Playing to win the game

Robert L. Reynolds is president of chief executive of Putnam Investments, the nation’s 37th-largest mutual fund company, with $55 billion in fund assets and more than 1,700 employees. Since stepping into that role three years ago, he has led the charge to get Putnam back on its feet after the 2003 market-timing scandals, which rocked it and other big fund companies.

Before Putnam, Mr. Reynolds spent 23 years at mutual fund giant Fidelity Investments, where he is largely credited with building out the company’s 401(k) business. From 2000 to 2007, Mr. Reynolds served as Fidelity’s No. 2 executive.

This interview was conducted July 26.

ROBERT L. REYNOLDS is president of chief executive of Putnam Investments, the nation’s 37th-largest mutual fund company, with $55 billion in fund assets and more than 1,700 employees. Since stepping into that role three years ago, he has led the charge to get Putnam back on its feet after the 2003 market-timing scandals, which rocked it and other big fund companies.
Before Putnam, Mr. Reynolds spent 23 years at mutual fund giant Fidelity Investments, where he is largely credited with building out the company’s 401(k) business. From 2000 to 2007, Mr. Reynolds served as Fidelity’s No. 2 executive.
This interview was conducted July 26.
FG: What does leadership mean to you?
RR:: To me, it’s is all about pointing people in the right direction and then leading them in that direction. When I first joined Putnam, it was clear to me that this was a company that had had its share of hardships and had been playing not to lose.
FG: What do you mean?
RR:: The company didn’t want to make any more mistakes.
FG: And that didn’t jibe with your particular leadership style?
RR:: My whole idea is, we have to play to win. So everything we do, every day we come in, it’s to win that day. If you do that day after day after day, you set up a methodology to build a great company.
FG: Speaking of mistakes, tell me about a mistake you made from which you learned a lot.
RR:: Gosh, I don’t focus on negatives, so it’s hard to say.
FG: Really?
RR:: Back in the late 1980s, while working at Fidelity [Investments], I was approached by someone in the company who said, “Hey, the 401(k) business seems like a good idea, and we’d like you think about starting it and running it.” My initial reaction was, “No, I love being on the institutional side of the business.” But I spent time with Gary Burkhead, [the former head of Fidelity’s retail and brokerage groups], who had hired me in the first place, and his basic thing was, “If you want to be big in the institutional money management business, just keep doing what you’re doing. But if you want to have a big, long career at Fidelity, you need to have mutual funds on your résumé somewhere.” Then I met with Ned [Edward C. Johnson III, Fidelity’s chairman and chief executive], and he told me, “You never know how these things turn out, but the 401(k) business looks like a good opportunity to me.”
So that convinced me to give it a try. It wasn’t so much a mistake as a mistake avoided, because it turned out to be a great career move and set everything in motion.
FG: What did you learn from that experience?
RR:: I learned that my initial reaction may not always be the right one. I learned that it’s important to get all the facts before making a decision.
FG: Describe your leadership style.
RR:: I’m a hands-on, active leader. I am always trying to think of what’s around the corner. I believe in empowering the people who work for me, and I try to hire the best people possible. I think a big mistake a lot of people make is that they don’t like to hire people who potentially could be a threat to them. I believe that if you hire the best people possible, it ends up making you a better, stronger leader.
FG: How has your leadership style evolved over the years?
RR:: To me, the evolution of leadership is

patience. When you first become a leader, you want to do everything yourself. It’s quicker. But over time, you learn that it’s better to get the people who are working for you to make decisions and act. It may take a little longer, but the organization itself grows from it.
FG: Tell me some qualities you don’t tolerate in the people who report to you.
RR:: To get to where we want to go requires a team’s working together. One person can’t be the driver. If someone is a lone wolf, trying to do his or her own thing, that’s not tolerated.
FG: What kind of culture are you trying to foster at Putnam?
RR:: Performance. If you perform, it gets rewarded. It’s all about winning.
FG: Talk to me about hiring.
RR:: When I am hiring people, it really comes down to my comfort with them as a person. I do think we all have track records, and I don’t want to minimize that. But at the end of the day, it all comes down to how I feel about an individual as a person. Basically, I ask myself whether that is someone that I want to work with every day.
FG: How much time do you typically spend interviewing a job candidate?
RR:: I can spend one hour with someone and say whether I think they’d be a great fit.
FG: Sounds like a lot of gut instinct.
RR:: I think it is. No matter how much time you put into it or what school they went to, it basically comes down to how well they fit, and how comfortable you are with that person as an individual.
FG: Are there any qualities in potential hires that you tend to favor more than others?
RR:: Aggressiveness. I love people who are
aggressive and want to succeed and have a high bar when it comes to how they conduct

their business.
FG: Do you encourage the people who report to you to challenge you?
RR:: I like to debate things. To me, that’s how you get to the really big points. You want to encourage debate. If someone thinks I am off base, I want to talk about it.
FG: Do you know when someone is “yes-ing” you for the sake of avoiding that debate?
RR:: Yes. You know when someone is just doing what you want them to do. Sometimes that is fine. But you really want people to push back.
FG: How do you know when you are dealing with an individual who is just telling you what you want to hear?
RR:: A lot of that is consistent within a person. You know who those people are, and so I don’t go to them and say, “What do you think of this?” Conversely, you also know the people who are the so-called contrarians.
FG: Is it possible to weed out those personality types in an interview?
RR:: It’s harder. You really don’t know until you are under fire. Again, if you are looking for people who are aggressive and want to succeed and want to win, they are usually the type of people who will push back.
FG: If your family were sitting here, what would they say about you?
RR:: I think they would tell you that they wish I had spent more time at home. I do think it’s somewhat of a trade-off, but it’s one, too, that I think you try to get everyone in. You try to do as many things as you can. But sometimes you are in China or Saudi Arabia, or you have a board meeting.
FG: Do you wish you had spent more time at home?
RR:: No. Again, I don’t try to second-guess what’s already happened. Look, my youngest is going to be 16 [July 31]. Do I wish that I had coached or done some other stuff? Yeah, but I don’t think about it. I made other choices, and I can’t change it. I’m comfortable with it. And we have a great relationship.

FG: How do you fire people?
RR:: You tell them it’s not personal. Most of the time, it’s in their best interest because they are not fulfilling their own expectations. To me, it’s better for that person — especially if they are not doing their job.
FG: How much time do you give typically after you have hired someone to determine that it isn’t working out?
RR:: It all depends on the job you’ve asked them to do. They can be three months into the job and you just say, “This isn’t working.” You thought they had certain skills, and they don’t. Or you can say to someone after five years that they’ve hit a plateau.

FG: How do you approach really tough challenges?
RR:: Sometimes, situations can seem overwhelming. My philosophy is to break things into small pieces. In other words, “Let’s do this, this and this.” Next thing you know, this thing that is overwhelming is not really overwhelming at all.
FG: Can you be more specific?
RR:: When I was working at Fidelity, we had to implement the 401(k) plans of AT&T [Corp.] and [General Motors Corp.] on back-to-back weekends. Everyone thought we were crazy. But we got our team rallied, and we broke it all down into very small parts.
FG: Tell me about some people from whom you learned about leadership.
RR:: I got to watch Hugh McCall build [North Carolina National Bank]. His leadership style was very hands-on. He was constantly with the troops and led by example. Then there was Ned Johnson at Fidelity. To him, innovation was key.
FG: Those are two very different leadership styles.
RR:: There’s no one leadership style. You can lead in many different ways. You’ve got to find a style that feels comfortable for you. People can pick out phonies and fakes. The most important thing about being a manager is consistency. You can’t be up one day and down the next.
FG: Do you find it difficult to admit when you are wrong?
RR:: I’ve never been wrong, so it’s not really an issue.

FG: You’ve got a good sense of humor. Do you use that to motivate people?
RR:: I think people around here would say that if I am not joking with you, you’re in trouble. It is part of my style to be sarcastic to get a point across.
FG: Does it work?
RR:: It works. Again, it’s about consistency. If I wasn’t consistent with it, people wouldn’t know how to react. But, because I’m consistent with my sarcasm, people say, “I get the message. I know what he’s trying to say.”
FG: Was there anything about the way you grew up that prepared you to become a leader?
RR:: I’m a huge believer in sports and in what sports teach you. And I have played sports ever since I can remember. I always played team sports, and I enjoyed winning. I was always aware of how good winning felt versus losing. So I guess sports are a big part of who I am.
FG: Were you the captain of any of the teams you played for?
RR:: No, not really. For me, it was just being part of the team.
FG: You also were a referee for high school and college basketball, and football. Did that also hone your leadership skills?
RR:: As a referee, you have to be able to make decisions on the spot. You can’t ever lose your cool. I think there’s a lot to learn from that. You know when you referee, you run the crew. You are the leader of the officials. I think it’s teaches you about handling pressure and not panicking.
FG: Were you disappointed when Roger S. Goodell was picked to become commissioner of the National Football League over you in 2006?
RR:: That was disappointing but not crushing. I was running Fidelity at the time. But I would rather have tried, than 10 years later say, “Why didn’t I go for that?” In the end, it all turned out for the best.
FG: Would you have left Fidelity to be the NFL commissioner?
RR:: Yes. It would have been tough. But again, at the time, I had been chief operating officer for six years. I was at a point where I had done what I could do.
FG: What surprised you when you found yourself at the top?
RR:: The higher up you go, the more people watch what you do. They watch your actions and how you handle particular situations. The impact you have in everything you do. Every time you talk to someone, it’s being watched. I’m fine with it. But I think it’s a realization that people have — that they are affecting Putnam and 1,800 lives.
FG: What advice do you have for new managers?
RR:: I tell all my managers that the people working for them are watching them. I tell them that how they behave and conduct themselves is how they are going to behave.
FG: When did you first realize that you would one day be the chief executive of a large company?
RR:: The first day I went to work.
FG: What is your advice to new college graduates?
RR:: Every day is important. It’s important to do the best possible job in the job you have. If you are doing the same thing tomoRR:ow that you did today, you are not improving.
FG: How do you run meetings?
RR:: I just try to keep everyone focused on whatever is on the agenda. I don’t like long meetings.
FG: Have you figured out how to make a meeting productive and quick?
RR:: You have to manage a meeting. A meeting can’t be free-form. If a conversation is heading down the wrong path or is getting repetitive, I will say, “We’ve got to move on,” or “We’re not going to make a decision on that today, so let’s move on.”
FG: Tell me about the first time you were in a leadership role.
RR:: It goes back to 1980. I was at [North Carolina National Bank, the predecessor of Bank of America Corp.]. At the time it was run by [former chairman] Hugh McColl and [Mr. McColl’s eventual successor] Ken Lewis. I was working in the trust area, and I covered the whole western part of the state. I was the top salesperson. They came to me and asked me to run all of sales for the trust company. That was the first management job I had. I’ve always been very fortunate to work for outstanding people who were outstanding managers. In every organization, I think people look up. Sometimes, when you are a leader or a manager, you don’t realize how many people are watching you. So what you do and how you act is very important. I’ve been very fortunate to work for people from whom I could pattern a leadership style.
FG: How much does luck play a factor in a person’s success?
RR:: I think luck, or fate, plays a factor in everyone’s career. But a great manager maximizes opportunity more than a poor manager.

Follow Frederick P. Gabriel Jr. on Twitter at Twitter.com/FredPGabriel

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