Listen to this article
Rick Waddell never intended to be a banker. He wanted to be a lawyer, but as he neared graduation he realised that an extra three years of schooling to practise law was not for him. He wanted to strike out on his own.
“In 1975 it wasn’t a great economy,” he says, but “banks were hiring”. Though he had no interest in the profession, he thought “banking would enable me to see different industries, so that if I wanted to pursue something in manufacturing or in retail or a service business [I could]”.
The second of five children of an insurance agent and a homemaker in Pittsburgh, Waddell graduated from Dartmouth College and received two job offers. “I like to think that was more a function of the bad economy than my résumé or interviewing skills, but I had an offer from Northern Trust and I had an offer from a bank in Newark, New Jersey, which doesn’t exist anymore.”
Waddell, now 62 years old, took the job at Northern Trust, the US financial services company, on graduation and never left. He followed the traditional route to his job as chief executive of the firm, which has $887bn in assets under management and $6tn under custody: he climbed the corporate ladder.
“I’ve loved my entire 40-year career here — I’ve had 14 different jobs by my count at the bank, including the one I have now,” he says.
But soon after he joined, the political science major realised he needed to round out his banking skills. “I really didn’t have any accounting, business or economics background.”
He was tired of the academic calendar, so a full-time MBA was out of the question — and anyway “I couldn’t afford it”. But at the time the bank paid employees’ part-time MBA tuition, so he signed up for night classes at Northwestern University’s Kellogg School of Management in Evanston, near Chicago.
The part-time course perfectly complemented his day job. “The things I was learning during the day, I could actually talk about and relate at night and the things I was learning at night, getting my MBA — around operations and finance and marketing — I could see in action during the day.”
The MBA did not lead directly to a promotion, as is sometimes the case today. “I’m not even sure I got any more money,” Waddell says. “I think it matured me, that experience of meeting other people from different companies . . . I think it was helpful in me developing as a leader here.”
Waddell’s biggest regret is that he did not forge a stronger network of fellow students during his Kellogg days. But, he says, “my focus was on my job”.
He is, in fact, more involved in Kellogg today than he ever was as a student. He is a member of the school’s advisory board and worked on its $350m fundraising campaign for the 415,000 sq ft glass-and-steel lakefront building scheduled to be completed late next year.
He also teaches a few classes each year, delivering lectures on his experience at Northern Trust. The students are “mostly interested in what it takes to be a leader”.
But leadership has changed drastically over the course of Waddell’s career, he says. Companies used to have a “very strong focus on hierarchical leadership, meaning top-down, CEO, the boss knows all the answers . . . and knows basically everything about where the company is going.”
But “the world is a much more complex place than it was 40 years ago; it’s much more global,” he says. “The technology, the regulatory [framework], the client market dynamics have changed significantly, and a guy like me doesn’t have all the answers, okay? So I think what leaders need today is to learn how to lead teams, to learn how to be a participant in a team.
“When I came here it was like you never questioned somebody up above — now I want people questioning me. I want people pushing back. I want people to say, ‘Rick, have you thought about this?’”
Being able to rely on the expertise of others was handy in his first year as chief executive, as the financial crisis reached its peak. “Seeing how quickly everything was unravelling, that was scary,” he says. “I’m eight, nine months into the job and I’m thinking oh my gosh, we just saw Bear Stearns go down, we saw Wachovia go down, we saw Merrill Lynch go down . . . the thing that was primary to me in facing that challenge was the management team that I inherited.
“I remember a lot of consultants and investment bankers when I was named CEO . . . advising me to shake the organisation up and get rid of some people,” he says. “I didn’t do any of that and I’m glad I didn’t because . . . to face that challenge, having yourself surrounded by people who could advise you, give you perspective, it was very, very important.”
As chair of the Financial Services Roundtable, a lobbying and advocacy organisation, Waddell knows that the industry’s reputation “has clearly been damaged, and to some extent rightly so, because there were some bad things that were done by the financial services industry leading up to the crisis”.
The regulatory response, he says, “has been shock and awe, honestly”. “Some of it [is] much-needed and good regulatory reform, but other parts of it I think — my own personal opinion — the pendulum has swung too far and will have a dampening effect on the economy for many, many years.”
Though rarely in the headlines, in 2009 Northern Trust became a symbol of the excesses of the financial services industry when it threw a series of lavish parties at its annual golf tournament in Los Angeles. Gossip website TMZ published videos of guests dancing to live shows by Sheryl Crow and the band Chicago, months after the bank accepted $1.58bn from the US government’s troubled asset relief programme (Tarp).
Then-senator John Kerry called it an “idiotic abuse of taxpayer money”. The bank paid back its Tarp money a few months later, along with a $133m return. Waddell commented later that year that the outrage “might have been a bit misplaced”, but conceded the bank “clearly misjudged the political environment”. He admitted that the scandal, “along with all the other incidents” had been detrimental to public perception of the banks.
But he says the industry’s reputation is now improving, despite the fact that rarely a week goes by without one of his peers reaching some sort of settlement with the Department of Justice or paying a penalty.
“I’ve been a little surprised that with all these fines we haven’t seen even more backlash,” he says.
While Northern Trust is “not perfect”, it tries to “do the right thing”, he says, and its values align with his own views.
“I’m a Christian. I believe in doing the right thing and that value that the bank stands on, which we call ‘integrity’, has really resonated for me,” he says. “It’s hard for me . . . to imagine working for a company where you’re always in the news with a fine or a regulatory problem.”
Waddell is no evangelist. He says he is not a weekly churchgoer and stresses that Northern Trust is an inclusive company even if he makes no bones about his faith guiding his work.
In 2003, Waddell was tapped to lead Northern Trust’s corporate and institutional services unit. It was a “very, very big job” and the first major step towards his appointment as chief executive five years later.
A colleague advised Waddell to use his first staff meeting to introduce himself to his new charges before he launched into his strategy for what is a bedrock unit of the 127-year-old financial institution.
“I thought about that and I said, ‘Well, who am I?’” says Waddell. He stood before the crowd and said, “I just want you to know what my priorities are: number one is my faith, number two is my family, number three are my friends and number four is the Northern Trust. So that’s who I am.”
Reflecting on this, he adds a fifth priority to the list: “Then golf . . . golf is very important to me.”