The ‘aha’ moment: How a leader listens

JON BAUM is chairman and chief executive of The Dreyfus Corp., which manages about $400 billion in mutual funds and separately managed accounts. Since stepping into that role four years ago, he has led Dreyfus and its 700 employees through one of the most tumultuous periods in the history of Wall Street. This interview was conducted Nov. 29.

FG: Tell me about the first time you were in a leadership position.
JB: I had been at PaineWebber [Group Inc.], a predecessor of UBS Financial Services Inc., for many years and had been through a series of management roles. One of my bosses found a leadership program down at the University of Virginia’s Darden School [of Business] and suggested that a bunch of us go through the course. I missed it, so I went back and had to take a public course to catch up with my peers. It was a real eye-opener.

FG: Why?
JB: Like a lot of young guys who were doing well in the business, I thought I was a leader. But I learned I was more of a manager.

FG: What’s the difference?
JB: It really comes down to whether people understand, and eventually adopt, your view of the world or whether they comply. It’s a very important distinction. As a manager, you say, “Because I am hierarchically higher than you, you will comply because I am telling you to do it.” That brings a certain level of results. But mainly, it brings people who will do what you say — but probably not much more than that.

FG: And leadership is?
JB: Leadership is very much a different view. Leadership is a worldview that says, “Here’s what I think,” or, “Here’s my dream or vision, and I want to help you subscribe to that vision. I want you to help me transform that vision into something that is reality.”

FG: Can leadership be learned?
JB: There is no doubt in my mind that leadership is something that gets developed over time. It comes with maturity. There are people who have some basic components of being a good leader upfront. But at the end of the day, you can be taught to be more “leaderly” in what you do.

FG: How would you characterize your own leadership style?
JB: Evolving.

FG: What kind of culture are you trying to build?
JB: I am trying to build a culture that allows other people to examine and try new techniques but also to work collaboratively with each other to build an organization that you would want to live in. Years ago, I had a boss [former UBS Financial Services chairman] Joe Grano, who used to say, “Look, you may sleep at home, but you live here.” And he’s right. So the question is, what kind of home do you want? Do you want a culture where the attitude is: “We do the dumb thing, because the dumb thing is what we’ve always done,” or one that is willing to explore and try different things?

FG: But most people are averse to taking risks, especially in their careers.
JB: You have to create a culture that rewards risk taking. You do that by allowing people to innovate and try things that are different, and giving it enough time to actually mature and work. And if it doesn’t work, you have to be very honest why it went wrong. It’s about intellectual honesty, which means being honest with yourself about what you’ve done wrong. Look — if you apply the same thinking that got you to where you are, you are not going to get to somewhere different in the future.

FG: What qualities do you look for among leaders at Dreyfus?
JB: Inquisitiveness. If you are inquisitive by nature, that’s a very good thing. Also, people who don’t use experience as a liability.

FG: What do you mean?
JB: I can’t tell you how many times I’ve started a meeting with people who have worked with me on teams over the years and I’ll say, “I think we should do this.” Invariably, someone will say, “Jon, we’ve tried that. Let me tell you why that won’t work.” What that person really is saying is, “My experience in the box that I live in tells me that there’s no life outside this box. I’m not going to try that again, because I failed in the past.” To me, that’s a limitation.

FG: What are other qualities of a good leader?
JB: I look for people who know how to use these things on the side of their head [pointing to ears].

FG: Are you a good listener yourself?
JB: This is one of the biggest things I’ve tried to work on. And I will be honest — I haven’t really gotten it yet.

FG: Why not?
JB: I think we all tend to listen for the pause as opposed to the “aha.”

FG: Listening for the “aha”?
JB: Watch what colleagues are really doing when you’re in a conversation — they’re listening for you to pause so they can jump in and tell you why you’re wrong and they’re right. And that’s how we tend to listen. On the other hand, listening for the “aha” means saying, “Hey, maybe my colleague is on to something, and I can learn something.” You can’t believe what a difference that makes if you’re willing to do that.

FG: I imagine you spend a lot of your time in meetings.
JB: I hate them.

FG: How do you run them?
JB: Meetings are a necessary evil, right? If you have a clear idea of what you are trying to accomplish going into a meeting, it’s great. I’m not a big believer in PowerPoint presentations in meetings; many people just want to go through decks and show all the work they’ve done. If you have a deck for a presentation, send it to me two days before the meeting so I can read it. Meetings should be open, have dialogue and be short. I have no patience or tolerance for long meetings.

FG: What’s a short meeting to you?
JB: A half hour; maybe an hour. But that’s pretty much the max I can take without wanting to kill myself.

FG: Do you use e-mail a lot?
JB: You know, there are some really great things about the electronic world. It’s made our lives easier. It’s made our lives efficient. And it’s made our lives a little more cloistered in the sense that we don’t have the same kind of interaction that we used to. I really frown when I bring two people into my office to talk about a problem, and one says to the other “Well, I e-mailed him,” and the other person says, “I e-mailed her back,” and they both copied 27 other people so there is now this long e-mail chain full of all this information. I sit there and say, “Wait! You just e-mailed someone who sits three doors down from you? What about just going into their office, sitting down in a chair and discussing it?” E-mail can be a very interesting thing. You can read a lot of inflection in words — so I get really worried about the lack of communication sometimes on issues.

FG: How do you dole out criticism?
JB: As a CEO, I have to be careful. People will take your word a little more seriously because of the position you are in, and sometimes that’s unfair because you may or may not deserve that level of seriousness. But I do think it’s important that you give people good, honest and open feedback, and you have to be willing, therefore, to take good, honest and open feedback. For me, one way of giving that kind of feedback is to bring a little humor into it.

FG: How do you hire people?
JB: I’m not a very formal person. I like to have informal dialogues with people. I tend to trust the opinions of those on my team. A good fit is really important — especially at a small organization. So we will have everyone interview someone who is going to be hired into a senior position. I have very good partners in the HR department and I rely on their instincts, as well. But let’s face it — we’ve all been taught how to write really good résumés. So when you get to talking to someone, what you are really trying to do is peel back what is real versus the conditioned response.

FG: How do you do that?
JB: I ask the same question three, four, maybe five times. You know, I once had an interview with [former SunAmerica Inc. chief executive] Eli Broad, and he was the best interviewer I’ve ever talked to. He would ask the same question over and over until he felt confident that he had the right answer. He was constantly looking for more detail, more depth and more nuance.

I think we all tend to want to hire people we like, and that can be dangerous. So you really have to think about the experiences of the person you are interviewing and how they will fit in on the team.

FG: Does everyone on the team have to buy in on a job candidate?
JB: No. It’s important to have the feedback of the group. But at the end of the day, it’s the hiring manager’s decision and I hold them responsible one way or the other. If I find out that nine out of 10 team members thought the person was a dud and the hiring manager still wants to make the hire, I’ll say, “OK, but be on notice that it will reflect poorly on you if that person doesn’t succeed.”

FG: What is the top job of any CEO?
JB: It’s value creation. I had a good boss who told me that your life at a public company is a three-legged stool: Employees, shareholders and clients. And you have to make sure you are adding value to all three of those constituencies at any given time. To me, it’s creating an environment that allows that to happen.

FG: How do you create that environment?
JB: I do roving monthly town halls, where I meet with different departments and talk about the markets, [Bank of New York Mellon Corp.] and Dreyfus, and how we are doing. I also do a monthly luncheon where I gather with employees from all levels of the organization. At those luncheons, we talk about our families and what we do when we are not at work. I get to hear all these great stories. It’s cool because we hire employees, but people show up.

FG: What’s the purpose of these gatherings?
JB: They just break down a lot of barriers. Hopefully, when these people see me walking down the halls, I become just Jon Baum to them, not “the CEO.”

FG: Do you use these meetings to also explain your vision or mission?
JB: It’s partly about that. But it’s also about demystifying the role of the CEO. Why am I CEO? Because I am over 50 and I have been around long enough. I am lucky to be in this role. But at the end of the day, I get up in the morning and put on my pants like everyone else. I have as many worries, bills, social interactions and family issues as anybody.

FG: Do you find that being a CEO gets in the way of connecting with employees?
JB: Yep. It’s a double-edged sword. You have to be very careful. The average CEO has a very busy day and does a thousand things. CEOs are on boards. They have regulatory issues and all that. As much as most of us would like to be a man of the people at all times, you have to be careful because you are in control of information that may or may not be appropriate to share. That being the case, I think it’s important to demystify the role a bit so that people can see that I face some of the same issues they do.

FG: What is a personal example of “I wish I knew then what I know now?’
JB: I guess I would say that you can’t always be perfect. It’s not always going to go right. I wish I knew back then that sometimes you have to use a longer-term lens and that sometimes, you have to make decisions about the better use of resources.

I wish I knew that, at the end of the day, it’s a balance. It would be really easy to say as a CEO, “I just want to create this really great culture where people live here and it’s terrific.” But that’s only good if you’re creating value for the other partners — the shareholders and clients. I wish I understood how tough that [balance] really is.

FG: What did you learn about yourself in managing Dreyfus through the economic downturn in late 2008 and 2009?
JB: I learned that it’s not about me. It’s about the greater good, the clients, the corporation and all that. It’s about figuring out how to reorient a company to survive and do well. I learned how resilient people were. I saw people working around the clock because they care passionately about what we are doing here.

FG: Is turmoil a necessary evil for running a solid business?
JB: I tend to do better in periods of turmoil. In fact, I think good companies do better in periods of turmoil. It’s very hard to gain market share in up markets, right? It’s when things get tough and things change and sacred cows get broken, and people say, “OK, now we can gain market share.”

FG: How do you fire people?
JB: That’s one of the hardest parts of the job, but it usually comes as a relief to the person being let go. If you’ve done your job right over the course of the years, nobody is ever surprised leaving. If someone is being totally shocked, then you haven’t done your job right. Believe it or not, I still talk to or remain friendly with most of the people I’ve had to let go.

FG: How have you managed that?
JB: I let them know that it’s not personal. I’m very upfront about that with our folks, especially our salespeople. I will say to them “Look — this is where the company is going. We are taking it here. This is our vision and you can help us craft that. But at the end of the day, there are no prisoners or no passengers on the bus. When the bus leaves the station, you have to be on it.”

FG: How much time do you give someone?
JB: It all depends. If it’s related to behavior — say, they are not easy to work with or they are being disrespectful to other employees — that’s easy. You just tell them that they are not a good fit with the team, admit it was a mistake and move on.

FG: What’s your advice to young people just starting out in business?
JB: One of the things that troubles me today is that every résumé I read is from someone who has been to five companies by the time they are 10 years in the business. There’s this sense out there that you have to achieve and move on and achieve and move on in order to make a career work.

I’m worry about that for two reasons. First, it means that people aren’t in a place long enough to make an impact. Second, it’s not their job to manage their own career. It’s their boss’ job — especially early on. Their job is to do a good job. If they do that and they do it long enough and have good results, their career will continue to move ahead.

FG: What role has luck played in your success?
JB: I believe you kind of make luck. If you believe in karma, you believe that if you treat people well, they will treat you well. If you are seen as honest and forthright about what you do, then those breaks come back to you later on.

FG: How are you at juggling the work/family thing?
JB: A friend of mine gave me a great quote around that. He said, “Nobody will ever remember if you missed a certain meeting during your long career. But your kids will never forget if you’re not there on Halloween.” I like my job and I like being a CEO, but I am working to support my wife and my kids.

FG: What do you want your children to remember you for?
JB: That I wanted them to do what made them happy. Look, I am a middle-class kid from Long Island, and I live a great life. I have far surpassed any sort of expectation that I may had had for myself. But you know, I know a lot of unhappy people who have a lot of money. I guess what I would say is that you have to find out what makes you happy.

Related Topics: The C Suite