Frederick Waddell '79
Northern Trust president knows the upside of the upside-down org chart
By Matt Golosinski
There are 3.4 million chances to blow it or else get it right. That's the average number of transactions that Northern Trust Corp. tellers conduct each year, according to the bank's president and CEO Frederick Waddell '79.
As a result, service is at the top of the venerable company's agenda.
"The fundamental values that we founded the company on are service, expertise and integrity," says the graduate of the Kellogg School's Part-Time MBA Program. "This is what we talk about, what we look for and how we hire and develop our people."
Service is so important, in fact, that Waddell, 55, has taken the advice of a former mentor and figuratively flipped the organizational chart at Northern Trust as a way of reminding its leadership that the employees on the front line — those directly interacting with clients each day — occupy positions of real power. They're the ones, after all, who are the company's most public face. Top brass needs to support those partners, says Waddell, by following the tenets of "servant leadership," a model taught at the Kellogg School for decades.
"Our role as leaders is to make sure our people are getting the right resources, getting the coaching, mentoring and strategic direction that they need to be successful," Waddell says. Such development is all-important for a company like Northern Trust, which is founded on long-term relationships rather than one-time transactions. "We're in the generational wealth management business, so we have to take a long view of our clients."
Founded in 1889 as a Chicago-based bank, Northern Trust gradually grew, expanding first throughout Illinois then the Midwest. By the time Waddell joined the company in 1975, Northern was aspiring to be a national bank. Today, he says, it is "on the cusp of becoming a global firm," with $4 trillion in assets under custody, $757 billion in assets under management, and nearly 11,000 employees in 85 offices throughout the U.S. and 13 other countries. Waddell assumed his current role in January, after serving as chief operating officer the previous year under then-CEO and fellow Kellogg graduate William Osborn '73, who remains the firm's chairman.
For more than a century, the bank has been headquartered in Chicago's Loop in a five-story granite building known as "the Gray Lady of LaSalle Street." This rock-solid edifice is symbolic of the trust that is essential for financial institutions and that has enabled Northern to thrive.
"Integrity is critical to us," says Waddell, noting that the company began as a trust and today is a leading provider of investment management, asset and fund administration, and fiduciary and banking solutions for institutions and affluent individuals. "Our reputation for service and integrity is only as good as our word. We always put the client interest above our own. That fiduciary heritage is really part of Northern's DNA."
This service mentality extends outside the company too, he says: Northern Trust targets 1.5 percent of its pre-tax profits to support the communities in which the bank operates. Waddell says this strategy is both the right thing to do and good business practice.
"We want to give back to the community," he says, indicating a range of social service, education and arts and cultural programs the bank supports. "Many of the individuals who work with these not-for-profits and cultural institutions are corporate leaders and potential clients of ours."
In addition to his service and philanthropy to the Kellogg School, where he has shared his insights with students, Waddell contributes his leadership to several boards, including The Art Institute of Chicago and the Kohl Children's Museum. As chairman of the latter organization, he was instrumental in helping raise $23 million for a new facility.
"I have a real passion for advancing early childhood education," he says. "There's real learning going on in this museum, hands-on, interactive play that allows young children to benefit at a critical time of development." Waddell also notes that the revamped museum has doubled its annual visitors from 200,000 to 400,000.
Understanding and contributing to local communities is something Northern Trust is doing on a global scale now too. In 2006, for example, the bank opened a processing center in Bangalore, India. To engage the area's stakeholders, Northern Trust invited to the grand opening not merely the new employees, but their parents too. The gesture was important in a country where family often plays a profound part in the lives of even young adults, says Kellogg School Dean Dipak C. Jain, a native of India and a Northern Trust board member who attended the ceremony.
Jain calls Waddell "an icon in the Chicago business community and a true leader."
Waddell says his relationship with the Kellogg School has been "inexorably intertwined" with his professional life. He recalls working at the bank all day, then stopping home to eat and change his clothes before heading to class. The collaborative experience of the Kellogg MBA program remains with him today.
"There was always something in my Kellogg courses that I could, literally, the next day apply in my day job," Waddell says. "Those connections between my job and my Kellogg studies are very, very powerful for me."
This article originally appeared in the Spring 2008 issue of Kellogg World alumni magazine.