Paul Purcell's mother died young, and the chief executive of Robert W. Baird & Co. almost followed in her footsteps in his 30s with a terrible infection.
Both these events contributed to his view of the world and the way he leads the 3,200 professionals of Milwaukee-based Baird.
Mr. Purcell, 68, readily admits to pushing people hard to succeed, much as he's pushed himself. But he's also eager to reward accomplishments, and wants everyone at the $152 billion wealth management company to view their role as critical to the firm's achievement.
The employee-owned company, which has 825 financial advisers, has landed on the Fortune 100 Best Companies to Work For list a dozen times since Mr. Purcell became CEO in 2000. Most recently it beat out Edward Jones as the top financial services firm.
Anyone interested in a job at this nearly 100-year-old institution should know that smarts isn't going to be enough to convince Mr. Purcell to hire you.
Mr. Purcell, who was born and raised Catholic in Salt Lake City, demands recruits have a history of success and integrity, and the ability to conform to his “No Asshole” policy.
Liz Skinner: Tell me about your leadership style.
Paul Purcell: I am all about transparency. People want to know what the score is, they want to know what's going on and that their efforts can make a difference. I call that transparency — good, bad and ugly. Everyone knows where you are, what the stakes are and what's expected of them, and it's very collaborative. Really talented people want to make a difference, and they want to be dealt with in a transparent and direct way. They also want to be heard. If you do all those things, they will feel not only empowered, they will feel an obligation to do that.
LS: What experiences did you have when you were younger that prepared you to lead a company?
PP: I was very involved in many team sports growing up, whether it was football, basketball, baseball or the track team. In all of these, teamwork and trust in your teammates were absolutely key. Being involved in a team, even if it's debate, where you rely on other people to be successful, that prepares people to be leaders. You need to build confidence and trust in the team to get your most optimum results.
LS: What leadership lessons did you learn along your career path?
PP: I had several mentors. My father was an independent businessman; he had a successful independent insurance agency. I had my older brother, Phil, who was a McKinsey consultant and then CEO at Dean Witter Discover & Co. and Morgan Stanley. I had a terrific mentor at Kidder Peabody whose name was Chuck Brickman, who made a huge impact on my life. And when I joined Baird in 1994, the CEO, Fred Kasten, was a great mentor to me. I'm not the smartest guy, but I'm a really good student of history of what works and what doesn't. Each one of those people taught me different things about leadership and making sure you're being inclusive with people and respectful of people and creating an atmosphere that allows people to reach their highest potential.
LS: What advice did Fred Kasten share with you?
PP: Fred really understood people. He taught me the importance of making every person in the organization feel important. That creates a wonderful dynamic, whether it's the mail person, an assistant, whether it's a highly paid, highly motivated investment banker or a big producer on the private wealth side. To the extent that you can make every person believe in their heart that what they do matters every day, they will perform at a higher level. I believe that every single person is really important in terms of what we're delivering to our clients.
LS: What kind of culture are you trying to foster at Baird?
PP: I spent 22 years at Kidder Peabody, working at a very large investment banking business there out of Chicago. My first 18 years were wonderful, but things changed there after the General Electric acquisition. When it became clear to me that I needed to leave Kidder because Kidder had left me, I was looking for a firm with a specific culture, the kind of culture Kidder had in the early days. That is client-focused, utmost professional and having the highest integrity. Baird had all that. The things we focus on all day long at Baird are making sure the clients are always treated first in the firm and that we have created a value proposition that works with the clients.
It's very partnership-driven, and we share the spoils of compensation, stock ownership and profit-sharing with many people in the firm. We have 3,200 associates and 2,200 of those associates are shareholders. We take 12% to 14% of our pre-tax, pre-interest profits and put it into profit-sharing and our 401(k) match. Every associate in the firm who is not on the grid, or on the sales side, gets a bonus equal to 9% to 10% of their base every year. We think we have created the best financial alignment of interest in the industry, and that creates a wonderful dynamic in terms of driving the firm and sharing the spoils within the organization.
LS: How important was it to become employee-owned again?
PP: By far the most important thing we've done. Nothing else is even close. When I came in 1994, Baird owned 20% of the firm and Northwestern Mutual owned 80%. By 2004, we were at 94% employee-owned. We had a fabulous relationship with Northwestern Mutual for 30 years, and today they are the only outside shareholder in the firm. They own a little over 6% of Baird. We have no absentee ownership; you can't own stock unless you are here working every day. We viewed that we needed to be independent to survive and prosper.
LS: Does it make a difference in recruiting?
PP: When we got into the downturn in 2008 and 2009, when most firms were significantly restructuring, we did not lay anybody off. We viewed that as the best recruiting opportunity in the history of financial services. At the end of 2007 we had 2,400 employees and at the end of 2014 we had 3,250. So we grew more than 35% while the industry contracted. Had we been part of Northwestern Mutual, it's highly unlikely that we could have been that aggressive. Not one of the 850 people who came would have come if they couldn't have become a shareholder in an independent, privately held, employee-owned firm.
LS: What other things do you do to foster the kind of culture you want in the workplace?
PP: We are very big on celebration for not only our success but individual success. We have lots of individual awards and celebrations to say to people, “Thank you very much.” We have been on Fortune's List of 100 Best Companies to Work For 12 years in a row. It's a phenomenal list, Google is No. 1. For 2015, we were No. 5. We think being one of the top 10 places to work is an absolutely fabulous accomplishment for our associates. We don't think you can be a great service provider if you're not a great place to work. It's become a very important part of our DNA, our self-esteem.
LS: So you are the top-ranked financial services company on the list?
PP: Yes. This was the first year ever that we were ahead of Edward Jones, which we think is a fabulous partnership and wonderful client-driven firm. We're No. 5 and they're No. 6. We frankly never thought we'd get ahead of them, and I'm not sure we ever will again. We are honored to be in the same zip code as Edward Jones.
LS: What qualities do you look for in a potential hire?
PP: We look for people who have been very successful over a sustained period of time, no matter what they have done. Almost all the people we talk to are very smart; that's not a big differentiator. Work ethic, honesty, integrity, putting the client first versus themselves, those things are important in terms of our incredible focus on teamwork. We need people who are very competitive and have a need and desire to succeed and want to get better. Ultimately, the best people who are going to take you where you want to [be] in terms of improving your franchise, are people who are absolutely manic about getting better, not just winning.
LS: What kind of hiring advice can you offer other financial professionals?
PP: We have a policy that we call the No Asshole Policy, or No Jerk Policy. We will not hire people who put themselves ahead of clients or ahead of the firm. And if we do, when we figure it out, we allow them to go work someplace else.
LS: Was there a time when you faced adversity on your life?
PP: When I was 5, my mother died. It made me very independent at a very early age, and independence makes you more of a leader. You take control of your life earlier and in a more competitive fashion. There's no question it had a lot to do with my drive, same with my older brother.
The second thing is when I was 34, I got very sick. I got a staph infection and almost died. My kidneys shut down and I was on dialysis for nine months. I was incredibly fortunate, this hardly ever happens — my kidneys kicked back in. That nine months of being tied to that dialysis machine made me very grateful for each and every day of my life. I treat every minute of every day as precious. It clearly changed my view of life and made me a vastly better person.
LS: How has your management style evolved over time?
PP: I've become kinder and gentler over time. When I came in 1994, there was a lot of work to be done. We built or changed every single business. It took a massive amount of energy and I was the change agent. As we have grown and prospered and matured, hopefully I have grown and prospered and matured in how I run the business. We really very much want our leaders to be leaders, not managers, because really talented people want to be led, not managed. We give our leaders quite a bit of rope to manage the businesses.
LS: Would you say you are quicker to fire someone today than you were 20 years ago?
PP: Probably not, because there was a lot of change that was needed 20 years ago. The average tenure here of our senior people, what we call our executive committee, is 17 years, which is unheard of in our business. We do push people very hard, but we also reward loyalty.
One major issue of financial services firms is turnover. We think turnover is bad for business and bad for clients. We have some of the lowest turnover in the business, and that's played a very big part in our consistency in our performance. We have one of the highest returns on equity in the business and have for the last 20 years. We're careful to make sure we're pushing people hard and that the underperformers are given a chance to succeed, but if they don't live up to our standards, we do move them on.
LS: Do you think the industry's high turnover rate impacts the lack of trust that the public has of the financial services profession?
PP: Absolutely, there's no question in my mind, because I've watched this for years and years. The industry is unbelievably focused and good at protecting certain people and compensation. They take that out on other people, in my opinion. Clients don't like turnover. If someone is serving you in whatever organization and they keep changing those people, do you feel valuable? Of course you don't, you feel like a pawn in the game. The consistency of application in a client service business is incredibly important in building trust with that client, and ultimately this business is entirely trust.
LS: Is there anything you do to stay on top of time management?
PP: I don't do long meetings. The enemy of any financial services firm is bureaucracy; you have to make sure you're not making work. We have very tight meetings when we have them. If you have a meeting [of] more than half an hour, you better have a really robust agenda.
I also review how I spend my time every single day. All we have is time. People tell you I have a short attention span; I do that on purpose. Chitchat is fine, but we're here to make decisions and do the right thing for our clients and the firm, so let's make those decisions and move on.
LS: What have you learned about how you spend the day?
PP: It's all about focus and priorities, because you can't do everything. The people who try to do everything end up being unbelievably mediocre. I force people to focus on three or four big priorities at a time. You need to tackle those issues and get them off the list.
LS: What's your best career advice?
PP: Be curious. If you're curious, good things are going to happen. You never stop learning when you're curious.
I also tell people that where you work is important, but rarely is it as important as who you work with. Do you respect the people that you work with and are they focused on making you better, not just at what you do, but as a person? If you really like and respect the people you work with day-to-day, holy mackerel, that is the Holy Grail.