Pimco Environment a `Pressure Cooker': Flamholtz

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Feb. 25 (Bloomberg) -- Management Systems Consulting Corp. President Eric Flamholtz discusses his Pimco research on Bloomberg Television's "In The Loop." (Source: Bloomberg)


What did you find in your research?

I was doing a number of different things, but i was coaching a number of the senior executives with the exception of bill gross.

I was getting their 360 feedback reports that they got from their peers, superiors, and so on.

I was doing one-on-one work with them.

I found that the environment was a pressure cooker.

I have a lot of respect for bill gross, a lot of respect for what i heard and what i saw in terms of her performance, but the environment was a pressure cooker.

What i concluded was that it was unhealthy with respect to a significant number of people.

They are very talented people at pimco, they have excellent credentials, they are hard-working.

There are first-rate professionals, but there was undercurrent theme with almost 100% of the people.

They were under a lot of stress.

You cannot find any trading desk out there that is not a pressure cooker cover that is not high stress.

What is different about it ? you see it in the wall street journal article, and i am just reading it, it is the way the people are treated.

You have a climate, and culture, and one of the values would be the spec for the individual.

In any organization you have to have respect for people.

It is true in many of these firms, but pimco is the one that i was looking at.

These people have a lot of money, but they are very insecure archive even though they are getting a lot of money.

There are excellent credentials, so what is different is the way you treat people.

Obviously, just my reading of the article, mohamed el-erian basically said he wanted to try to change the culture and the way people were treated, and bill gross agreed.

I think that was the number one thing i observed.

I cannot speak of all of the company and all of the trading desks.

Is it unfair of pimco to do this if people go into it knowing that that is what they're going to get?

They're going to trade off that insecurity for the money.

Another hedge fund in the tri-state area, someone who applied their saying that they know they treat people badly, but it is a great opportunity.

That is not the issue.

Would you have there's human capital of three kinds, the skill of individuals, the teamwork if you build that, and then a corporate culture which is an asset.

In those organizations that can go beyond the money and provide a strong positive culture for people copy of something that builds and loyalty.

Otherwise you have a hedging mentality.

It is not that they are worse, or an unfair company, but the fact is that pimco or any other critic can build a strong climate and culture which would be an enhancement.

In the article, it mentions how mohammed area el-erian -- mohamed el-erian was trying to institute a more traditional corporate structure, and bill gross was not as favorable to that view.

Do you know what he was trying to do?

That actually surprises me, because when i was working there, bill thompson was the ceo.

I thought pimco had done an excellent job of striking the balance between being entrepreneurial and putting in professional management systems.

They were not fully del valle, but they have gone a lot further than other firms i have seen in the financial space.

It sounds like mohamed el-erian was continuing the initiative that bill thompson had put together.

My understanding was that bill gross had basically gone along with l thompson on this.

I think what is different now, what you read about malcolm is the stress they were all under when the performance is not there.

Then a lot of these problems emerged, would performance is high, a lot of these things can be swept under the rug, or minimized.

When things start unraveling cover you start to look for what is causing that, and that is a problem.

Is there something you would recommend specifically for pimco or any other company in this area?


I have defined five key areas that all companies need to work on, and pimco did a good job with four of them.

How you treat the customers, accountability, open to innovation and change, process orientation in terms of planning and decision-making very they are good on all of those things.

The way they are weak is how they treat people.

It is a deal that people strike, that they will get a lot of money, and i will get however i am treated, but it is a corrosive process.

That seems to have been the trade-off.

Not knowing the situation there, the people were traditionally paid very well, and more than the industry average.

Is it the hours?

You bumped into people who left, who i was coaching at pimco, and he was about ready to explode.

He was a very hard-working individual, he was very unhappy.

He started a firm with someone else, and was a different person.

I had heard about mohamed el-erian leaving and going to harvard, and basically people can take the pressure intellectually up to a point, and then it stops.

Not everyone is bill gross, not everyone can handle that kind of wrestler -- pressure for 30 years.

What you have done is you have lost human capital.

When i brought mohamed el-erian back, i thought that would solve their problems.

You have a second iconic investment manager, it was a brilliant move.

And then you lost him.

When i read about that, i realized that it had gone back to a situation which i had noted.

It was a corrosive situation, something they had to deal with.

All they had to do was some fine tuning, it's not like it is a terrible place.

Mohammed has been very tightlipped about where he has added -- where he is headed.

He has been able to go wherever he wants.

Whatever his situation.

Thank you for joining us.

And to michael mckee.

Now we know why bill gross does yoga.

This text has been automatically generated. It may not be 100% accurate.


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