extended q & a with daniel beunza about taking the floor: models, morals, and management in a wall st. trading room

Following 9/11, Wall St. firms struggled to re-establish routines in temporary offices.  Many financial firms subsequently made contingency plans by building or renting disaster recovery sites.   As we see now,  these contingency plans relied upon certain assumptions that did not anticipate current pandemic conditions:

The coronavirus outbreak threw a wrench into the continuity planning that many Wall Street companies had put in place since at least the Sept. 11 terrorist attacks. Those plans were largely built around the idea that if trading at a bank headquarters was knocked off-line, groups of traders would decamp to satellite trading floors outside the radius of whatever disaster had befallen New York. But those plans quickly became unworkable, given the dangers of infections from coronavirus for virtually all office work that puts people close to one another.

“This is really not the disaster that they had planned for,” said Daniel Beunza, a business professor at the City University of London, who has studied and recently written a book on bank trading floor culture.


Just in time for us to understand the importance of face-to-face proximity in the workplace, Beunza has a new book Taking the Floor: Models, Morals, and Management in a Wall Street Trading Room (2019, Princeton University Press) based on years of ethnographic observation. Beunza kindly agreed to an extended Q&A about his research.

Q: “Chapter 1 of your book describes how you were able to gain access to an organization, after two failed attempts.  Quinn, a classmate, offers to introduce you to a former co-worker of his from finance: Bob, now the head of a derivatives trading floor at International Securities.  You meet with Bob and observe activities, where you realize that the trading floor no longer looks or sounds like prior literature’s depictions.  After this first meeting, you send over “sanitized” field notes about your first visit (p. 32), and you meet again with Bob, who has even read and reflected on these field notes. This second meeting to go over your initial impressions starts a longer relationship between yourself and this unit of International Securities [a pseudonym].  You have your own desk on the floor, where you can write down notes​.  

In subsequent years, after the bulk of your field research ends, you invite Bob to come as a guest speaker in your Columbia Business School classes.  Your book recounts how bringing in Bob not only offers the MBA finance students perspective on their desired field of employment, but might also smooth over student-professor relations, especially since teaching evaluations matter.  Afterwards, Bob comments on the students’ late arrivals to class and how he handled the equivalent in his workplace, helping you to understand divergences in your respective approaches to relationships and organizations. 

In chapter 8, your book describes your interview with Peter, an executive who had worked with Bob at International Securities.  Peter describes how most Wall Streeters might react to researchers’ requests for access:

“Bob is a curious dude.  He reads a lot.  He befriended you because he was curious. Most guys on Wall Street would say, ‘Oh, another academic from Columbia?  Thank you very much.  Goodbye.  I don’t have time for you.  You’re going to teach me a new algorithm? You’re going to teach me something big?  Okay.  Come in and sit down.  And I’ll pay you, by the way.’  But a sociologist?  ‘Wrong person on my trading floor.  A desk?  No.  You’re crazy.  Go away.’ So Bob has those qualities, and many of the people you see here have those qualities” (p. 168).

Peter’s comment, along with your observations, also offers a colleague’s assessment of Bob’s management style.  Rather than relying on money as an incentive or fear as a motivation, Bob hires people ‘who were a little different,’ and he cultivates relationships by spending time with employees during work hours in supportive and subtle ways, according to Peter.  (Elsewhere, your book notes that this does not extend to colleagues having drinks outside of work – a way that other organizations can cultivate informal relations.)  

 Your book argues that such practices, when coupled with clearly communicated values delineating permissible and impermissible actions, constitute “proximate control.” Such efforts can check potential “model-based moral disengagement” where parties focus on spot transactions over longer-term relationships; this focus can damage banks’ viability and legitimacy.  In other words, your book posits that face-to-face contact can channel decisions and actions, potentially reigning in the damaging unknown unknowns that could be unleashed by complex financial models.

 First, the content question:

These analyses remind me of older discussions about managerial techniques (notably, Chester Barnard, who built upon Mary Parker Follet’s ideas) and mantras (Henri Fayol’s span of control), as well as more recent ones about corporate culture.  Indeed, your book acknowledges that Bob’s “small village” approach may seem “retro” (p. 170).

That said, your book underscores how people and organizations still benefit from face-to-face connection and interdependency.  Some workplaces increasingly de-emphasize these aspects, as work has become virtually mediated, distributed, asynchronous, etc.  Why and how does it matter so much more now?  How are these findings applicable beyond the financial sector​?”

Beunza: “Face-to-face connections are crucial, but I should add that the perspective coming out of the book is not a luddite rejection of technology. The book makes a sharp distinction between valuation and control. The use of models to value securities is in many ways a more advanced and more legitimate way of pursing advantage on Wall Street than alternatives such as privileged information.

However, the use of models for the purpose of control raises very serious concerns about justice in the organization. Employees are quickly offended with a model built into a control tool penalizes them for something they did correctly, or allows for gaming the system. If perceptions of injustice become recurring, there is a danger that employees will morally disengage at work, that is, no longer feel bad when they breach their own moral principles. At that point, employees lose their own internal moral constraints, and become free to pursue their interests, unconstrained. That is a very dangerous situation.

I would argue this is applicable to all attempts at mechanistically controlling employees, including other industries such as the Tech sector, and not-for-profit sectors such as academia. Some of the warmest receptions of my book I have seen are by academics in the UK, who confront a mechanistic Research Assessment Exercise that quantifies the value of their research output.”

Q: “Second, the reflexivity question:

Did you anticipate how Bob’s visit to your Columbia Business School classroom might provide additional insight into your own “management” [facilitation?] style and your research regarding financial models and organizations?  How have research and teaching offered synergistic boosts to respective responsibilities?  How do such cross-over experiences – discussing issues that arise in researcher’s organizations, which probably constitute “extreme” cases in some dimensions – help with developing organizational theory?”

Beunza: “Back in 2007, I had a diffuse sense that I would learn something of significance when inviting Bob to my classroom, but was not sure what. Before I saw him, I suspected that my original view of him as a non-hierarchical, flat-organization type of manager might not quite be entirely accurate, as a former colleague of him said he was a “control freak.” But I had no way of articulating my doubts, or take them forward. His visit proved essential in that regard. As soon as he showed up and established authority with my unruly students, I understood there was something I had missed in my three years of fieldwork. And so I set out to ask him about it.

More generally, my teaching was instrumental in understanding my research. MBA students at Columbia Business School did not take my authority for granted. I had to earn it by probing, questioning, and genuinely illuminating them. So, I develop a gut feeling for what authority is and feels like. This helped me understand that asking middle managers to abdicate their decisions in a model (which is what the introduction of quantitative risk management entailed in the late 90s) is a fundamental challenge to the organization.”

Q: “This, a methods question:

Peter’s comment underscores what Michel Anteby (2016) depicts as “field embrace” – how an organization welcomes a researcher – as opposed to denying or limiting access.  Anteby notes how organizations react to researchers’ requests to access is a form of data.  How did Bob’s welcoming you and continued conversations over the years shed additional insight into your phenomena?”

Beunza: “Anteby is right that the bank’s form of embrace is data. Indeed, I could not quite understand why International Securities embraced my presence in the early 2000s until 2015, when Bob laid out for me the grand tour of his life and career, and allowed me to understand just how much of an experiment the trading floor I had observed was. Bob truly needed someone to witness what he had done, react back to it, accept or challenge the new organization design. And this was the most fundamental observation of the research process – the one that motivates the book. My entire book is an answer to one question, “how did Bob’s experiment perform?” that I could only pose once I understood why he had embraced my presence.”

————– Read more after the jump ————

Q:  “You’ve written your ethnography in an ac​cessible, exciting style, with an electrifying detective “whodunit”-like approach to understanding your phenomena.  Readers accompany you, as you enter the field in Wall St. as a novice ethnographer, and encounter puzzles about morality on the trading floor.  For instance, your account starts with your surprise that a NYC trading floor doesn’t sound or look like the noisy trading pits depicted in prior literature.  In later chapters, you test various ​ideas about the limits of organizations and managerial practices in markets with follow-up encounters and interviews.  

Can you talk more about this?  How did you work with prior studies to shape and inform your research process and interpretation, without being “deformed” by it, as Howard Becker warns against?”  

Beunza: “Becker’s warning is of course relevant to any ethnographer, but my decision about how to present my findings was primarily informed by the practice of writing the book. I originally divided the chapters into themes, such as “culture,” “models,” etc. Once I had written the first four chapters, I read them again and discovered –to my surprise — that my raw field notes were far more interesting than the chapters. What made my notes interesting was that when I started reading a given set of notes, I did not know how they would end. That there was a plot to them. But by grouping my observations around thematic chapters, I was giving away the point too early. So, I decided to trash the four chapters I had written, and bring a plot to the entire book, that is, write them in roughly chronological order. I’m pleased to hear it reads as a “whodunit” (hopefully not pulp fiction!), because that is also how it felt to me at the time.”

Q: “The book recounts moments when you observed informal interactions among traders, especially the practical jokes played. These reminded me of Donald Roy’s ethnography about “banana time” of bonding among factory workers (which later became Michael Burawoy’s field site).  How did these moments – which a novice ethnographer might overlook as not work – help test theories about organizations?”

Beunza: “The practical jokes were truly a test of the theory I was developing about the organization. At first, and based on my stereotypical understanding of Wall Street, I looked for instances of pranks and other colorful behavior. But I only saw one serious prank, at the expense of a random caller. As I revisited my fieldnotes and my site in 2015 I understood that those pranks challenged the new understanding of the floor as an ethical project that was beginning to emerge. So, I challenged the manager of the floor, Bob, about them. His response was that they were typical on Wall Street, that he one was not on the floor during the one I mentioned, and that he might laugh with the traders first, but then make them rectify the prank and apologize to the person. That response persuaded me of the validity of my interpretation.”

Q: “The book cover has an especially striking artistic shot. Can you tell us more about it?​ (I know it’s not your field site)”



Beunza: “It is a damn good cover. I took the book with me during walk around the Chicago Mercantile Exchange, and people stopped me on the street to ask me about the book.

Interestingly, it was the second attempt at a cover. My editor, Meagan Levinson at Princeton University Press, initially proposed a cover that I felt did not work for technical reasons, but as soon as I raised concerns they were willing to change it. She was brilliant. I sent her a set of possible options based on a Google search, and she went with one of them, using it in an unconventional way. Everyone was very pleased with the final design, included myself.”

Q: “Academics are feeling increasing pressures to publish quickly in particular outlets, especially to land jobs and secure tenure and promotions.  I suspect some of us feel that these pressures are counterproductive for developing and testing ideas, particularly with ethnographic research.  What was your journey like for conducting this research and interpreting and writing up ​the results?  In particular, you have worked at several institutions in several countries that are not your origin country (Spain) – how have those experiences influenced your interpretations and understandings?”

Beunza: “The standing of books in academia has changed markedly, especially in business schools. Because journal publications are seen as better able to incorporate input from peer review, papers they are now far more relevant for tenure decisions. Increasingly, this sentiment is echoed in different countries, including Spain and Denmark. Concerns about tenure and promotion delayed me in turning to the book, though I am now pleased I delayed. My current view is, there are ways to simultaneously publish books and journal articles. What Donald MacKenzie did with An Engine Not a Camera was to publish a set of papers first, and then bring them together in a book.”

Q: “Your research found that face-to-face conversations and physical proximity were important to communicating values that could curb potentially catastrophic individual actions.  What does this suggest for the months ahead, when people will be working from home or perhaps working in cycles of being in the office versus physical distancing form home?”

Beunza: “If my findings are correct, proximity is crucial to keeping financial markets stable and efficient. If so, social distance poses a fundamental challenge to Wall Street. We may start to see high volatility and mini-crashes and the recent instance of negative prices for oil is one example. The challenge is even more worrying at a time when asset prices need to adjust to reallocate capital from some industries to others in response to the disruption caused by Covid-19. For that reason, it will be interesting to see how banks try to reproduce proximity through technological and other means, as well as how they avoid compliance pitfalls in doing so.”

To learn more about Beunza’s research, you can follow him on Twitter @ danielbeunza and read his past posts over at Socializing Finance. You can also check out this interview with him, courtesy of Human Centered Design podcast.



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