T Rowe Price’s Bill Stromberg on Building the Right Culture
In the weeks leading up to his retirement, Bill Stromberg reflected. People in the asset management industry are tired, he says, after going through a pace of change that has only deepened and intensified during the pandemic.
During his 35 years at T Rowe Price and six years as managing director, Stromberg guided the $1.69 billion Baltimore-based asset manager through a period of volatile change for the industry. , as pressure on fees, technological innovation and the acceleration of new investment vehicles such as exchange-traded funds have forced traditional managers to evolve at breakneck speed.
“Asset management has changed more in the last twelve years than in the last three decades,” he says. The pace of change was hard to follow, for everyone.
“If you combine that with a pandemic, there’s a level of fatigue among asset management in particular that’s unusual,” he says.
This industry-wide fatigue, he says, has brought new attention to corporate culture. At a time when employers are increasing benefits and wages to retain burnt-out employees, and job changes are at record highs, companies are learning that golden handcuffs don’t have the same hook-and-hold power. they used to if employees are unhappy.
“In a pandemic, people think a lot about their careers and where they want to spend their time and what kind of culture they want to be part of,” says Stromberg. As an employer, the asset manager focused on “how can T Rowe conduct himself in a way that people want to be part of it?”
The company is so well known for its friendly office culture that it is colloquially referred to as T Rowe Nice. On the Glassdoor employer review website, the company has a four-star approval rating and “T Rowe Nice” has been referenced in more than 75 reviews. People are nice and co-workers are supportive, noted a review from Glassdoor, before adding, “Pay is below average.”
According to Glassdoor, average executive salaries at T Rowe aren’t industry-leading, but they’re not too far off the average either. But in an industry where base pay and generous bonuses are poised to become an increasing differentiator for companies, T Rowe says he has another formula.
“You hear a lot about pay raises to keep people, but the highest pay is not why people stay or why people are attracted to companies,” Stromberg says. This culture and the team-level support the company relies on has been crucial in their efforts to combat employee fatigue. “People want to be part of something special and bigger than themselves, something they’re proud of.”
The asset manager says he grew and hired because candidates from their peers are drawn to the company culture after two years of difficult remote work. “They want to be part of a company that. . . represents something. That’s the formula,” Stromberg says.
T Rowe’s “enjoyable” factor has been a deliberate effort by management to retain and preserve a specific and definable corporate culture. The asset manager emphasizes teamwork, collaboration, long-term thinking and mutual respect. Part of the company culture is on maintaining its culture.
“It starts at the top with management and leadership saying it matters and culture matters,” Stromberg says. Business leaders are often preoccupied with change. The asset manager has grown rapidly during this turbulent time in the industry, roughly doubling its assets under management since 2016. But equally important in a rapidly changing environment is preserving intangible assets such as culture.
Culture is critical to employee retention, and more fragile than many managers realize. It only takes one bad boss to disenchant a talented team. “Reputations are built very slowly over time, but they can deteriorate very quickly if management doesn’t follow suit,” he says.
A good culture does not happen by accident. If companies want a special culture, says Stromberg, it requires “hiring with the culture in mind, promoting people with the culture in mind, and firing people with the culture in mind.”
The protection of culture also requires a clear example at the executive level; it is not enough to establish guidelines and then try to enforce them. Transparency, honesty and regular communication from major offices are key, he says, especially during the pandemic when remote working has complicated communication in the office. “It’s hard to overstate the importance of communication and being upfront and honest with [staff]says Stromberg. “If they’re wondering if the management is true to the culture, that’s a problem.”
T Rowe has been a rare beacon of hope among stock pickers, delivering solid returns in a decade of bull markets that have been brutal for active managers. The fund company outperformed the S&P 500 but underperformed the Nasdaq Composite, which rose around 200% over the same period.
T Rowe has proven to be an early growth tech identifier, investing in companies such as Twitter, Facebook and Dropbox ahead of their public offerings. T Rowe’s stock price has soared more than 150% in five years.
But he has been criticized for his reluctance to jump on trends, such as environmental, social and governance (ESG) standards – now a defining movement within the asset management industry – and exploit markets. international. Stromberg says he wishes he had developed his international footprint earlier and more deliberately.
Although after such a long career in the industry, if he could guide his younger self just starting out in asset management, Stromberg says that “the main advice I would give myself is to forgive myself for the mistakes I have committed along the way”.
Making mistakes is part of the job of investing, he says, the fear of making mistakes led him to be more inclined to take risks at first. “I was in the penalty box. . . all investors make mistakes. The key is to learn from them.
Three questions for Bill Stromberg
Who is your leadership hero?
I would say Abraham Lincoln, the 16th President of the United States. I always admire leaders who are willing to do difficult and often unpopular things when they are the right things. Under immense public pressure, Lincoln showed amazing courage and perseverance in working to reunite the country and be a leader for all.
What was your first leadership lesson?
A key first lesson for me was that leaders must earn the right to lead. Early in my tenure at T Rowe Price, I tried to change a few basic operational practices. I quickly learned that successful change would only happen if I made a strong case for the change – and convinced the team that the changes would make us better. Having a title won’t make you a leader, but improving performance certainly will.
What would you have been if you hadn’t been CEO?
I probably would have taken over as head of our global investment divisions – still at the helm, but focused on investing. My love for investing and the pursuit of strong returns is what brought me to this company in the first place. It’s at the heart of what we do and it would have been exciting to stay fully focused on that as well.
Cost pressures and unpredictable markets have made the jobs and bottom lines of large asset managers much harder to manage, and these challenges are ongoing. In 2021, Stromberg led the asset manager through its first major acquisition, of alternatives house Oak Hill Advisors for $4.2 billion, to diversify T Rowe’s revenue stream beyond funds. mutual funds in a crowded market.
This rate of change will continue, says Stromberg. But, reflecting again, he says that if he could advise himself at the start of his tenure as CEO, a tenure defined by relentless change, he would say, “Suppose people can handle a lot more change than they don’t think so.
It helps if you have a strong culture as a foundation, he says. Stromberg’s successor, Rob Sharps, is also a veteran asset manager.
For the outgoing chief executive of T Rowe, it is perhaps telling that Stromberg says he would like to be remembered first as a good investor who brought value to his clients. Just second, he wants to be remembered as a good teammate.
While it’s not possible to accomplish all the tasks you set for yourself before you “left the stage,” he says, “the only thing you need to do is make sure there’s a team solid in place behind you, and I feel confident. in the team I leave behind.