Watching the Rockettes dancing in sync to foot-stomping music this weekend was a good reminder that team work requires attention and commitment. My guess is that these ladies can't miss a step and expect to stay employed for too long. It's amazing to see such synchronized movements, one leg kick after another.
Teamwork is important elsewhere too, notably in managing institutional money pools. Healthy deliberations can promote a thorough vetting of important decisions such as what asset manager to hire or whether to embark on a new strategy. In contrast, repeated squabbles and misunderstandings about core objectives can be disruptive and expensive.
Exits of key persons at the San Diego County Employee Retirement Association illustrate what happens when teams don't run smoothly. According to "San Diego County pension fund suffers new shock" by Arleen Jacobius (Pensions & Investments, March 23, 2015), this $10+ billion pension plan is keeping recruiters busy with searches for a Chief Investment Officer ("CIO"), Chief Financial Officer ("CFO"), General Counsel and now a permanent Chief Executive Officer ("CEO"), following the resignation of Mr. Brian White. As readers may recall, this public pension plan has been in the news for a derivatives-based strategy that some felt was too risky. In "San Diego Pension Dials Up the Risk to Combat a Shortfall" (August 13, 2014), Wall Street Journal reporter Dan Fitzpatrick referred to its "new approach" as "comparatively complex at a time when some big pension plans are moving in the opposite direction. See "Decision Making When You Don't Like Your Colleagues" (Pension Risk Matters, September 9, 2014) for further commentary.
On March 9, 2015, the not-for-profit organization, the Greenwich Roundtable, tackled the issue of investment committee dynamics with the release of a 60-page white paper. Contributors to "Best Governance Practices for Investment Committees" address items to consider for implementation as well as those to avoid. At the top of the list of recommendations is an urging to crystallize long-term organizational objectives and identify "unique needs." Establishing a "target for investment success that is both realistic and consistent" with fund resources is likewise mentioned. Both make sense.
An institutional investment committee needs to decide where it must go in order to create a road map process. Acknowledging that the end game could change as new circumstances arise is another factor. Setting up an actionable plan to assess how "success" will be determined is paramount. Without such, it is difficult at best to benchmark any or all decisions made by members of the investment committee.
The Rockettes may not be everyone's cup of tea when it comes to entertainment. Nevertheless their efforts in working together to deliver a seamless outcome provide a good example to follow.