Keeping up with the Joneses

As financial services across the globe feel the squeeze, Edward Jones continues to flourish. Ken Dude explains that growth is intrinsically linked to the firm's people.

Edward Jones has been a regular fixture in Fortune's list for years

“I think one of the core values of the firm is respecting all individuals and the contributions that they make”
-Ken Dude of Edward Jones

At a time when most involved with the financial industry are worrying about shrinking pay packets and disappearing jobs, brokerage firm Edward Jones seems in excellent health. Last year it awarded 70% of its head office staff a chunky 6.5% pay rise. It also jumped in Fortune's annual Best Places to Work List from a respectable number 29 to a stellar number four. But any suggestion that this rise in the rankings is a result of cold, hard cash is given short shrift by Ken Dude. "Our home office represents less than 20% of our associates," he says when we catch up with him at the firm's St. Louis headquarters. "So that pay raise only affected 70% of one fifth of our total staff. It's a small number compared to our whole population of associates. And all of the associates are surveyed randomly for the Fortune process."

In fairness, the idea that Edward Jones' popularity as a place to work hinged on one little pay rise was never going to fly. The firm has been a regular fixture in Fortune's list for years, even grabbing the top spot in both 2002 and 2003. In addition, the company has picked up plaudits as an employer from a huge range of sources in the US, Canada and the UK. Asked to identify exactly what it is that makes Edward Jones special, Dude responds without hesitation. "I think one of the core values of the firm is respecting all individuals and the contributions that they make," he says. "Another would be a real focus on working in partnership with each other. It's a very collaborative environment with a lot of respect for the work that each individual does. It also helps that we are a private firm and more than 10,000 of our associates are owners of that firm."

Dude is in no doubt that culture is of vital importance in the firm's success and a great deal of effort is made to ensure that only those prospects who correspond with it are brought on board. "We have a strong culture at Edward Jones," he says. "During the interview process, it is essential to have that interviewee talk with more than a single person. You have to have multiple senior interviewers speak to that candidate and examine them for their fit with our culture as much as for their functional expertise."

That's all well and good during the interview process. But with something like 10,000 offices spread out across vast distances, how is it possible to build and maintain a consistent culture? "We keep the culture of the firm alive through geographically organized regions of between 50 and 70 offices," Dude explains. "People feel much more a part of a smaller region than they would if we had all 10,000 offices responsible simply to the headquarters. Instead of being one part of 10,000, they're one part out of the 70 offices in their region."

One of the biggest change agents in HR over recent years is the increased influence of technology. Dude tells us about the annual benefits period from his early years with the company. Forms were physically mailed to all associates and carbon copies were than sent back by return of post. It all sounds ridiculously arcane now, but this was happening only just over a decade ago. It's a stark example of how things have moved on. Nowadays, Edward Jones avails itself of the full range of HR technologies, the better to manage everything from its recruitment processes to succession planning. "We receive over 250,000 applications and inquiries for employment each year," says Dude. "The only way we can handle that volume effectively and efficiently is through automation. Applicant tracking and succession planning systems make sure we understand our people. It used to be that we knew everyone in the firm, but as we have grown, this automation and these systems help us keep an understanding of all of our associates."

While the human side of the recruitment process still remains vital, the improvements in efficiency brought by IT cannot be underestimated. Technology enables a huge volume of applicants to be automatically whittled down to a much more manageable number. So while all hires are made person to person, only prospects who look like a good fit for the company get as far as that stage.

The ability to deal with much larger amounts of data also impacts on Edward Jones' internal succession planning. "It comes down to having a system that allows us to keep track of associates and leaders with potential for more responsibility in an organized fashion," says Dude. "When we were a much smaller firm, you could keep a notebook of people that you met and thought had potential. As we've grown to the size we are today into the geographic distribution we are, we need an organized method to keep track of those folks." While this technology is no substitute for a good understanding of the firm's people and regular review meetings with its talent, it does turn a potentially insurmountable problem into something more manageable.

Returning to the carbon copied forms that he had to deal with in the early days, Dude illustrates how streamlining these processes has enabled HR to become an increasingly valuable partner to the business. "Automation has reduced the workload and the time spent on those transactional activities," he says. "It allows HR to now focus on these more strategic initiatives around talent."

But despite the function's increased sophistication and importance, common concern is that in the current economic downturn, HR could quickly become a target for cost cutting. Though he acknowledges the seriousness of the situation, Dude remains confident that his firm will be largely insulated from such pressures. "We're very fortunate in that Edward Jones is a partnership, and we may not have those quarterly pressures to report earnings," he explains. "That allows us to treat all of our talent acquisition and training expenses as an investment, to think of them as an investment into the firm and to continue our growth during slower periods of economic times."

In a financial industry that is shedding jobs at an alarming rate, this puts Edward Jones at a significant advantage. However bad things are now, the cyclical nature of business makes it reasonable to assume that things will get better at some point. While their competitors are letting people go, Edward Jones can continue to build for the future. "As we're able to maintain our employment and maintain our growth, we know that eventually a good time will come around the corner," Dude explains. "And when that next good time that comes, our workforce is fully staffed and prepared and trained. Companies that have gone through those cuts, their first course of action will be to go back and rehire people to fill the jobs that they had." 

More than just getting a jump on the competition, there are even opportunities to be exploited while the crisis rolls on. "I think the current markets provide opportunity to hire the right people," explains Dude. "The folks still need to fit the culture of our firm, but we've been able to bring in good people with experience in the industry to support new products and services here. That opportunity is increased at this time because of the uncertainty."

The difficult times also have big implications in the war for talent. After nearly decade of intense competition for the best people, we could suddenly see an influx a quality candidates into the job market. Dude agrees that the next few years could see some major changes, but suggests that this new environment could bring challenges of its own. "What's going to occur is that people will become more free agents and will be looking out for themselves rather than having the commitment that they used to have to a firm," he says. "So I think the war for talent is going to be to not only attract people but to retain people and to work with them over a career."

It is here that the Edward Jones culture and the firm's reputation as a good place to work will be absolutely crucial. Asked about the defining element of that culture, Dude quickly identifies one concept as absolutely key. "I believe that what keeps our associates with us is our respect for people," he states. "We have an open communication with the leadership of the firm which is very clear about the firm's goals, its performance and its plans for the future. I think that open communication and respect for all associates is what really draws people here."

With this respect come certain expectations, in the form of what Dude describes as 'responsibility-based management.' "We believe that the people who know best what work needs to be done are the people doing it," he explains. "We place a lot of accountability on people, but we also give them responsibility for their own work. They have the ability to get the work accomplished in the way they see best."

It's a concept that has been gaining traction over recent years, an attitude that says 'we don't care how you get the job done, just get it done the best way you can.' "I believe the balance is shifting more towards having to have that freedom in your associates and giving them the responsibility," Dude confirms. "As we move away from the old command and control environments, associates are now more on their own than ever before with the knowledge workers. We need to give them the resources and the support that they need to accomplish their job." With the recent failings in so many sectors of the financial industry, the longevity of such a liberal management model remains to be seen. For now at least, Edward Jones seems content to place its trust in its people, viewing it as a vital element in keeping them engaged. 

"We're an organization that's all about relationships between financial advisors and our clients," Dude continues. "If you're going to have successful relationships, they need to evolve over time. Therefore you need to retain your associates to develop those relationships. If you're constantly turning people over because they're not engaged, they're not happy, you're simply not going to develop those client relationships."

And make no mistake, the Edward Jones philosophy is build these relationships and buck the market's general downward trend. Hitting an ambitious target of 10% annual growth is no certainty even in the best of times, so doing it now will require some very hard work. Dude explains that nurturing the firm's people will absolutely essential to these goals. "We'll continue to focus on leadership development," he says. "As we grow we're going to need more leaders. We have a desire to promote from within, so we need to develop those people. On the inclusion and diversity initiatives, we need to make greater efforts in the next few years to include a greater diversity of associates. And as we bring them into the workforce we now need to move them through our leadership ranks." 

The feminine touch

Dude: Roughly 65% of our workforce is made up of women but only about 18% of our financial advisers are female. That's something we're working to change. Historically, financial services have not had a high representation of women, so we're starting at a low point. But what we've done this year is to organize role models, women role models that have proven success in our industry. We've identified them for geographic areas and have committed resources to recruiting more females into the financial advisor capacity. We're also working to retain the trainees that we do hire as this is a difficult industry to start in. We now have committed resources to support those new trainees that are female. We're also looking to increase the leadership development of our female financial advisors and the development opportunities that are available to them. So far, this year, we've increased our hiring of female FA's to more than 25% of our hires. 

About the company

1922 - Company established by Edward D. Jones Sr. in St. Louis
1941 - The firm is restructured to comply with New York Stock exchange requirements
1955 - First branch office opens in Mexico, Missouri
1974 - Partnership is expanded to give an opportunity for those who work at the firm to share in its ownership
1986 - 1000^th office is opened in Stoughton, Wisconsin
1994 - Edward Jones Canada begins operations
1997 - Edward Jones Limited opens with operations in Canary Warf
2002 - Firm tops Fortune's 100 "Best Companies to Work For" list, a feat it would repeat in 2003
2007 - Ranked as a top company for training associates in Training magazine for the
           seventh consecutive year
2008 - 10,000 branch office opened in Southington, CT