culture within The manager is listed on the NASDAQ with a market capitalisation of US$17.2 billion. Last month in Baltimore, where the business is based, it held a lunch to mark its 25th year on the public exchange. At the table sat more than 100 current employees who had been staff shareholders since its listing, Ruppert says, plus many others who fell short of this mark by one or two years. Cultivating a collaborative, loyal culture is important for the manager’s top brass, Ruppert says. This is a culture where analysts who do not share stock ideas are penalised and sometimes fired, and where fund distribution revolves around the interests of existing clients. “Culture is built by doing a number of little things over a long period of time. It comes down to shared values and norms of behaviour, and behaviour is beliefs and values put into actions.” As the business expands worldwide, and as key executives work out their second and third decades of continuous employment with the manager, the question of succession arises. But it’s been asked – and answered – before, Ruppert says. For all businesses, succession is inevitable. And it can be a minefield for those with deeply embedded cultures and long-tenured bosses. James Kennedy, president and CEO at T. Rowe Price, has worked at the manager for all but the first of his 33 years in investment. He took over from George Roche, who joined the manager in 1968 as a natural resources analyst and rose to become CEO in 1980, Ruppert says. His colleague, David Testa, joined in the early 1970s as head of research and then became CIO.
At the end of 2003, he was succeeded by Brian Rogers, who had then been with the manager for 22 years and is still its CIO. These transitions were smooth, “like a non-event”, Ruppert says, and he notes that certain individuals in the business have already been identified as potential leaders of the business. It’s rare that portfolio managers and other senior people will be hired laterally from outside the company. The manager’s Australian employees – Brewer, Jenneke and head of Australian equities research Viral Patek – are each hired in the circumstance where there were no candidates coming up through the ranks. To build a culture of cooperation among its investment teams, the manager rewards analysts who feed their stock ideas into any portfolios that could benefit. If a financials analyst’s insights into a Japanese bank stood to benefit not only T. Rowe’s global equities fund, but also its Japanese equities team, they would be expected to convey this information to both portfolio managers – and be paid for it. “Our compensation system is very rewarding for collaboration and very punitive for lack of collaboration. If there’s a pattern of someone not collaborating, they’re going to be eased out.” These rewards are usually long-term in nature, such as stock options that vest over a five-year period.