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Crisis Lessons:from Thrivers, Survivors and Divers

CFA Society of Orange CountyJanuary 27, 2010

Jim Ware, CFA

Jim Keene, CFA

FOCUS Consulting Group www.focusCgroup.com

FOCUS Consulting Group

My primary role in my firm is…

www.focusCgroup.com 21 2 3 4

25%

19%

8%

47%1. Distribution/client

service2. Investments/trading3. Operations/all non-

investment4. Other


Context:

•60 firms surveyed•Interviews with all leaders•March-July, 2010•3 statistical experts assisted•34 industry leaders involved in reviewing


Agenda Culture

Defining strong cultures and their benefits The “Red X”: dealing with cultural outliers Red X: the impact of sludge Success factors

Leadership Best practices for senior teams

Sub-cultures: the 3 Tribes Investments Distribution Operations

Leading the Investment Tribe Questions and Comments

www.focusCgroup.com 4


Topics

Culture Leadership Tribes Leading the Investment Tribe Questions and Comments



Culture: The beliefs, values and behaviors that differentiate one organization from another.

www.focusCgroup.com6

Value #3

Value #2 Value #1

X

XX

XX

XX

XX

X

X = Culture Carriers: behaviors and attitudes support the chosen valuesX = Culture Converts: monitor and coach these employees to better reflect all the chosen valuesX = Culture Outlyers: behaviors and attitudes do not reflect chosen values

Measures:Perfect = 100%

High = 63%Average = 43%Low = 18%

Copyright 2010 The Focus Consulting Group. Use only with permission.


Cost of a “Red X”

Percent of workers Effect of Toxic Behavior48% Decrease their work effort47% Decrease their time at work38% Decrease their work quality66% Said performance declined80% Lost work time worrying about it63% Lost time avoiding offender78% Commitment to firm declined

Christine Porath and Christine Pearson, “The Cost of Incivility”


How many Red X’s are in this senior team?

1 2 3 4 5 6 7 8 9 10

0%

20%

40% 40%

0%0%0%0%0%0%

1. Choice One2. Choice Two3. Choice Three4. Choice Four5. Choice Five6. Choice Six7. Choice Seven8. Choice Eight9. Choice Nine10. Choice Ten


Do you consider yourself a Red X?

1 2

100%

0%

1. Yes2. No


Do you think there are red X’s at your firm?

www.focusCgroup.com 101 2

42%

58%1. Yes2. No


Where do the Red X’s live?


17%

37%

17%

30%

1. Investments2. Distribution3. Operations4. Don’t have them


How would you recommend dealing with Red X at your firm? (2 answers)

www.focusCgroup.com 121 2 3 4 5

32%35%

3%6%

47%1. Fire them2. Fix them3. Firewall them (isolate)4. Forget about them

(ignore)5. Fret about them (all

talk, no action)


Top 10 Values in the Investment Industry


VALUES/BEHAVIORSCURRENT CULTURE

% OF EMPLOYEES VOTING FOR THIS VALUE

Client satisfaction 50%Professional 45%

Ethical/Integrity 40%Collaboration/Teamwork 34%

Intelligent 29%Analytic/Research oriented 28%

Accountability/Responsibility 28%Balance (home/work) 27%

Excellence/Continuous Improvement 28%Results oriented 26%


Which “sludge” factors scored highest? (pick 3)

1 2 3 4 5 6 7 8 9 10

26%

50%

32%

26%

9%

32%

15%

38%

26%

3%

1. Blame2. Bureaucracy3. Defensive Behaviors4. Entitlement5. Gossip6. Negative Attitude7. Politics8. Short term focus9. Slow moving/Reactive10. Territorial


Sludge Factors: Industry vs. Focus 6


Sludge Factor Focus 6 average Industry average Difference

Slow-Moving/Reactive 3% 15% 12%Short term Focus 2% 12% 10%

Bureaucracy 2% 10% 8%Defensive behaviors 3% 10% 6%

Territorial 3% 9% 6%Negative 1% 6% 6%

Entitlement 3% 7% 5%Blame 2% 7% 5%Politics 7% 11% 4%Gossip 2% 6% 4%

Manipulation 1% 3% 2%Disrespect 2% 4% 1%

OVERALL AVERAGE 3% 10% 7%


Success Factors are correlated with Focus 6

www.focusCgroup.com16

SUCCESS FACTORS Focus 6 Agree

Focus 6 Disagree

IndustryAgree

IndustryDisagree

As an organization, we have the ability to attract top talent 86% 2% 61% 5%

We are free from silos in our organization 40% 11% 26% 23%

We have strong talent management which includes career pathing and succession planning

49% 7% 28% 20%

We have an ownership mentality, our employees think like owners of the business

63% 4% 34% 16%

We are good at executing plans 78% 2% 40% 6%

Our senior team communicates well (clear and transparent) 65% 6% 41% 13%

Copyright 2010 The Focus Consulting Group. Use only with permission.

Significant at .99 level


Topics




What are the Top Leaders doing?Team Factor Focus 6 Industry Difference*I feel fairly compensated for my contributions

5.99 5.18 .81

We have the right team members to accomplish our goals

6.15 5.41 .75

There is a high level of trust among team members

5.98 5.30 .68

Our team openly debates issues 5.79 5.21 .58

As a team we value and appreciate one another

6.08 5.55 .53


7 point scale: 7 = strongly agree, 1 = strongly disagree

*statistically significant at .95 level


Topics




It is important for firm success that the “tribes” work well together.


47% 47%

0%0%

6%

1. Strongly agree2. Agree3. Neutral4. Disagree5. Strongly disagree

Tribes = investments, operations, distribution


Which statement best describes the cultures of the “tribes” at your firm:


6%3%

34%

56%1. Very similar2. More alike than

different3. More different than

alike4. Very different

Tribes = investments, operations, distribution


Core Values:Client Satisfaction

Ethical/IntegrityProfessional

Collaboration/Team

Analytic/ResearchDisciplined

Creativity/InnovationMeritocracy

AccountabilityEfficiency

Quality/Precision

Competitive/WinPassion/Energy/Positive

Humor/Fun

Friction:Efficiency

Vs.Competitive

LT Perspective/VisionPassion/Energy

Excellence/Cont. ImprLeadership/Mentor

FrictionRespect

AppreciationEmpowerment

Respect, Appreciation, Empowerment

Investment: Operations:

Distribution:

Black = CurrentGreen = Aspirational

Friction:Respect

AppreciationEmpowerment

Respect Appreciation

Empowerment


Topics




CEO’s agree, leaders in any tribe must be competent in these skillsets:

The “Big Five”

1. Client Focus2. Building Effective Team3. Integrity and Ethics4. Priority Setting5. Strategic Agility



In addition, Investment Leaders must have skill in these competencies: Creativity (shared with distribution) Drive for Results Motivating Others Caring About Direct Reports Decision Quality Hiring and Staffing Managerial Courage Perspective Standing Alone Understanding Others Composure Timely Decision Making (shared with operations) Process Management Command Skills



Topics




I would recommend this presentation to other CFA society


46%43%

0%0%

11%

1. Strongly Agree2. Agree3. Neutral4. Disagree5. Strongly Disagree


To contact us…

Jim Ware, [email protected]

Jim Keene (JK), [email protected]



Leadership competencies in TribesInvestment Distribution Operations

Client FocusBuilding Effective TeamIntegrity and EthicsPriority SettingStrategic AgilityCreativityDrive for ResultsMotivating OthersCaring About Direct

ReportsDecision QualityHiring and StaffingManagerial CouragePerspectiveStanding AloneUnderstanding OthersComposureTimely Decision MakingProcess ManagementCommand Skills

Client FocusBuilding Effective TeamIntegrity and EthicsPriority SettingStrategic AgilityCreativityDrive for ResultsMotivating OthersAction OrientedOrganizingPerseverancePresentation SkillsManaging Vision and

Purpose

Client FocusBuilding Effective TeamIntegrity and EthicsPriority SettingStrategic AgilityBusiness AcumenDirecting OthersOrganizational AgilityPlanningTime ManagementFunctional / Technical

SkillsListeningMotivating OthersNegotiatingProblem SolvingTimely Decision MakingProcess ManagementCommand Skills


Distribution Competencies Defined Organizing

Can marshal resources (people, funding, material, support) to get things done; can orchestrate multiple activities at once toaccomplish a goal; uses resources effectively and efficiently; arranges information and files in a useful manner.

Action Oriented Enjoys working hard; is action oriented and full of energy for the things that he/she sees as challenging; not fearful of acting with a

minimum of planning; seizes more opportunities than others.

Perseverance Pursues everything with energy, drive and a need to finish; seldom gives up before finishing, especially in the face of resistance or setbacks.

Presentation Skills Is effective in a variety of formal presentation settings; one-on-one, small and large groups, with peers, direct reports and bosses; is

effective both inside and outside the organization, on both cool data and hot and controversial topics; commands attention and can manage group process during the presentation; can change tactics midstream when something isn’t working.

Managing Vision and Purpose Communicates a compelling and inspired vision or sense of core purpose; talks beyond today; talks about possibilities; is optimistic;

creates mileposts and symbols to rally support behind the vision; makes the vision sharable by everyone; can inspire and motivate entire units or organizations.

Creativity Comes up with a lot of new and unique ideas; easily makes connections among previously unrelated notions; tends to be seen as

original and value-added in brainstorming settings.

Drive for Results Can be counted on to exceed goals successfully; is constantly and consistently one of the top performers; very bottom-line oriented;

steadfastly pushes self and others for results.

Motivating Others Creates a climate in which people want to do their best; can motivate many kinds of direct reports and team or project members;

can assess each person’s hot button and use it to get the best out of him/her; pushes tasks and decisions down; empowers others;invites input from each person and shares ownership and visibility; makes each individual feel his/her work is important; is someone people like working for and with.


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