Unique benefits from a unique company

Throughout the last month at Fidelity Investments, one differentiating factor that seems to set Fidelity apart from many other financial services companies is the way that they treat their employees. All employees at Fidelity, from intern to senior executive, are treated with a high degree of respect. Based on what I have observed it seems that Fidelity is relying on many of the principles Messick (2005) discusses in his theory of leader-follower exchanger. Messick (2005) argues that leaders and follower engage in a social psychological contract in which each party provides the other with certain incentives that explains why people are both motivated to lead and to follow. Messick (2005) argues that leaders provide followers vision, direction, protection, achievement, inclusion, and pride. In return, followers provide leaders with focus, loyalty, commitment to the common goal, cooperation, respect, and obedience.

From my observations during my time at Fidelity, Fidelity leaders capitalize on this exchange to get the most out of their employees. For instance, a large part of Abby Johnson, the Fidelity Chairman and CEO, job is to set the vision and direction for the company. Last Friday morning, all 44,000 Fidelity employees received an email with a video message from Abby detailing her mid-year update and ways in which Fidelity has made progress towards their goals. This helps to make Fidelity employees (the followers) feel included and valued in the decision-making process. Furthermore, Fidelity offers financial incentives to employees once they reach a certain level to make them feel included. Many companies offer employees company stock to both reward and engage them in the company’s mission. However, since Fidelity is a privately held limited liability corporation, none of the shares are public and on the open market. Roughly half of the shares are held by the Johnson family and the other half are held by employees. They are known as “Chairman’s shares” and employees are given the opportunity to hold them for several years before the vest, at which point the shares are returned to the company. Fidelity is also known for their annual Christmas party, held each year in downtown Boston in which little expense is spared. At a time when many companies are cutting down on expenses such as holiday parties, Fidelity continues to throw them to value and include their employees in the company.

In return, the employees show strong evidence of focus and self-direction as they all embrace the values and culture. Very few, if any, people complain about working at Fidelity and all seem to be committed to their work and to the company. This can be clearly seen in the longevity of the company, with many employees spending upwards of twenty or thirty years at Fidelity. Some of my coworkers who have worked at other financial services companies said that they were shocked by how well Fidelity treats their employees relative to the companies they came from. All employees are genuinely willing to do what is best for the company. For example, some of the members of my team volunteered to spend their weekend helping to test a new product that is scheduled to be introduced in the coming weeks.

One of the aspects of Messick’s (2005) theory that Fidelity best exemplifies is their sense of integrity. All leaders at Fidelity have maintained incredible levels of ethical behavior, and the company goes out of their way to avoid any wrongdoing. Last week I was in a meeting where people were discussing how they cannot use photos of celebrities or real names in creating fake profiles of customers using their products. Even though most people may recognize that the name “Ronald McDonald” is an illusion to the restaurant, there are actual people with that name, and as such, the company avoids using it to prevent a potential lawsuit. Of course, the chances of such a lawsuit being filed are very slim, but still, the company wants to work hard to maintain a sense of integrity and ethicality. This type of behavior comes directly from the top, as the Johnson family is known to donate generously to different causes, under the one condition that they gift be made anonymously.

However, there are some areas where Messick’s (2005) theory of leader follower exchange seems to fall short of describing behavior I have witnessed at Fidelity. For instance, Messick (2005) argues that the leader must primarily focus on the interests of the group which can at times be complicated. At Fidelity, like many companies, they have to balance the need for satisfying customers with satisfying employees. At the end of the day, none of the employees would exist without customers, but the customers would also not be satisfied without the work done by employees. This creates a more complex situation than Messick (2005) alludes to, that may better be explained by Heiftez’z (1994) theory of adaptive work. Fidelity navigates this complexity better than other companies since they are not publicly traded with no shareholders to answer to, thus eliminating some of their external pressure. As such, they can pay excess profits as a bonus to employees as opposed to paying shareholders a dividend, allowing them to maintain their unique culture that provides clear benefits to both followers and leaders.