that

Bloomberg L.P. now faced. More and more companies were entering the market in the 1990s,

creating tougher competition for Bloomberg L.P. The organization was forced to restructure

accordingly to keep up with the competitive market. Although Bloomberg L.P. tried to continue

to keep the company as flat as possible by avoiding management titles, in 1995, the team leader

position was created to help manage the sales process. Within 8 months’ time, the sales manager

position was created as a result of the lack of coaching provided by the team leaders. The sales

manager position would focus on making good sales people better. Nineteen ninety-seven

brought about the addition of approximately 100 sales people. Competitors were cutting back

and looking for skilled employees that knew all aspects of the business to include the product,

financial market, and selling. At the same time, two groups of fifty people were hired at

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Bloomberg L.P. (Dann, 1999). Similar to its competitors, Bloomberg L.P. decided to hire new

sales people with product knowledge and sales skills. The sales skills would emphasize the

communication model in selling. The communication model was thought to improve efficiency,

production levels, and employee success; all leading to the company success (Ashcraft, 2012).

In addition to hiring new sales people, Bloomberg L.P. began promoting its top

performing sales employees to sales management positions. This change meant that these

individuals would be managing and developing employees instead of being sales people. This

structural change effort could have inhibited or supported positive change. Once the initial

positive emotions of the new promotion faded, the managers were left to deal with their

transition to an authority role over their peers. Some of the sales managers could have found it

challenging to make this transition depending on their personality style (L. Evans, personal

communication, October 5, 2012). While the managers received training focused on coaching,

education on interpersonal skills and leadership would have been beneficial (L. Evans, personal

communication, October 5, 2012). According to Robert Katz’s management theory, managers

need to have the appropriate technical, human, and conceptual skills to be successful. Some of

the promoted managers may not have been successful because they were lacking in one or more

of those skills. Struggles due to a lack of needed skill, likely led to the reduction of managers in

the role in later years.

What becomes apparent from the Bloomberg case is that organizational change, inclusive

of formalization and a bureaucratic structure, was a necessary evil. As the company continued to

grow, it could no longer successfully function as a flat organization. Without the necessary

change, adding a significant number of employees to an organization could cause chaos and

dysfunction because of the pressure on the centralized authority managing so many individuals.

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Today at Bloomberg L.P.

The structure of Bloomberg L.P. today allows its employees to receive considerable

amounts of feedback, formal and informal. This stems from wanting to maintain as flat an

organization as possible while meeting the needs of its employees, which has always been at the

top of Michael Bloomberg’s list of priorities. Managers continue to work side-by-side with

employees and teams (Profeta et al, 2008). This immediate feedback and close communication

can improve productivity, however the large amounts of overhead has the potential to be

inefficient and stressful. This structure has the ability to empower employees to be innovative on

projects which has the potential to create a self-managing workforce (Profeta et al, 2008). This

empowerment brings a happier, more satisfied work atmosphere as we see today in Bloomberg

L.P.

Many of the same things that existed at Bloomberg L.P. during its early days still exist

today. To promote the strong culture based on open communication, its flat structure, and team

orientation, the Bloomberg L.P. office is set up differently than most other organizations. There

is an open feel in the office as the conference rooms are made of glass, employees travel through

the lobby to get to most places in the suite, fish tanks are spread about to offer a tranquil

atmosphere, and of course, there is a lot of free food. One business owner believes some of his

organization’s best ideas came from employees who were hanging out in the kitchen (Donnelly,

2011). People gather and collaborate around food more in the U.S. than we would probably have

guessed. To further foster Bloomberg L.P.’s culture, there is a fully stocked kitchen with free

food and room for employees to sit together and collaborate over a meal.

In Summary

Bloomberg L.P. saw tremendous growth opportunity in the external factors surrounding

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the organization. While the organization grew and changed its training program and structure, it

held true to its culture. Though not perfect through the evolution, Bloomberg L.P. was able to

successfully become a nature, large organization while maintaining the same, small company-

feel for its employees and customers alike.

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References

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century (white paper). Retrieved from http://www.hum.utah.edu/communication/classes/

fa04/41701/theorysumm.pdf

Dann, J. B. (1999). Bloomberg L.P. Harvard Business School, Case Number 9-399-081.

Boston, MA: Harvard Business School Publishing.

Donnelly, T. (2011). Your office design is killing team work. Retrieved from

http://www.inc.com/articles/201110/coolest-offices-fostering-teamwork-through

innovative-design.html.

Greiner, L. (1972). Evolution and revolution as organizations grow. Harvard Business Review,

50, 4 (1). Retrieved from http://www.ils.unc.edu/daniel/131/cco4/Greiner.pdf.

Jermann, U., & Quadrini, V. (2010). Stock market boom and the productivity gains of the 1990’s.

Retrieved from http://finance.wharton.upenn.edu/~jermann/FinalPapOct.6/pdf.

Profeta, M., Tripathi, S., Gandhi, V., Bothra, A., & Rewari, R. (2008). Organizational analysis:

Bloomberg LP. The RoundTable: The International Business Association Journal.

Retrievedfrom http://roundtable.typepad.com/round_table_blog/2008/02/organizational.

html.

Robbins, S. P., & Judge, T. A. (2012). Essentials of organizational behavior. (11 ed.). Upper

Saddle River, NJ: Pearson Prentice Hall.