The first sign that there’s something unusual about SEI Investments is its headquarters in Oaks, Pennsylvania, 30 minutes west of Philadelphia. On the outside, the five-building complex looks like a Playskool version of a commercial farm. On the inside, it feels more like a beehive. All the furniture is on wheels, so employees can create their own work areas. Colorful cables (“pythons”) spiral down from 25-foot-high ceilings. They carry electricity, a dial tone, and Internet access – instant connectivity. So many people here move their desks so often that SEI has created software to map every employee’s location.
“The buildings are a visual statement of who we are,” says Al West, 55, SEI’s chairman and CEO. “When you walk through here, you intuitively grasp 60% of our culture.”
That culture is a striking contrast to the starched-shirt world – financial services – in which West and his colleagues compete. SEI manages or acts as administrator for $121 billion in assets, almost all of which are in mutual funds. It handles back-office operations for the trust departments at 85 of the top 200 U.S. banks. It runs an investment-advisory service for wealthy individuals.
Yet the company exudes a sense of bottom-up informality. The Oaks campus has no walls and no secretaries. And forget the org chart – the defining unit of operation at SEI is the team. Work is distributed among roughly 140 self-managed teams. Some are permanent, designed to serve big customers or important markets. But many are temporary: People come together to solve a problem and disband when their work is done.
The result is a workplace that’s always on the move. “We call it fluid leadership,” says West. “People figure out what they’re good at, and that shapes what their roles are. There’s not just one leader. Different people lead during different parts of the process.”
SEI is on the move in the marketplace as well. Revenues in 1997 were nearly $300 million – up 30% from three years ago. Profits have grown even faster. This year, SEI shares have traded as high as $54, up from a low of $18 in 1997. The company’s market value is approaching $1 billion.
It wasn’t always this way. Alfred P. West Jr. founded Simulated Environments Inc. in 1968. Its first product was a computer-based simulation to train loan officers. The company quickly launched a range of outsourcing services for the financial industry. But even as SEI’s business was growing, its business model was stagnating. The company was indistinguishable from other players in its industry. “Our divisions competed with each other more than they did with competitors,” says West, an earthy native of Brooksville, Florida. “We were getting in our own way.”
Then, in January 1990, West broke his leg in a skiing accident. He spent three months out of the office and used the time to think about the future. His conclusion: The company had to speed up its reaction time, innovate more quickly, get closer to its customers. And those changes demanded a reinvention. So the CEO returned to work and took a wrecking ball to the corporate pyramid. Two of SEI’s three division heads quit; the third was fired. “We disenfranchised the upper-level people and enfranchised the lower-level people,” West says. Next he eliminated SEI’s phalanx of secretaries and told his managers to do their own typing, faxing, and travel planning. “That really broke the back of the old culture,” he says.
SEI Investments moved into its new headquarters in late 1996. “The buildings are the capstone of the cultural change,” West says. To reinforce this final break with the past, SEI declared that each employee could bring only two boxes of possessions to the Oaks campus. And there were no prearranged offices or floor plans. It was up to the teams to arrange things as they saw fit.
And to keep rearranging them. Earlier this year, SEI’s investment sales and services group moved 100 desks in two hours. Henry Greer, 59, SEI’s president and chief operating officer, describes the culture change this way: “We wanted to throw away any structure that would impede us from doing what was right for the business.” Jeffrey Scherer, 49, a principal at Meyer, Scherer & Rockcastle Ltd., the Minneapolis firm that designed the Oaks campus, puts it even more simply: “Every day, it’s a new place.”
Perhaps the first rule of teamwork at SEI is that there are remarkably few rules. Teams have as few as 2 members or as many as 30. Different teams are structured differently. Most employees belong to one “base team” and to three or four ad-hoc teams. These ad-hoc teams are what give SEI its sense of perpetual motion – and for new arrivals, they take some getting used to.
The biggest difference between SEI and traditional companies has to do with the nature of power. The only power here is the power of persuasion. No bureaucracy provides resources, no hierarchy issues commands. Your ability to get things done is a function of your ability to persuade colleagues to support you.
Bob Aller, 40, a team leader in the investor-strategy group, says that life here is a world apart from life at Proctor & Gamble, where he worked as a brand manager before joining SEI: “At P&G, the hard part was getting an idea approved. But once you got approval, the resources of the company fell behind you. Here, getting approval is the easy part. The hard part is marshaling the resources. You have to convince people to get involved.”
So team leaders at SEI have to be first-class recruiters. “It’s up to the recruiter to describe the project in a strategic and enthusiastic way,” says Rob Prucnal, 41, a marketing team leader in the asset- management group. “But it’s a soft sell. You want people to say, ‘That’s a team I’d like to be on. It could benefit from my insight.'”
The recruiting challenge applies outside the company as well as inside. SEI has no centralized HR department. Team leaders work with placement agencies to attract applicants. “The biggest hiring criterion is cultural fit,” says Dave McLaughlin, 35, a former Navy pilot who runs a team that sells SEI’s services to community banks. “Are they confident about their ideas? Are they articulate? Do they respect others and have a drive to succeed?”
Richard Lieb, 50, a former Marine major, joined SEI in 1976 and is now president of investment systems and services. He offers one important corrective to this talk of persuasion and participation. “This team stuff comes across as New Age mumbo jumbo,” he says. “It’s not. We hit our numbers.”
The numbers that matter most to Lieb and his colleagues are EPS and AUM: earnings per share and assets under management. SEI establishes corporate-level targets for both figures and translates the targets into goals for the teams. “Our goals are parsed out to the business units, and they figure out what they have to do to hit them,” says Greer. “The unit heads, in turn, survey their teams and ask, ‘What can we do to hit that?’ Since they’re closest to the client, the teams know what they can do to move the ball forward.”
People at SEI all act as if they’re in charge, because everyone has goals to hit. “I step in when a team needs tools to be productive,” says Bob Aller. “Otherwise, I don’t have to interfere.” Concentrating on a few all-important targets shapes life at the top as well in the trenches. “I don’t worry about reports from my teams,” says Carmen Romeo, 54, president of SEI’s investment-advisory group. “I don’t care how many vacation days people take. I worry about one thing – assets under management.”
The same goes for CEO Al West. “This style of leadership is better for me,” he says. “I lead where I figure it really matters, and I let other people lead where it matters to them. The result is that my top managers are 10 times better as businesspeople than they were a few years ago. And my job is a lot more fun.”
Scott Kirsner email@example.com writes on business and technology from Boston. He contributes regularly to Fast Company.