OPINION | Our industry is a people business. Simply put, both investment managers and institutional investors have three core stakeholders they need to manage: their clients, their shareholders and their staff.
If you can align clients’ objectives with those of your shareholders and staff, you have pulled off the trifecta.
During a recent string of client meetings, I was struck by how quickly conversations kept turning from investment ideas to common challenges with managing talent development initiatives and culture.
Many of our super fund clients are growing rapidly and with this comes pressure to attract and retain talent. While some organisations are diligent at crafting key performance indicators and mission statements, they can fall short by using these as standalone administrative tools, rather than as part of a wider cultural framework. However, it has been interesting in recent years to see many super funds taking a more sophisticated approach to how they attract, retain, manage and incentivise their people.
For staff to deliver consistent investment outcomes, they need to step up to their personal best continually and always seek to improve. This takes commitment from both individuals and the organisation.
Stick to what works
In the last few years, QIC has invested in our staff through career development initiatives, including a tailored leadership excellence program through which I was recently given the opportunity to attend a Harvard Business School course on building and sustaining competitive advantage.
The week-long course included 91 attendees from various industries around the world and it was a wonderful opportunity to hear diverse global views.
One of the key messages from the course was that fund managers and super funds need to focus on the competitive differentiators that matter most to their customers to build and sustain competitive advantage. A product offering must have a sustainable competitive advantage in each market to compete successfully.
This is a good reminder of something that is easy to say and difficult to do: If an organisation can enhance the client’s willingness to pay by focusing on the differentiators that matter the most to clients, then sustained value is more likely. Commoditised offerings with low competitive differentiation become price takers as the client’s willingness to pay decreases.
In a nutshell, if an investment of time or resources in a product differentiator does not affect a client’s willingness to pay, don’t do it.
We often focus on how to differentiate product, which can be easier than generating less tangible differentiators, such as within the people and culture. It is interesting to consider the impact ownership structures inherently have on culture. In my experience, fund manager, who are owned by their clients, have a distinct cultural advantage over managers with impatient, listed owners. The ability to operate in line with clients’ longer-term objectives, without excessive shareholder-driven pressure, is a huge benefit we have at QIC and creates a different culture. It’s also a key reason we have seen such strong growth from profit-for-member superannuation funds.
Share for success
Strong culture starts with clarity around what your organisation stands for. Every fund manager will say their fund is a client-centric organisation but the ownership structure may show something different.
In the example of QIC, our shareholder, the Queensland Government, is also our biggest client. This means, like the government, we are more concerned with long-term investment outcomes than short-term wins.
Increasingly, our clients face people challenges and opportunities like our own. We operate with transparency, sharing both our learnings and failings.
QIC’s executive director of human resources, Glenn Jackson, has shared information with several of our super fund clients about how we use a range of talent-management tools, such as staff engagement surveys and balanced scorecard assessments, that clients are considering implementing within their own organisations.
We’re in this together and their success will become ours. We all strive for differentiation and cut through. Alignment of people, product and culture is key.
David Asplin is the managing director of global business development at QIC, the Queensland Government’s $80 billion funds-management business.