Paul Braverman was a cultural force behind the growth and success of Wellington Management which currently has over $1.3 trillion under management. Since retiring in 2007, he has served on over 17 boards of directors, including boards of public and private companies and nonprofit organizations. In this episode we discuss the most important drivers of board success.
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Big Ideas/Thoughts/Quotes:
“I think the culture of Wellington is its most sustainable competitive advantage. It always has been, and the culture is basically the name of the book (I wrote) entitled: Client, Firm, Self: The History and Culture of Wellington Management Company. We believed that we existed for the benefit of our clients and that they always came first, and then the firm, and then the individual.”
What was there that allowed Wellington to sustain that very, very, very strong culture for so long?
What we all observed how devoted the founders were to each other, how they watched over each other, took care of each other, helped each other's families. If there were problems, we watched when one of the partners passed away how well they looked after his spouse, things like that - - we learned by observing them.
I said in my final speech when I left the firm, I learned more about life at Wellington than I did about the investment business just by watching the character of these people and how they conducted their lives and treated other people.
How does a board help maintain the culture of the company for which it serves?
The board, I believe, sets a tone at the top, and it is a tone that we exist for the benefit of our clients or our customers. We are accountable to the shareholders. We need to take care of our employees. We need to take care of the cities and the locales that we do business in to help wherever we need to help philanthropically, and to set that tone for the rest of the company. It's not just always business and always profits. You're not going to believe this, but I never had a budget all the years that I was there.
Reputational Risk: with a company like Wellington Management, which works so hard to create the culture and to create the reputation of the company – it often becomes one of, if not the, most valuable asset of a company.
It's one of the most important responsibilities that a board has. The amazing thing about it, Joe, is as hard as we worked on it, as strong as it was, it's still fragile. It's always fragile. It can just be one incident.
Board of One
My worry is that a specialist who doesn't have the broad experience, when we finally get to the point when we have to decide about a cybersecurity attack or something, I don't want the decision to be in a vacuum by one person.
Role of a Board chair
I have chaired a few boards, I chair one now, and what I say to the other board members is, "Before we start, I just want you to know one thing. I work for you, you don't work for me, so I'm here serving you." I think that helps a lot. I'm very transparent. I reach out to them all the time seeking a wider audience.
I set the agenda with the CEO, and I meet with the CEO once a quarter privately to make sure to see how the company's doing. I try to keep myself out of the board meeting as much as possible, other than to make sure everybody stays on track as far as time and that we cover the key points.
Board Chair and the CEO. If they aren't working well together to make sure that the board is being effective, what does a board member do?
To the extent that you don't like something that's going on, you have to go to your chair because at some point, you're violating either the prudent man rule or your fiduciary responsibility. We're fiduciaries so you're going to have to report it and you're going to have to do something about it. Either something has to change, or you have to change in terms of moving on.
