Many wondered why Charles “Ed” Haldeman, Jr., former chairman of Putnam Investment Management, LLC, would accept the daunting task of running Freddie Mac, a poster child for the mortgage meltdown.
In a recent Wharton Leadership Lecture, Haldeman explained the conditions he faced when he joined the company in July 2009, and what drew him to accept the challenge in the first place.
Taking a job nobody wanted
Besides being blamed for the housing crisis, Freddie Mac had a leadership vacuum. Its 6,000 employees had no CEO, CFO or COO. “When I took the job,” Haldeman said, “I was the sixth CEO in six years, and the prior CEO had left the company after being in the job for six months.”
So why he agreed to take the reins at Freddie Mac?
“First, I thought the mission of Freddie Mac and Fannie Mae was really important, and we ought to keep it together.” Haldeman also considered the company’s goal of keeping people in their homes to be vital during a recession. Finally, he thought the job presented “an interesting management challenge: how to energize and motivate 6,000 people to stay the course and get the job done, given all the negatives.”
Creating a Template
Haldeman applies the same management principles to any company he joins. “The first day you come in,” he said, “you literally don’t know one person. You’ve got to have a template … some philosophy to bring” that can be applied to an organization and the culture that already exists.
Haldeman said his ideal management model has eight necessary ingredients:
- Make integrity and high ethics prerequisites. A lot of business people think there’s a trade-off between ethics and making money, Haldeman said, but “in my experience it’s not that way…. Integrity and ethics are a sort of precondition for business success.”
- Create a workplace that’s open, direct, candid and honest. Haldeman e-mailed all his employees when there was a House Financial Services Committee meeting, saying, “It’s likely they’re going to trash us, so be ready for it.” He faced up to the uncertainty of the next two years, telling staff to focus on what they can do today.
- Make sure employees understand the company mission. A person’s job is about more than making money, Haldeman stressed, and “to really motivate people, you need to have them believe that they’re doing something worthwhile.”
- Develop a business plan that all employees can understand and repeat. As an example, Haldeman cited a time at Putnam when morale was low, there was a run on the bank and clients were leaving. He developed a clear, four-step business plan: Reestablish the public trust; bring great investment professionals on board; deliver great investment results and bring funds flowing in with better marketing and distribution.
- Communicate the mission and plan constantly. In one of his weekly dinners with company officers, Haldeman was asked, “So basically what you do is schmooze all day, right?” He accepts that characterization as critically important in his job — to transmit the values, the sense of mission and the business plan, not only to employees, but also to “directors, the regulator, Congress, customers and clients.”
- Give other people autonomy. As a former asset manager, Haldeman said, he felt this was the only way to manage people. “If you want to attract and keep great people at any organization, you’ve got to give them a sense of autonomy, of ownership…. The really good people won’t tolerate being micromanaged.”
- Enforce teamwork. Not enforcing it makes for dysfunctional management. Employees know “when a senior team is working together or when they are not aligned…. If [teamwork] stays bad, you’ve got to get rid of some people.”
- Senior managers must spend time walking around. “You can’t stay in your office,” he advised. “Too many CEO operations are cocooned and separated.” Not only does circulating make employees feel more connected to management and the company, in many cases it’s the best way to hear what’s really going on.