Jane Fraser, CEO of Citi: Lead with Empathy

Thank you.

Yep.

Yeah.

Yeah, it was one of those weird experiences. I was in a conference in the Middle East and they had a whole group of the now friends who run the different financial institutions and there were two women out of this group of 20 of us. And everyone was from all over the world and the two women had been at the same high school in Sydney, Australia. And we were both going, "Wow, that says something about that school." I'd left Scotland when I was 12. My parents immigrated to Australia. And the school was fantastic. It taught you to go for it. And that's not really what you get taught as a girl in the 80s or 70s in Scotland. And the headmistress there just equipped you to, you know, you gave it a shot. You gave it a go and it didn't matter if you didn't succeed, just try it, go for it. And also an insatiable curiosity about the world, about how things worked and other pieces. So, it was a wonderful education. And to this day, I think that was a great foundation.

Yeah, so back in the 80s when I was looking at other women, I was at Goldman as an analyst and there were very few women in financial services at that point. And those who were weren't exactly role models. They were either trying to be more male than the men and didn't really like that or they were just miserable. So I had switched over to McKinsey where I felt there was just a better chance of still having fascinating strategic discussions, career learning and all of those good things but at least a chance of having a little bit more balance. And the year before I made partner, I wanted to have a family and so our first son was born right before I made partner and I made partner. The phone call came in and I was just so desperate to get the head of the firm off the phone because our son needed feeding. I was two weeks into a newborn. And at that juncture, I thought, you know, I'm going to go part-time as a partner there. So, I was part-time for 5 years. And for me, it was the ability to have both the career but also be a mom. You know, if you have a kid, I wanted to have a chance of spending time. And so, I found a way that I could do. So, I had one less client and several mentors had all said, you know, just tell everyone that no, you're not working this day. If you had other client meetings on that day, you wouldn't be able to do it. So, they helped give me a bit of the courage to stay the course. And I worked the entirety of the time I was a partner, five years part-time. And that's given me a lifelong belief that you do need to make choices which will be more in favor of your personal life rather than your professional life at certain times and that's okay because as someone told me your career, you're going to have many careers in your life and you're going to be measuring them in decades. So why are you so fussed about something that will be probably five or six percent of your professional life? You know, make some of those tradeoffs and have the courage that it won't slow you down.

Yeah, it was pretty supportive. I still think they got their value for money. I say they got on a 60% program they were getting 70-80%. But still, you know, these are the ones where you just have the courage that at certain points in your career you will have other priorities. You'll say no to jobs, you'll say no to mobility opportunities and that's the point where you have to have the courage that you'll have other opportunities that will come up. And that you find a balance.

Well, Race for the World is a book about building global businesses. Yes.

Yeah, I think particularly now the speed of technological innovation and how quickly it moves around the world and then the geopolitics. The geopolitics at the time were pretty simple whereas now the impact as a CEO you end up having to spend a lot more time worrying about what's happening in terms of the voice of the people. You're much more worried about what are the different tensions that are going on and that was something that this was much more purely the business dimensions of it and not understanding the full range of stakeholders the same way. And some of the things we got right, some of the things we got wrong.

Yes, as a woman who likes shopping, I certainly spent all my time selling things.

Look, I think there's a couple of different pieces. I learned a lot. I'd been at the firm for three years when the financial crisis hit. And then was put into the strategy and the M&A role which is really divesting. And we chose a different CEO and the previous one was fired. And Bob Joss remembers this time well is sitting in the room. I think at that point you need incredibly clinical thinking. You can't have emotional attachments to different areas. CEO at the time was a trader and one of the things traders are very good is they're unemotional about the different positions, different things they hold and also someone who is very smart and that mindset was something I really learned at that point from him. The other another element I think is important is courage. And you have to be courageous to take some of the tough decisions and I think having seen how far awry the firm had gone at that point, it gave me lifelong courage to take the tougher longer term decisions. And those were things that I saw that group of leaders doing like they really took bold decisions and they put a bit of time in. They got to move on. But they put enough time into the thinking and then they would move quickly and I think those were the things that I saw that was important. What got us there was a lot of poor management decisions. What I then saw was just sticking to certain principles and I've tried to follow that too. It's very hard to follow to set all the rules you need but certain principles are in place. So we had one of we're not in the business of manufacturing, we're in the business of distribution. So we will sell everything that's to do with manufacturing. And that way we can be true to our customers of finding the best product for them and giving it to them. So those types of principles are certainly I found incredibly valuable for sticking to certain things. Same way we used it in COVID. You know, we had a set of different principles about how we would respond as a firm. We stuck with them. So that would be one of the things I saw from the leaders that I've shamelessly copy-pasted for the rest of my career was be courageous, was be very clinical about decisions like get your ego and get the emotion out of the way. The ego is usually the toughest one. And the third one was this other element of sort of curiosity and decisiveness.

Yeah, my risk appetite used to be awful. If I didn't feel I was to this day, I still have to catch it. If I don't feel I'm 120% prepared for something, you know, I'm out of my comfort zone. And you know, my hand up in class used to be like this. And I learned it better be like that. How do you... and you just had to get comfortable with those pieces. So some of the courage comes from trusting yourself and taking certain leaps through my career. I've done all sorts of what sometimes lateral other times almost downward moves in order to build different skills. And so being courageous to go an unorthodox path is something you guys are going to have to do in spades given where the world is going to be. And you know, be not just getting comfortable. You're going to fail at a few things. That's okay. And you're your own worst enemy. So those are the areas that I think the greatest courage is in your own emotional resiliency and your willingness to grasp at opportunities and not worry that if you fail, you know, you'll pick yourself up and you'll go for it again. That's one of the reasons I came to the States. I hated that about the UK that there was none of that mindset. Whereas I do think this country is pretty remarkable in that and this part of the world even more so. Yeah. Courage is tough.

You can learn courage. You don't need to be born with it.

Yeah. I mean, because someone once asked it, is it because none of the men wanted to take them? There might be a bit of truth in some of that. I think one of the things I'm not a tweaker, so I never wanted a job where you just be tweaking things to make it better. I think I'd be awful at it. I think a lot of people in this room would be awful at tweaking jobs, too. It's more fun to be bold in making changes. And then if something's not in great shape, it's amazing how you get left alone to fix it. Whereas if something is actually going well, you have everybody giving you helpful advice and opinions on what you can be doing better. So, one of the fun things about turnarounds or changing things more radically, quite often you're left a little bit more on your own. Then when it starts getting successful, then everyone jumps onto the train and heads that way, but I've always quite enjoyed transforming things a bit more. And then you learn a playbook of what you need to do and you can repeat a lot of it in the different situations. Like get the team in place that you need as the first step because otherwise you're going to be doing everybody else's job and be really lousy at the one you've actually been put in to do. So there's just different steps that I've put in place each time now.

So, I'll give you an example. I was running the private bank out of London and it's a fantastic job. You're serving the world's billionaires and their families and they all have incredible stories about how they made their fortune. They usually then lost it then they made it again and it was one of the most humbling jobs too because by definition you were never going to be as successful as any one of the clients. So it kind of keeps you grounded. But I'd been doing that for four years and I could tell I felt the business it was time for the business to have a different leader and I thought it was time for me to do something else. So I had a list of criteria of different things I thought would be good and I moved from London to 45 miles outside of St. Louis, Missouri. To from running the private bank to running the mortgage business at the back end of the mortgage crisis out of a call center. And everyone thought I must have really screwed up to be doing that move. For me it was logical. I'd learned how to run a factory business. I was in the middle of a big crisis at the end of the great financial crisis. I'd have exposure to the Hill and Congress. I'd learned different risks. I had this whole categories of things I thought it would be good for. And I stood in front of the cafeteria and there were 22,000 people in the mortgage business. And the market had just crashed again in mortgages and they all knew half of them were probably going to get fired. And I stand up in St. Louis, Missouri with my accent having never worked in mortgages in my life before. And that was one of those moments that I was like, okay, you might have the job, but you have to earn the right to lead. And I thought, the only way I could get these people to follow me is if they feel I'm really in it with them. And I thought the only way I can persuade them is my son, who is 11, who was rather upset about being told to move from London to the States, as 11 year olds are. I explained to them that he had just come for the day. He had had his day at the new school he was going to and I explained he'd run around the baseball pitch the wrong way because he didn't know which way to run because he's used to cricket where you go backwards and forwards and I felt that would be the only way that that audience could say okay she is coming here if her kids are moving here she's going to be here and then we just always talk to them straight but those are some of the things of part of it is they'll trust you if they feel you're going to talk to them straight and you put yourself into their shoes. So how would I want to be communicated to? What would it be? And then get good people around you when you don't know anything. Just go and get people who know have that courage to have a team that is better than you are at any of their jobs and just lead them and help them be successful. So, those are the things that I learned how to I don't know if you ever earned the right to lead, but that was the way that you capture the hearts and minds of people.

Yeah. It's weird. The first day you become a CEO, I remember walking into my boss's office and you sit down in the chair and you suddenly feel the weight like there's a weight around you. And I see it from my friends who are CEOs when they stop and they just say the weight's lifted off because you are and many of you have probably run your own companies before this or will be shortly. You know if you're the CEO that defines who you are. You're no longer Jane. Even to friends and other people outside you are the role all the time. Even Friday night when you just want to go out and relax with your husband and have dinner and you know you are the role to everyone around. So that sense of responsibility is there and then I definitely felt it a bit more for being the first woman in the role. Just a sense of you just I just sat there you've got to try and get you've got to do the Taylor Swift shake it off. Because you're not going to do a good job if you're feeling that pressure and that element of I better be in the job for I better do a good job. It doesn't help but you definitely felt the responsibility. You know and you also think it made me more mindful about how I did things rather than just the what I was doing. And that I think everyone should probably feel when you're going to leadership positions because people will remember you for how you led or how you turned up much more than they'll remember you for whatever decision you made or you took. So I think that piece is important.

Yeah. I was lucky. I knew the company, so I knew the things I thought needed to get changed strategically. And so I started with it's going to sound you're all going to be like oh I started with the vision and said what is it the firm is going to be and define that around the client base we'd be but I and what were the different business that fit together where we had a competitive advantage and where there were synergies across them and I felt we could really scale and win and then get rid of everything else and the world had gone on very it was starting to get incredibly complex and we were running businesses that were both global in nature and incredibly local in nature and my view was I had to get out of everything that was locally defined. So I would only be in businesses that could have global platforms and then the last mile could be local. But that got us out of retail banking, branch-based banking, out of local credit card. We got out of all of those businesses. But I was always very motivated that you people will you will inspire people with where you run to, not just what you're getting out of. And so it was always mindful of defining what we would be. But the vision wasn't just enough. It was also what were the cultural changes we need to make. So one of the first things we did was a from to in terms of some of the culture and then putting that into the leadership principles that we use for how we recruit and evaluate people. And I ended up putting the time in and I had a pretty clear view of over a 5 to 10 year period where I'd imagine the org structure would go how we'd need to be re-engineering and changing the bank. So I had a pretty good sense of the journey and a lot of the decisions were then the timing when's often the toughest piece. So we I knew I had to sell everything before I could reorg. Once we'd reorged, I knew all the different pieces that we thought would fit together. So there a clear sense of who we were, but the most important bit was just it's that always have never make it a no vote. Always make it a yes vote, right? What it is is what is it that you want the firm to be, not what you want to fix because you will not inspire people with we're going to fix this, we're going to fix that. You will get incredible things out of people and they'll take the mountain for you if you lay out something that they get really excited by and you see that every single day in this part of the world but even in boring financial services that's true. And we're able to get a lot of talent to come and join because teams like some teams just love they love running into the fire, right? Some people are just made that way. And so, you know, if you can galvanize a team to run into the fire and do amazing things, they'll really they surprise themselves and it becomes infectious in an organization. And that can be true of a team, it can be true of a company.

Yeah. So you often find in companies you'll have multiple layers within the company and you know that just slows down communication. It slows down innovation and productivity. So we took out four layers in our company. One was the layer beneath me. And that then brought the management of the bank much closer to the actual business's day-to-day. And then we took out three layers in the middle of the organization which is often the trio or you know de l'echelle or whatever you want to call it that stops things inside a company. And if you're trying to get somewhere to be agile that's sort of stuck in there but we've always done it this way you need to put a lot of change through. So we changed through a huge number of people. 50,000 people in our bank had different managers in a three-month time period. But that's when you can then put new norms in, you know, get rid of more of the bureaucratic processes, get things to be agile, and then get people to suddenly believe they can innovate. And that's remarkably powerful because some of you will go and work in companies or your own companies which will be smaller and you don't have to worry about the legacy. Others of you will be in institutions where you know you're going to have legacy to deal with and you want to have your cake and eat it of what are the best strengths of that but then what are the areas that are really getting in the way and the we've always done it this way people getting comfortable. A lot of folk can be very complacent. The biggest thing is fire every a**hole in your company. Like because good people in a bad culture, you know, they'll go back to being good people again and fix the culture. But if an a**hole is always an a**hole and it's amazing how that just drains energy. So the people that just take energy away from the team, get them off the team. Help them find another opportunity. You don't need to be an a**hole about it. Right. So, you can help them get into something else, but get rid of them. And my favorite one on that was one of my friends who was at McKinsey with me, runs one of the big German insurers. And he'd said he'd done the same. He got rid of people who are draining energy on the board on his management team, two superstars, but they were there. And then he said, and I only see my mother once a month now rather than every weekend. And that's really helped my own emotional energy completely. So those are some of the things that make a difference.

Yeah. So, it was a bit like that story in mortgages where you're standing, you go to a site and you're going to tell everyone that the site is going to get shut down. And you put yourself and say, "Okay, I'm a member of that site. How do I want that to be communicated? I want to be told straight. I want to be told it clearly upfront. And then I want you to tell me what are you doing for me?" So it's empathy for me is putting yourself in the other person's shoes and understanding their position. I don't know how you sell a thing to a client if you don't put yourself in their shoes and don't if you're sitting there saying, "What is it I need to sell? What is it I want to sell to them?" as opposed to what do they need? And if you go into the okay, what do they need? you unlock a whole range of things that you would never do if you were just pushing your own agenda or pushing your own pieces to it. So to me, empathy is about understanding needs of your employee base, of your customers, you know, of someone. We had an activist shareholder in our stock and I remember my coach telling me how to deal with them with empathy and I had a very rude response to that one. And they said, "No, but understand..."

The pressure they're under and then you'll be able to if you can solve for them, they'll get out of you. And he was absolutely right. And I wouldn't quite call that empathy in the sort of traditional form. But when I did put myself into, okay, what are the things that these guys are embarrassed about that, you know, they're looking, they're not looking good to the outside world and what's a successful offramp here. That's when we had a breakthrough. So that's where I think empathy gives you a competitive edge because there's far too many people that don't try and understand the other perspective. And then just not being a jerk to people. And Warren Buffett, who was in our stock for a while, he had two pieces of advice he gave me which I'll pass on. He said, you can always call them tomorrow. Really good piece of advice. So, never in anger. Respond to that email or other pieces. And then he said, 'Criticize by category, praise by name.' And that's also another really good piece of advice. Because you're always going to regret if you criticize someone by name, it's going to come back and bite you. So those are different elements of empathy. Not the empathy is not being nice. But it's just being thoughtful about the other side of the table.

That is my team's gullible.