Managers focus on employee health, preserving culture

Money managers are as razor-focused on the preservation of their corporate cultures and the well-being of their employees as they are on their investment strategies and clients with the COVID-19 pandemic continuing to wreak havoc worldwide.

Employees of firms as large as PGIM Inc., with 2,637 U.S. employees, as well as a small firms like Aetos Alternatives Management LP, with 33 U.S. staffers, described collaborative, supportive company cultures that helped them to work remotely during the coronavirus pandemic.

Both PGIM and Aetos are among the newcomers this year to Pensions & Investments' annual Best Places to Work in Money Management program, which recognized 94 firms in 2020.

"Money management executives are finding that their cultures are at a pivotal point right now and the decisions they are making about their company's future are likely to be transformational," said Kevin P. Quirk, the Darien, Conn.-based principal of Casey Quirk, a practice of Deloitte Consulting LLP.

Mr. Quirk said that while "many firms still are in survival mode, a significant minority are beginning serious planning for their firms' futures post-pandemic."

These firms are mapping out operational issues including workforce deployment (in the office or not); their real estate footprint; more use of virtual communication to strengthen and enhance employee and client engagement; technology and outsourcing; and most importantly, attracting and retaining the best talent during and after the COVID-19 pandemic, Mr. Quirk said.

P&I's BPTW questionnaire asked money managers to rate the difficulty of sustaining corporate culture during the COVID-19 outbreak. Nearly 60% of the 80 firms that responded to the question indicated that they were having some difficulty, while 5% said it was very difficult. The remaining firms that responded reported no difficulty.

These survey responses may mask to some extent the true difficulty of managing a mostly remote workforce.

For example, in terms of negative impact on company culture, senior money management executives interviewed for this story each stressed the difficulty – to some extent emotional – that employees at all levels and departments are experiencing because they have been unable to work together in person.

"The employees who are really struggling are our younger employees. We really enjoy being together and having fun," Peter Stelian, co-founder and CEO of real estate specialist Blue Vista Capital Management LLC, Chicago, said in an interview.

For example, a dozen of Blue Vista's analysts regularly rent a house during fall weekends so they can watch football together, Mr. Stelian said, noting that younger employees have said they want to come back to the office now.

The firm is making do — culturally — until employees can safely return to the office by leveraging Zoom meetings; offering more frequent educational lectures via the online Blue Vista University; virtual bingo and other social activities; and get-to-know-you interviews with senior executives and investment team leaders.

Like other CEOs and human resources officers P&I spoke with, Mr. Stelian said he is very concerned about the mental health of Blue Vista's workforce.

He determined that the firm would survive without layoffs and could grant employee bonuses for two years even if the firm didn't do any real estate transactions in 2020 or 2021 and shared that information with staff.

"Everyone is stressed out. People can't easily separate their personal and work lives. The best thing we could do is offer them reassurance about their jobs and their work life," Mr. Stelian said.

Blue Vista, a newcomer to the Best Places program, reported 58 U.S. employees and $4.5 billion in assets under management as of June 30 in its survey responses.

Analysts at Aetos Alternatives Management are accustomed to regularly going back and forth between the firm's New York and Menlo Park, Calif., offices to work together on investments and are finding "not traveling and not being together really weird. This has been the biggest impact for us from the pandemic," Michael F. Klein, the New York-based managing director, co-president and chief risk officer, said in an interview. Aetos managed $8.9 billion as of June 30.

Aetos' senior executives are "very concerned that the current working situation isn't sustainable indefinitely. It's not at all clear how long the runway is," Mr. Klein said.

"People like going into the office and it's essential for us to try to replicate the water-cooler chatter," Mr. Klein said, noting that executives are trying to accomplish that with more frequent Zoom meetings between team members and ramping up the firm's support for charitable activities, including paid time off for volunteering.

On a more personal note, Mr. Klein said that as a boss "it's hard, very hard to be sitting by yourself, trying to balance all the demands. You want to fix all the problems. I'm grateful for being able to talk with my partner, Anne Casscells, every day. You need to share the burden."

Ms. Casscells is a managing director and Aetos' co-president and CIO, based in Menlo Park.

Another pandemic-related problem is recruitment via virtual channels, money manager executives said.

Chicago-based Adams Street Partners LLC, which manages $41 billion in alternative strategies, hired new employees during the pandemic virtually, Jeffery T. Diehl, managing partner and head of investments, said in an interview.

"We've adapted to the practice of meeting by Zoom, including onboarding these new employees. However, it's hard for me to not to have met 10% of our employees in person," he said.

"We're doing all we can do to build relationships with these new and existing employees through more frequent meetings. Before COVID-19, our all-hands meetings were every six months. Now, we meet every two weeks. Employees know a lot more about the company and like the frequency of meetings so we might continue this schedule when we're on the other side of the pandemic," Mr. Diehl said.

Employees said they appreciate Adams Street Partners' efforts. Adams Street also was designated a Best Place in 2018 and 2019.

"We have a very special culture. We work hard but genuinely enjoy what we do and collaborate incredibly well. During the pandemic, the firm's culture has only shined through more with great communication, demonstrated care, and providing the necessary resources and technology to work remotely," an Adams Street employee said in a survey response.

Adams Street Partners reported 170 employees in its survey responses.

ClearBridge Investments LLC, New York, has "tried to mimic normal hiring and onboarding processes using Zoom and Microsoft Teams" and has been able to "maintain active recruiting … and were also able to continue our summer internship program," Terrence Murphy, CEO, said in an email.

But Mr. Murphy said "engaging candidates in terms of our culture is something that's special and valuable during the interview process that has been missing" and added that "some of our new hires have never seen our physical office space."

"Our operations and technology teams have done an amazing job creating an absolutely seamless transition to remote working for everyone across the country. But there is no substitute for the camaraderie of being together," he wrote.

ClearBridge, with 213 employees, managed $149.4 billion as of June 30. The firm ranked first in the BPTW category of firms with 100-499 employees, and has been designated a Best Place every year since the program launched in 2012.

Amid the trials of managing people and corporate culture from a distance, investment management company executives have found some surprisingly positive effects.

Executives said they're seeing higher participation in virtual meeting venues than before the COVID-19 crisis and are finding that younger and less senior employees feel more empowered to speak their minds about investment management, operations and distribution practices.

"One unintended blessing of the pandemic has been the democratization of virtual conversation. There have been so many moments where teams are finding ways to create deeper engagement to get to know each other better," said Stephanie G. Braming, partner and head of William Blair Investment Management LLC, Chicago, which has been recognized eight times in the Best Places program since 2012.

One William Blair employee said in the survey: "With our remote work environment, engagement has increased. Stephanie (Braming) meets with small groups frequently to discuss our current financial outlook, progress (in) our initiatives, successes and hurdles. And we have a lot of team-building activities and interaction on Microsoft Teams to substitute for not being in the office. In some ways I feel more connected!"

Another surprise was the ease with which William Blair has been able to maintain the creative tension and debate that's a hallmark of the firm's investment teams in a virtual forum, Ms. Braming said.

Ms. Braming added "that kind of creative tension usually sparks from more casual, in-person connections between team members'' but stressed that she's been "positively surprised by how well the teams are doing."

William Blair, with 316 employees, managed $61.7 billion as of June 30.

Before the COVID-19 outbreak, PGIM, Newark, N.J., already relied on digital onboarding of new employees and the firm continues the process as it adds new employees to its workforce, Pamela Sinclair, global head of human resources, said in an email. As of June 30, PGIM had $1.4 trillion in AUM.

"While it's certainly unusual that we have PGIM employees that have never set foot (in) a PGIM office, managers and teams are aware of the need to go the extra mile to welcome people and embrace them into the fold," Ms. Sinclair said, noting one good thing about the firm's business travel ban is that it "has meant that our senior leaders have had greater availability than (in) years past to participate in our onboarding programs including teach-in and virtual fireside chats."

PGIM ranked No. 3 in the BPTW category of 1,000 or more U.S. employees.

Money managers have a lot on the line when it comes to maintaining their corporate cultures through the COVID-19 pandemic and beyond, industry observers said.

"The culture of money management firms has become a very big topic," said Luba Nikulina, global head of research based in consultant Willis Towers Watson PLC's London office.

"A firm's working culture has very significant value when it comes to the quality of investment management and is a critical differentiator for us in recommending managers to our clients."

Ms. Nikulina said many asset owners among Willis Towers Watson's investment consulting clients have become more proactive in asking questions about manager culture during the pandemic "because it's in the forefront of everyone's thinking right now" as managers have been forced to manage their remote workforces.

As for what's ahead for money managers after the COVID-19 pandemic is under control, Michael S. Falk, a partner at Focus Consulting Group Inc., Long Grove, Ill., said in an interview that "managers won't presume that employees need to work in the office. Offices will become more of a gathering place than a 9-to-5 workspace."

He said that of the three general categories of money management company personnel, "the biggest question will be how operations employees fare in what may be a largely remote-working model for the industry. Distribution and marketing people were rarely in their offices anyway and investment staff have proven that they can work anywhere."