CIO Roundtable: Secrets to Building an Effective Team

From top left: Tim Barrett, Marcus Frampton, Jim Grossman, Robert Hunkeler, Alyssa Rieder, Karl Scheer, and Joel Wittenberg

Even the most prescient and capable CIO can’t lead a successful investment portfolio without an effective team. In the current crisis, that’s of particular urgency. Our CIO roundtable weighed in on the secrets to building and managing highly functioning, well-coordinated teams in not just the age of the coronavirus, but in other times, as well.

COVID-19 Concerns

As you might expect, CIOs say their teams are under tremendous pressure, facing greater demands from their constituencies even as they try to navigate crashing markets. Tim Barrett, CIO of the Texas Tech University System, says that’s certainly true for his eight-person staff, which has been deluged with requests for information.

“Every stakeholder that is involved wants to know what is going on with performance and whether we’re making any changes. That creates a lot of work to communicate efficiently to all our stakeholders,” he said. “And every staff member responsible for asset allocation is on the phone with managers, who really have the same problem. Every one of their clients is calling.”

But Jim Grossman, CIO of the Pennsylvania Public School Employees’ Retirement System (PSERS), said morale remains high for his 50-person team.

“I think it’s safe to say everyone—no matter their career or station in life—is feeling some level of stress over this pandemic. Everyone is trying to do the best they can while this invisible monster lurks about. I am happy to say my team is on top of their daily workload, staying on top of the ever-changing market conditions and in contact with their supervisors who report to me daily,” he said.

Highly mission-driven organizations may have a leg up in these times, as do teams with a solid esprit de corps. Alyssa Rieder, CIO of CommonSpirit Health, a hospital network formed last year by the merger of Dignity Health and Catholic Health Initiatives of Colorado, for example, feels the crisis highlights for her 11-person team the system’s mission to serve vulnerable populations.

“This reinforces the importance of our organization’s mission and goals. Our colleagues are out there on the front lines helping people get tested, treating people. It brings the criticality of our mission to the fore,” she said.

Some CIOs even see a silver lining. Karl Scheer, CIO of the University of Cincinnati, finds the crisis provides a level of challenge his team hadn’t had to address during the long bull market. And that’s a good thing.

“This climate is actually invigorating people. I think it makes them more engaged and excited. We’re facing a very different set of risks and opportunities now,” he said.

Working remotely, CIOs say, has proceeded with fewer hiccups than expected. While having one-on-one conversations is harder, thanks to constant demands on their time, Barrett said, “I would have told you a few weeks ago that working from home would be almost impossible. But overall it’s turned out not to be bad at all.”

Robert Hunkeler, vice president of investments at International Paper, prepared ahead of time. Before official orders to work from home were issued, he ran a remote work trial run with his seven-person staff.

“We wanted to see how it would work, how we could communicate. It was a chance to test out the system and work out any bugs before it really happened,” Hunkeler said.

Most CIOs hold regularly scheduled, daily conference calls with staff when each team member discusses what they’re working on and the issues they’re dealing with. At Texas Tech, team members are also tapping into their regular information-sharing platform, in which they enter notes from those managers who have provide updated statements throughout the month.

Building the Team

Forging an effective team, of course, requires hiring the right people. But before CIOs can even get to that point, the first step is finding the right structure—from what types of expertise team members should have to the reporting hierarchy. Ultimately, there’s no one size fits all. But especially for those building out a team, finding the solution is not a small project. When Rieder started researching how to form a larger investment staff at Dignity Health in 2016, she called more than 30 CIOS to see how their teams were structured and what they liked most and the least about their choices. “I realized that there are many right answers. It very much depends on the organization, its size, asset level, culture,” she said.

It’s also essential to get support from leadership and the investment company for the process, Rieder said. “When I started in 2011, we had a $5 billion program with no dedicated staff. After our current CFO [chief financial officer] joined four years ago, that was when he and the investment committee really encouraged us to fully build out our team.”

For Hunkeler, the governance structure is critical for determining team roles and how much influence individuals can have. When he joined the company in 1997, his predecessor already had introduced a system delegating virtually all investment decision-making to his office, with the investment committee playing primarily an oversight role. “The right governance structure will magnify the impact you can have. That’s one of the great attractions to this field,” he said. “Quite often the investment decisions are made at the investment committee level, which tends to be made up of people whose priorities may be with whatever function they serve in that company. If you propose what might be perceived as a risky investment idea, they’re more likely to say no than yes, because their primary alignment is with their own business duties.”

Another big factor in recruitment, especially for CIOs who aren’t based in or near major city hubs, is location. “The biggest challenge is recruiting talent to Harrisburg. Our professionals have to be interested in moving to south central Pennsylvania,” said Grossman, who points to the area as an inviting place to raise a family.

Marcus Frampton, CIO of the Alaska Permanent Fund Corporation, faces a similar dilemma in staffing his 25-person team, most of whom are not from the state. 

“We have to figure out will this person want to live here for more than two years,” he said. To find candidates, Frampton focuses on his network. “I’ll tell everyone I meet I’m looking for a specific type of manager and do you know anyone. You’ll get a million people who might be interested. Then you spend half an hour with them on the phone to see if you want to go to the next step.”

Location has other ancillary effects. One is setting responsibilities.

“We’re in Battle Creek, Michigan, halfway between Detroit and Chicago,” said Joel Wittenberg, CIO of the W.K. Kellogg Foundation, who heads a nine-person team. “But we need to recruit the best people in the world to work here with us. That’s partly why we look for a generalist background,” he said. “The team covers all the different sectors and we compare them together.”

Wittenberg said he’s established a detailed decision-making process making that approach possible. In addition, team members have what he calls “informal specialties,” such as hedge funds and public equities.

Other CIOs take very different approaches to job descriptions and skill sets. “The most important element in building a team is knowing how you want to manage the portfolio. I think in verticals, like public and private credit, instead of traditional asset classes,” Barrett said. Also important, Barrett adds, is whether a team focuses on funds only or also on other tasks, such as co-investments. “As you go down that spectrum, so do the complexity and skill sets. We do co-investments. Our guy has to be able to go toe-to-toe with a manager and talk me through it, too,” he said.

Knowing she was going to build out a bigger team, Rieder chose a hybrid approach. “There are clear benefits to both generalists and specialists. With a generalist model, if you cover everything, then if an asset class isn’t attractive, you have something else to work on. And it encourages collaboration. But as a program grows, you need the benefit of people with knowledge of a particular asset class, and deep relationships with managers,” she said. Her solution: Enlisting some team members with a strong expertise in particular areas, who serve as point people. They have the responsibility for driving research in those areas, while also working across asset classes.

Also important is finding people who fit the culture. “Our focus is on thriving children, working families, and equitable communities. Racial equity is essential to that. So part of our recruiting process is helping recruits understand what our DNA is. You don’t live in a vacuum here,” Wittenberg said.

On the other hand, Frampton looks for independent thinkers. “In Alaska, people are very enterprising and dismissive of consensus thinking. We have that culture on the investment team,” Frampton said. One tactic for detecting that mindset: asking candidates about their personal investments. “I find it takes 10-20 minutes of interviewing to get them to talk about what they’re really doing. If someone doesn’t engage in anything that’s not mainstream, I wouldn’t hire that person,” he said.

CIOs also say there’s a need to develop talent in-house and figure out how that affects recruitment. “We often hire at our entry level positions. New hires usually work in that position for a couple of years and then move up,” Hunkeler said. “It’s way more difficult to run an organization if you have to fill a more advanced position and you don’t have someone ready to move into that position.”

As for compensation, it’s useful, of course, for attracting top talent. But pay also provides a way to encourage collaboration. “We look for folks who are willing to be cooperative and then have incentives aligned with that, Rieder said. “Incentives are based around the total performance of the program. So if Joe has a great idea that’s better than mine, I’m totally aligned with it.”

Offering a top-level compensation package can be a struggle for some, especially at organizations tied to a state budget and legislative decisions. “You have to think out a year in advance for our budget cycle and build a real business case if you need a position,” Frampton said. “Whereas in a private company, you might just need to convince your boss.” Frampton said that for the past three years, the board has approved a plan for incentive compensation, but it’s failed to make it through a complete budget process.

In some cases, the available talent has a significant effect on strategy, as well as whether to use an outside consultant. “Like anyone, I have to be a little bit opportunistic when deciding who will come here based on what the pool of available talent looks like,” Scheer said. “I have someone who’s amazing at private equity and I make sure he can focus on that area. If there’s a public equities decision, I’ll lead on that. And if I can’t find somebody who could be responsible for, say, real estate, we might invest in a real estate fund of funds.”

Managing the Team

Building an effective team also means putting in place processes that encourage cooperation. “I’ve been in work groups with lots of very talented people, but if they didn’t get along as a team, they were not very effective,” Hunkeler said. “It’s not enough to bring talented people together. You have to be able to get them to work together.” When team members disagree, he prefers to have them talk directly to one another. “If that doesn’t work, I’ll step in,” he added.

For his part, Wittenberg has his team work with an external coach, who provides one-on-one coaching and also comes in if the group needs to address a particular situation. “That helps make sure issues are on the table and everyone is being heard,” he said. 

The physical office layout is also important. “The way the office is set up, in the whole building, walls can be taken down,” Wittenberg said. “In the investment department, we’re set up so everybody can walk out of the office and stand together right there in the hallway. You can’t imagine the value of a hallway conversation.”

It’s also crucial to emphasize the importance of individual team members’ impacts on the overall organization. That means designing job descriptions ensuring each person makes a real, tangible contribution. “There’s a tremendous amount of satisfaction in seeing your ideas come to fruition,” Hunkeler said. “I try to make sure everyone who works for me has an important job to do and enough accountability so they can see their impact on the bottom line. I think that’s the DNA of job satisfaction.”

CIOs heading fast-growing teams encounter particular challenges when it comes to encouraging collaboration. Over the past 10 years, Grossman’s team has expanded from approximately 30 to about 50 members as part of an effort to build out various divisions to support internally managed investment portfolios, as well as oversee risk management, compliance, and external managers. “The biggest challenge is mitigating tendencies for divisions to become silos,” he says. With that in mind, he said, “I’ve worked hard to ensure that the groups work collaboratively, and the investment office is run more like a meritocracy. I’ve established various committees which have representation from each of the groups so everyone is involved in the collective success of the fund.”

In addition to affecting recruitment, location also affects priority-setting—where to invest and in what sectors—and making sure the team coordinates activities. “As we invest around the world, we have to really focus on our priorities because we’re a place that’s hard to travel from to start with. It often takes half a day to get to a meeting,” Wittenberg said. “One person may be talking to a manager in, say, Berlin. And another is going to Berlin to see someone else. So the first person might ask if that colleague can cover for him or her.“

Team members also need ways to grow in their own careers. To that end, Wittenberg moves employees in and out of different roles. “I think of it as being quite fluid. As you move somebody around, it allows you to adjust other people’s roles. It’s creating a puzzle and putting the pieces into place,” he said. “Also, we’re always make sure we have a strong bench of managers, who report to the directors, so if somebody leaves or is promoted we have the right people in place to promote.” In addition, each employee generally works on three or four projects at any one time. “They have a lot going on their plate. They want to keep leaning,” he said.

As for feedback, that tends to be provided on an ongoing basis, not just at formal reviews. Hunkeler holds regular one-on-ones with his direct reports and meets with the rest of the staff twice a year to discuss larger issues, as well as day-to-day projects. “I once had a job early in my career where I didn’t get a lot of feedback from my supervisor. It just wasn’t his style,” he said. “But I sure could have used it back then. That experience taught me the importance of regular feedback.”

A year and a half ago, Frampton’s human resource (HR) colleagues introduced an HR software program that includes a review module. Managers pick employees to peer review each other every three months, imputing a paragraph on the individual’s strengths and “what they could work on,” he said. “I’ve found that having frequent interactions is the way to go.”