Getting fired isn’t always a bad thing. Just ask shareholders of Vanguard Group.
Founder John Bogle launched the first retail index mutual fund in 1975, a year after being ousted — for engineering a merger that ultimately failed — from his role as president of Wellington Management Co., a Boston-based asset manager that today is a subadviser for some Vanguard funds.
Driven by an entrenched thriftiness he developed early in life, Bogle started a company specializing in index funds that was owned by shareholders and provided services at cost. Over the years, Vanguard developed an ethos, still strong today, that fosters teamwork, regarding success as collective rather than individual and valuing employees. Vanguard has never had layoffs, something virtually unheard of in the asset management industry, especially during the recent crisis.
“We have such strong Kool-Aid that if you didn’t like the flavor, you wouldn’t stick around,” says CIO George Sauter.
Managing director of planning and development Mike Miller experienced this tight-knit community culture firsthand in November 2008, when his son Matt, now 21, was hit by a car and critically injured while training for a triathlon by biking through the Blue Ridge Mountains near the University of Virginia, in Charlottesville, where he was a premed student.
The morning after the accident, Vanguard chairman Jack Brennan called Miller at the Charlottesville hospital. “I don’t know where to go,” Brennan said. The chairman, who Miller had thought was just calling to check on the status of his son, was actually down in the lobby and needed directions to Matt’s room. Two days later three more visitors arrived: CEO Bill McNabb; Chris McIsaac, head of institutional asset management at the time; and Tim Buckley, head of retail. “This place is family,” Miller tells Institutional Investor. Matt survived his injuries, and after multiple reconstructive surgeries and with the support of family and friends, he took his finals, earning a 4.0 grade point average.
Bogle, now 80, is an outspoken critic of the mutual fund industry, using the bully pulpit of his Bogle Financial Markets Research Center, housed at Vanguard, to berate the leadership of other companies for their high fees and lack of stewardship. He doesn’t spare the firm he founded, either. “Vanguard is a much bigger place than it once was,” Bogle explains. “It’s a challenge to keep that [employee- and investor-friendly] culture intact.”
See related article, " Vanguard CEO Bill McNabb Is Calm Under Fire”.
