May, 2005, Volume 9, Number 8

CONTENTS

Leadership Conference:  Leading with Creativity and Conviction at Wharton on June 9

Leadership by the Numbers:  It's One Part of Todd Thomson's Management Strategy at Citigroup

Back in the Game:  Women’s Stories and Strategies for Returning to Business after a Hiatus 

Now You’re in Charge:  Leading in the First 100 Days
 

Leadership Conference:  Leading with Creativity & Conviction at Wharton on June 9 

Focusing on creativity and conviction, the Wharton School's Ninth Annual Leadership Conference, will be held on June 9 in Philadelphia.  Speakers include CNBC's Maria Bartiromo, author Marcus Buckingham (The One Thing you Need to Know), explorer Peter Hillary, and Citigroup's Todd Thomson.  The conference speakers and agenda are described here, and online registration is available here.
 

Maria Bartiromo                                                                                       Peter Hillary
 

Leadership by the Numbers:  It's One Part of Todd Thomson's Management Strategy at Citigroup

At a time when the accounting scandals of Enron, WorldCom and other corporations are still fresh in people's minds, it's interesting to note that Todd S. Thomson, chairman and CEO of Citigroup Inc.'s Global Wealth Management division, describes the role of CFO as "the conscience of a company." Thomson, who was Citigroup's CFO and chief strategist before taking on his current position, spoke with Wharton's Michael Useem, director of the school's Center for Leadership and Change Management. During the interview, Thomson discussed the importance of focusing on facts, motivating employees, and treating shareholders as customers, among other topics. Thomson will be a keynote speaker at the Ninth Annual Wharton Leadership Conference in Philadelphia on June 9.  The interview first appeared in Knowledge@Wharton on May 18.

Useem: Given your previous senior-level positions with GE Capital, Barents Group and Bain, what in those earlier jobs did you find most useful for your role as CFO of Citigroup? What was not in your background, and what did you have to learn on the job?

Thomson: My view of the CFO job is that it really encompasses a few things. The first is that you must be the conscience of the organization, [which includes] making sure that you are the one who thinks about the shareholder. This means having the necessary financial controls and processes in place. I see the second part of the job as bringing the right information to the right people at the right time to make the right decisions. As CFO, you run the finance organization, but most of the time you are part of a team of people, including the CEO, the president and perhaps some division managers. You are all figuring out where to take the business. I view the CFO as the one who sets the agenda for those conversations.

That's a very powerful role....  A couple of very important parts of my background helped me to think this through. At Bain, for example, the whole approach is data driven – not around opinions, not around personalities, but around the data and the facts. Spending as long as I did at Bain, I analyzed many business problems, recognizing how important it is to go out, bring in the right information, analyze it the right way and get it in front of people who can make the right decisions.

I was also at GE Capital. If you look at the GE method of managing, it's about bringing facts to bear – not about putting people together and debating an issue without the relevant data – about doing real analysis on the business itself. That's the second part of the job.

The third part of the job, for many CFOs, is the strategy piece. It's about understanding what's really happening out there in terms of changing customer needs, industry dynamics and competitor frameworks ... and bringing all that into the discussion. I had the opportunity to work in 15 industries as a strategist while I was with Bain. At GE Capital I had the opportunity to see how strategy truly gets implemented.

The final piece, from a CFO's perspective, involves cost discipline. In most places, the CFO is viewed as the guy who [uses] a sharp knife to keep costs to a minimum, always ensuring that costs aren't getting out of control anywhere in the organization. One of GE's incredible strengths is cost discipline. Having had the experience at GE, I understand how, from a day-to-day management perspective, CFOs can invest money in things that will pay off. You eliminate all the extraneous projects, the "popcorn stands" that people want to start – all those ideas that sound good late at night but in the cold light of day are more fantasy than practical reality. 

Useem: Can you talk about the tactics you used as CFO to create and sustain a culture where everybody appreciated that they really had to do the analyses and have the facts? To put it another way: How did you build, on the ground, a culture and a way of life that communicated to everybody the need for a fact-based decision-making process?

Thomson: First, we have our senior management team – what we call our "business heads" meeting – every week for a few hours, and then once every month for a full day, where about 15 people meet offsite. These are the senior people who run the business on a day-to-day basis – the CEO, myself, the heads of [divisions] and the chief risk officer.

What I did from a top-down perspective was to revamp the entire management information process so that we were getting information to people who would actually sit down and look at it every day. We changed our management information report, which comes out monthly and focuses on the performance of the business. We changed what was inside and what was presented so you could see the facts about how the business was being run. If we thought cross selling was important, then we could see every month in that report what we were doing in cross-selling revenues.

If expenses were important, we broke out expense categories and tracked them month by month. The key issues about running the business were embedded into a management report, and I talked about them at each of our weekly meetings and then at the monthly meetings. It was always about the facts. Everybody had them so we could talk about them. We also started doing full competitor analysis on a business-by-business basis. So again, instead of people coming in without the facts and saying, 'We hear this is going on in the industry,' and 'We kind of hear that this competitor is doing that,' we said we should collect the data, do the analysis and find out where we are winning and where we are losing. Then let's have a conversation about how we are doing. So we changed it from a top-down perspective.

We also changed it from a bottom-up perspective. I ran the financing strategy organization globally, so there was a reporting line to me from the CFOs in each one of the businesses, and I could set the tone with this group too. I would get the group together once a quarter for a [conference] call and once a year in person for a few days. I was responsible for putting a lot of these people into their positions, and they understood that part of their job was to make sure their CEOs were getting the facts. So there was a top-down as well as a bottom-up approach to try to get the culture focused around facts and data when making decisions.

Useem: Just a quick follow-up on that. You changed the process and the mindset. Did you also have to change some people? And if so, how did you know a person was ultimately incapable of adapting to this more factually-disciplined attitude towards decisions?

Thomson: Once you have those processes in place, then your discussion in a business review becomes much different. You are asking questions – but not about opinions. Instead, you are asking people to prove to you why something is true. That means they have to provide you with real facts and data. And if they don't, you tell them to go and do the work and come back [with the results].

In a business like ours – which we expect to be very high-performing – we don't have a lot of patience for asking people to go back again and again to do their homework. We expect them to show up having done their homework. When you get people who don't learn after going back two or three times, then you realize that they should go someplace where data and facts are not that important.

Useem: Just to shift ground here, in your previous position as Citigroup's CFO and head of Operations, Technology and Strategy, you worked with Sandy Weill when he was CEO and now, obviously, with Charles Prince. Can you talk about the right kind of relationship that a CFO should create with the chief executive officer? And could you contrast the way you worked with Weill and Prince?

Thomson: In my view, the CFO's job is to be a very close partner with the CEO and help the CEO build the business. At the same time, the CFO should be a good partner by, in a sense, pushing back at the CEO on a number of issues. One of the problems when you are a CEO is finding people around you who will push back at your ideas in a constructive fashion instead of saluting and just going off and doing whatever you said needs to be done. I think the CFO's job is to be that close partner with the CEO in building the business. There also has to be good chemistry between the two. But besides the respect for each other, part of your role is to push back.

Sandy and Chuck are both excellent leaders but very different personalities. Sandy is a "people person" and tends to manage through people. Sandy would wander around into offices – including mine – on a regular basis, and we would sit down and start talking about the business.

Chuck tends to structure more formal reviews as opposed to informal discussions. In both cases, what was important was that they felt their CFO – in this case me – knew what was going on around the company and would bring up issues of importance for discussion. I felt quite pleased with the professional and personal relationships with those two leaders.

Useem: As CFO you are one of most visible faces in the equity market. In conjunction with the CEO, how would you describe your approach to working with the big institutional investors and equity analysts who followed Citigroup?

Thomson: I viewed our shareholders as customers, as clients if you will. And that's how I worked with our investor relations department that reported to me. I think that's how the senior management of Citigroup wanted to view them. We viewed ourselves as working for the shareholders, and so what I tried to do with the institutional shareholders was the same thing that I did with our board of directors. I tried to identify key information for them, what they needed to know about our business to make an intelligent investment decision – if they wanted to be a long-term shareholder or not. So on a regular basis we would communicate with the shareholders. We would have a call each quarter to explain earnings and identify what the truly important performance drivers were.

We would also set up regular meetings to talk about our strategies for each of our major business segments. On 'Consumer Day' we would go through our credit card business, consumer finance business and retail banking business in the U.S. and outside the U.S. Then we would have a 'Global Corporate and Investment Bank Day' to go through those businesses. We did that for each of our major segments once a year. It gave shareholders and analysts a good, in-depth idea about more than just our financial performance over the last quarter. It informed them about our business strategy to try to drive future performance as well.

In addition, we would visit a lot of our large shareholders and also host them in our offices. We would let them know how we think about the business, how we were allocating capital, where we thought we could gain share and grow revenues, and so forth. Finally, if something unusual was happening – for example, a new capital allocation approach – we would hold a special conference call with our shareholders to let them know that we were implementing something that's different. Here's what we're doing and here's why it's important.

Useem: Last November you moved from five years as CFO to become the CEO of [Citigroup's] Global Wealth Management division. I believe there is well over a trillion dollars worth of assets there. And as CFO you were also presiding over annual revenues (in your last year) that were probably fairly far north of $100 billion. In both cases you had no [previous] job similar to what you did as CFO or now as CEO of Global Wealth Management. To the extent that you were performing similar functions, it was on a much smaller scale.

When Chuck Prince announced your assignment last fall, he said, "We are providing these two talented and accomplished executives (a reference to Sallie Krawcheck, who switched with you to become CFO) the opportunity to build upon their skills and capabilities while furthering our goal of creating a broadly experienced next generation of leaders for Citigroup." If you would, take both of those positions as you came into them and offer a few thoughts on lessons you acquired on moving into a much more demanding and often very different assignment. What enabled you to do both, having done neither of those jobs before?

Thomson: I think it all comes down to leadership. That's true for any job where you are running a large organization, whether it's one with 6,000 employees in finance and thousands of technical and other people around the world, or whether it's moving into a job as CEO of wealth management with 30,000 people and $8.5 billion in revenues. In each case it's all about providing leadership and direction for people – having them understand the vision of where you want to take that function or business, and getting them motivated to go along with you in that vision.

Coming into a new area I typically start by recognizing that it's all about dealing with people. [That means] listening. It's the first thing I always try to do, and I try to do it continually after. But it's most important, at the beginning, to go in, meet people, talk to them, ask questions and listen to what they have to say. Because in most cases I found that these people do understand the business; they understand the issues, the problems and the opportunities. In most cases, if you listen carefully, you can find all the answers.

By doing that in the beginning, then by clearly setting my expectations for how we want to operate, and then by spending a bit of time developing the strategy, I find that people will follow that kind of direction. They appreciate the fact that you are listening, the fact that you set your expectations out very clearly up front, and that you have taken some time to put a strategy in place and communicate it. I think in both of those cases – with the CFO job in the finance organization and now with global wealth management – we were able to put a very compelling vision in place.
 

BACK IN THE GAME:  Women’s Stories and Strategies for Returning to Business after a Hiatus 

By Monica McGrath, Mary Gross, and Marla Driscoll 

In recent years, significant media attention has focused on the exodus of highly educated women from the workforce.  While most of the articles and news features concentrate on the reasons why women leave their jobs, very little attention has been given to the other side of the story:  what happens when these women attempt to return to the workforce after a career break, and what can be done to facilitate their re-entry?  

For the past year, we have studied women who “step out” of their career – that is, women who take a break from their managerial or professional career but intend to return to a corporate position in the near future.  We wanted to understand the challenges that executive and professional women face in stepping back into the working world after an extended hiatus and to identify proactive measures that such women, as well as employers and universities, can take to facilitate the transition.  Addressing the re-entry process is important given the shortage of experienced talent, the large number of women who do step out, and the goal of ensuring a diverse workforce.  

Drawing upon a survey of more than 120 step-out women and in depth interviews with 25, we have found a marked migration toward smaller companies upon re-entry, and significant movement across industries and functional roles.  In addition, a quarter of our survey participants have opted out of the corporate world entirely upon their return to the workforce in favor of entrepreneurial opportunities. 

Women can facilitate their return to the workforce, we find, by taking specific steps before they decide to step out of their career, during their time away from the corporate arena, and during the subsequent job search period.  For instance, women who structure their step-out period – through ongoing networking with mentors and colleagues, keeping pace with industry and technology trends, and cultivating new skills that are of value in the workplace – fare better during the job search period than those who more completely disconnect.  The same is true of women who frame their step-out experiences for a business context – e.g., how the skills they developed during their hiatus can be useful upon their return to work – and maintain their self-confidence during their step-out period via a strong network of support. 

Employers interested in accessing the talent pool of step-out women can take several actions to attract re-entrants, including flexible work programs, training their own recruiting staff to recognize the value that step-outs can bring to the workplace, structured ramp-up programs similar to those in place for relocating employees or ex-patriots, and formal and informal mentoring initiatives.  

Universities can also play a greater role in preparing step-out women to re-enter the work world.  Universities could offer, for instance, focused re-entry programs containing refresher courses and seminars on current business topics.  Such certification programs would help re-entrants better market themselves to potential employers while also providing employers with greater assurance regarding the abilities and readiness of candidates to contribute to their companies.  Universities could also draw upon their relationships with corporate leaders to identify projects or other temporary assignments that alumnae could perform during their step-out period or upon re-entry.  University career offices could provide step-out women with improved guidance and support for finding their way back into the corporate world.   

Everybody stands to gain from such measures.  Step-out women will approach the re-entry process with more confidence and competence; employers can capitalize on a broader pool of leadership talent; and universities can expand their service to both alumnae and employers.  Tapping this under-appreciated but highly experienced segment of the workforce and leveraging its capacities is sure to become increasingly important in the years ahead.  

Note:  Monica McGrath is an Adjunct Assistant Professor at the Wharton School; Mary Gross is a Director at Merrill Lynch Investment Managers, where she is Head of Learning & Development; and Marla Driscoll is an independent consultant.  The research team expects to publish the results of their study in the second half of 2005.  For more information on the study, contact Dr. McGrath at mcgrath@wharton.upenn.edu.
 

Now You’re in Charge:  Leading in the First 100 Days 

By Jim Pawlak, Editor, Biz Books   

You’re In Charge – Now What?  The 8 Point Plan by Thomas Neff and James Citrin (Crown Business, 2005):  Whether you’re a first-time supervisor or you’ve taken on a new managerial assignment, your productivity depends on your ability to connect with your staff during your first 100 days.  Why are the first 100 days so critical?  That’s all the time it takes for employees to decide if you’re a leader worth following.  Through over 100 interviews with executives who’ve made successful connections, the authors have developed a success template.  Their 8 points:  

1. Develop an information gathering process.  You must learn as much about the new job, its people, its processes, its cross-functional relationships before trying to make an impact. 

2. Aligning expectations.  This involves aligning what you expected with the reality of what you found and what you were told was expected of you.  Tough assignment – unless you’re a good listener and a team builder.  This is the best time to show your staff that their input is important. 

3. No one can do it alone.  You need to develop a list of “Go To” staff.  What are you looking for?  Positive influence on people.  Good coaches.  Collaborators.  Workers who understand the company mission comes before personal goals. 

4. Crafting a strategic agenda.  Make your agenda a short list of the highest priorities.  Why?  Short lists provide focus for your team.  Build a “Why it’s important” theme into each priority. 

5. Culture is the game.  When management changes, the way things are done often changes.  Staff must buy in, or it will resist.  New managers have to learn how to “sell” change, rather than “command” it. 

6. Answering to your new boss.  What are his/her expectations for your performance?  Ask questions about types of information he/she wants and when.  Make sure you know your decision-making boundaries, too. 

7. Communication.  Two-way communication is the only effective communication.  Know your audience and tailor your message.  Encourage peer-to-peer communication. 

8. Resisting temptation.  Don’t think that what made you successful in your old job will work in your new one.  Don’t stifle dissent; evaluate its merit.  Don’t pick the wrong battle; stick with your highest priorities. 

Note:  For information on direct distribution of Jim Pawlak's Biz Books reviews, he can be reached at bizbooks@hotmail.com.

Copyright 1996-2005, Wharton Center for Leadership and Change Management
 University of Pennsylvania.