Name: Jane Fraser on leading in a new era of business
Uploaded: 2023-06-22
Duration: 20 min 58 s
Description: Fortune CEO Alan Murray sits down with the head of one of the Citigroup to discuss the economy, leadership, and the way ahead.

Fortune CEO Alan Murray sits down with the head of one of the Citigroup to discuss the economy, leadership, and the way ahead.

Jane Fraser on leading in a new era of business

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Thanks so much and again, thank you all for coming. We have a lot to talk about uh Jane. Thank you so much for agreeing to be the uh fire starter for our conversations tonight. So many things, anything for free dinner, it was a good dinner, it was a fabulous dinner. Um We, we, as I said earlier, we have so much to talk about the economy, inflation, the ge geo geopolitics, us, politics. Uh uh But I really wanna start with the most important topic, the one that really divides us and that is the return to the office. Now, there, there are a couple of bankers here in New York who have been quite vocal uh in demanding everyone back to the office full time, but you've been much more laid back about it, more embracing of hybrid work. How's that working for you? Uh It depends what business you're in. So if you're in an apprenticeship business, we're encouraging people to be in. Um because that the value I think many of us have all grown up the hard way. We're just sitting next to somebody who is teaching you how to do this and you can't really do that over zoom. But then we also have a huge number of folk who, um, they have a different circumstance. They're not a trader, they're non investment banker. Um, they're an environment which is more challenging frankly. Um And we find that their productivity is pretty good if they're coming in a couple of days a week, they still feel a sense of belonging to the institution, but they don't necessarily need to be, um, doing that commute. And it's particularly important for some of the women as well. And when we look at, you know, the, the core States in America, rather than those of us that have the privilege to be in New York City. Um, you know, they, they really value the ability to work from home. So on average, how many days a week, um for our people coming in around the world varies very much around the world, but on average people are in three and they're coming and they're coming in. Just Tuesday is a pretty big day, Tuesday and Wednesday are, obviously we have just, just a quick show of hands. I mean, it amazes me by the way, the intensity of the debate between the two day crowd and the three day crowd. But, but a quick show of hands if you're three and up and two and less. Wow, that's a pretty, uh, pretty even divide. Do you think that will shift over time? Are you shifting over time. Yeah, we, we certainly shifted for those. Say, we look at the, why, um, why, why do you get the value of being in? So if someone's not performing well, then we're saying you're coming in, you're getting coached, you're going to be there until you're performing more strongly again. And then you can go back and if someone doesn't want to do that, we have a different conversation and say, ok, this is probably not. Are those conversations happen? Um I must say for the um, there were quite a few of the younger investment bankers who last summer thought it was a five day a week in the Hamptons. When the wallet, the investment banking wallet collapsed and they worked out that they need to be in front of their bosses for visibility and for development and other pieces. They'd be more enthusiastic and then they come back in and actually they find they love it. They like the energy they enjoy being with people. They're learning more. Um But even at three, you're a little looser than those other two banks. So if you actually look at the data, we're all probably experiencing roughly the same thing, five days a week. They just, they breast feeding and yeah, then I think everyone's had challenges getting everybody in that much. Interesting. All right, let's, let's, let's, let's turn to the economy and the recession that the recession that no one knows when it's happening that keeps getting put off the recession has once again been delayed. Is it possible that we could have the mythical soft landing? It's kind of like the Phoenix, right? We, you know, we don't have this wonderful advisor who comes and talks to many of our clients called Larry Summers. And he always says that the soft landing is a bit like a second marriage. It's a triumph of hope over experience and he, he, by the way is in his second happily. But that was a very clever way to deflect my question. I was looking for a simple yes or no. Look, I think we think it's coming, but we don't think it's this hairy monster. Um I think we certainly heading for a slowdown. No one quite knows when it's coming because the US is so resilient. The late, you know, we over stimulated a well performing economy to make sure that people had jobs, um that resulted in four trillion of excess deposits hitting the financial system and hitting the the wallets of consumers must say, God bless America, we know how to spend. And we have good data on that though. There are many in the room that have good data on that. That is slowing down. We're certainly seeing the bottom two quintile lower deposits and they had PRE COVID. Um But the labor market is very tight, labor market is a participation is less than it was pre-covid and we're all feeling it. Um And the services continues to be a reasonably strong spend this too will come, will normalize or whatever the new normal is. And um, we're definitely seeing that a lot of signs of softening, but I'm not sitting here stressed about this because the consumer is entering in whatever the slowdown is in good health, the corporate client is in very good health on their balance sheets. The banks, there are, there is a handful of banks that were mismanaged, but largely the large banks are in very strong health. So the typical amplifiers of a recession just aren't in place. But I think this country powers out of whatever we go through. But of course, the flip side of the question is we power out of it and we get to the end of the year and you talk about how tight labor markets continue and we see inflation continuing at 5% and the fed has to March phase two. I mean, no, I think Jay was pretty clear today. I think he was pretty clear around. He thinks, you know, he's seen the numbers, he's a resolute and I think many of us think appropriately in making sure that the US does get inflation under control and that, that takes some economic pain. He will take that um because that economic pain is unlikely to be too bad, he'll see what the data is because there was there is credit tightening happening. Um And he wants to understand what that impact is. It takes a bit of a lag. So he took a pause this time, but he's pretty clear. He's, he's sure there's more needed and I think he's bought himself an ability to have a bit more of a pause. I think it's more likely when it plateaus to be higher for longer than everyone wants. Certainly, the market, like the markets has been desperate to get, you know, the rates coming down and every piece of news there and he's been a bit like me with my teenage boys of, oh, you're just not listening to me. Um that, that, you know, they won't, they'll keep on doing it. But, you know, you're right, he has a bit of that. Um I think he'll keep it higher for longer than most people would like and then it will pass. But overall, you sound pretty optimistic. I'm optimistic on America. Yeah, I've been traveling all around the world and you're seeing, you just never want to bet against the American entrepreneur and probably more than we thought five or 10 years ago. Right? I mean, we've lived most of this millennium with the sense that China was soon going to overtake the US. You were in China recently and, and I think that with mckinsey came out with a statement the other day that having been on the ground there, I tend to agree with them that the, you know, the next China is China. Um I'm, I'm very big on India. Um, but it's 3.5 trillion and China is 20 with the same population. Um, and they, they're very clear they've got a lot of challenges. Even the government was talking about a lot of the challenges that they're facing much lower growth, structural mismatch in the skills, 20% youth unemployment, et cetera. But um there's still, I think it's tough not to look at the innovation in that economy in the industries and not feel that they've got further to go. Your trip, there was seen as a symbol, you and a number of other people who've traveled over in recent months as something of a symbol that you believe engagement is the right strategy that don't let de risking decoupling whatever you want to call it go too far. Well, I've also got people on the ground and we've got clients on the ground, many multinationals, some of whom are companies in the room. Um, and you better be on the ground listening and understanding what's going on. So, um I've given the advice of big ears and thick skin by one of our board members as if you get those two things, right? Um, then you'll be a successful ceo um all the odds are good, you better be listening. And so I think you've got to engage, you don't need to agree, but you better be engaging and talking and I think, think Antony Blinken, there was um, was good news this week. You've been a real leader on the climate front. You've been a part of the Sustainable Markets initiative. You've, you've pushed forward on a lot of those things, but you're also living with the backlash here in the United States. How do you balance? Well, I, I just don't think energy security and the move to sustainability and to cleaner energy should be mutually exclusive. I think there are two things we have to solve together. You know, I, I grew up in northern Scotland. I know what it is like to be cold. It is not fun. Um, unfortunately, never been hungry. Um, but we need to have energy to power the growth in the global economy and the other pieces going forward at the same time, we have to be driving to scalable and affordable new sustainable energy sources. Um, and those two have to be worked out how we get them both together. So I don't think it's exclusive but path is not always a popular and I, I appreciate your optimistic words about what's happening in this U in the US right now in terms of the US economy, but the political situation is pretty fraught, very divisive. I'm not gonna put Brian Cornell. I want to put Brian Cornell on the spot, but I'm not gonna put him on the spot to get him. It's good to be with you too. But, but it's, but it's, it, it's, it's uh, it's nasty. You know, if people are looking for issues that divide us, uh, you face it in Texas. I know, uh, the, the state of Texas won't let you participate in bond offerings anymore because of a policy you have towards, uh, uh, gun makers. What, how, how, how do you, and it's only going to get worse. Right. We're heading into, to a big election year. How do you think about that? And how do you deal with that as a leader? We, we open our doors as a bank in 100 countries around the world. Um, there are many of them that have it a lot, lot worse than we do on that one. And you focus on what it is. Your company stands for, you focus on what it is that your clients need and you get on with the day job and you stand up for those two things and if you argue with them as to why you think they're wrong. But at the end of the day you go and find other people's bonds so they won't do that. Um, you are the first woman to run a money, big money center bank. Is that significant? Does that affect the way you lead? How do you think about that? Um, I hope that everyone who's got daughters in the room that you're encouraging them, that yes, you can, they can do it the same way as you, you know, the sons can do it too. So, you know, you feel a burden as a role model, depends on the day. Um, no, but every now and then you do, you know, it puts pressure on. You don't want, you know, we want to do a good job. But on the other hand, if you're honest, I don't think there's anyone in the room that doesn't want to do a good job. So it's probably just an excuse rather than real. Do you uh do you think you lead differently than your predecessors than other people in the industry? That's not to be, but it's just, it's one of the pieces I come from a different bank. I'm a scotswoman who is running an American bank um and a global bank. So I, you know, I hope I bring some different things to the table around it because that's part of the reason. Oh, I, I think I have the courage on some of the areas to lead, lead with a different style. And I think during COVID, which was a very human crisis that went through rather than a sort of a hard core financial crisis was one where it, it became um a voice that I was able to have more easily than some male peers did um around a different style of looking after one's people. I talk about empathy a lot. I think it's a hard skill. I, I see empathy as listening to clients and being in tune with your talent and therefore you'll come up with a competitive advantage in the talent market or you'll be listening to your clients instead of pushing your idea on them. Actually, what do they need? And how do you need to adapt to it, the big ears thing? And I think that leads to competitive edge, but I do think it's an easier, easier stance for a woman to have than a man. That's interesting. And I'm, I'm guessing in your industry. Uh But beyond your industry, I'm guessing they did when you were in business school, they didn't teach courses and empathy. No. Um uh And, and it did develop uh interestingly, by the way, we did a survey of Fortune 500 CEO S a couple of months ago and asked an open ended question. What did you learn about leadership during the pandemic? Let them answer it. However, they wanted to answer it. 50% of the responses use that word, which is not, I mean, I've been doing this for four decades. That is not a common part of, of, of the conversations I had prior to the pandemic. And I think some of the things evolve with it. So we talk about ourselves as being you have to be a bank with a brain um given the clients that we serve and solutions we have to come up with. But it's still a human bank. And I think those relationships and that focus on the human side of things is important and with a I changing and the change is coming as well. Um, you know, there's a human element that is an important part of the equation to think about as a leader. You were given a tough job. Uh, city was, I would say a turnaround. I mean, it had, it had a tough decade in lots of different ways. How do you, where do you think you are in that turnaround? Part way through with good progress to, you know, because you never know what comes, what lies the head around. I don't think you ever stop transforming. And if there's anyone in the room who does, you know, you're constantly thinking, oh, be nice not to be that I've come to Los Continuous improvement. I know it is, it is unrelenting. So you have to find energy from it and you've got, you've got to fall in love with perpetual change and, and how does that energize you? Because otherwise it is exhausting. What, what? And I'm sure your job is exhausting. What do you do to relax? What do you do to? I do travel, which is not great for relaxing. Um, but I, I just, I really find it interesting maybe because I grew up in a little village in northern Scotland, um, which is sort of cold, wet, bleak and the winters are long. But you have this love and, um, you get enraptured with seeing new countries and new cultures and beautiful landscapes and the like. So do you have a, um, I, it, well, my family would say it would be nagging them. You get things done at home. But it is, for me it's traveling. I, I really do love going to new places and, and I enjoy the, you get to do a lot of what you love. It's a privilege. So I want to ask you the question that we're going to ask you to these tables to take on to, to help start the conversation. And it's really to look at the next six months of all the things that are going on, all the things you're hearing, all the things that you're, you're dealing with. What would you cite as the one biggest challenge facing business over the next six months and the one biggest opportunity in business over the next, it might be correlated. Like the easy answer would be say A I on both of them. I think it, but I think that challenge is more in the, is slightly longer run than that. What we're seeing is. Um Well, the world is getting more fragmented and in ways the risks are getting more connected and correlated. Um So as we think of, you know, we would say there's a new Snesg which is security, energy, security, food, security, cyber, financial, et cetera, a lot of these things are getting linked together. So I think the challenge is resiliency. Um And I think it's one that will be a decade long one. Be it resiliency around the climate change, be it around. Um, you know, the fact we all went a bit heavy on cost efficiencies and we now need to think about more redundancies into the business and the like, so that I think is a challenge. A I is a big risk in there and it's scary. Um It's also a huge opportunity as well. Are you seeing uh multiple uses for lots and lots of use cases? Um So we're doing some top down and we've got lots coming bottom up. And I think the challenge for all of us is just getting our arms around. How do we get this into a, in, you know, into a, into an environment that is controlled? Um And one that we're able to innovate safely around Igor was talking about, well, we were having a conversation with Igor and at the table as a, as a lifelong journalist who's always seen my job as being in search of truth. I have a little bit of problem with the fact that this technology makes shit up, right? Because the rest of us don't. Well, all right, any news organization I worked for, if you just made stuff up, you would lose your job. And I would suspect most law firms that, that story on the front page of the New York Times was stunning. You know, if you you filed a law brief that had three citations that were completely made up would not be working at that law firm any longer. So there's a lot of work to do and it's gonna need brains and values and other pieces to put it together. But if we do it'll have some huge benefits is gonna solve that problem for us, right? You promise. Yeah. You know, you look a little skeptical. Yeah. Uh So that's great actually, great. Uh, a great start to the table conversations. Thank you so much, uh uh, for doing give Jane, thank you. Uh uh So here's the way this works. Every table has a captain, raise your hands, captains, you know who you are, your job. This is gonna be a very unruly crowd. Your job is to enforce a single table conversation over the main course, uh, and to focus on, on the question, what is, what does your table think is the, the top risk over the next six months and the top opportunity uh over the next six months, conversations, reminder conversations at the table are under Chatham house rules. So you can, uh be honest, say any outrageous thing you want to say there is no danger, Brian, it'll go out on social media, it's not gonna happen. This, this is uh safe and then we'll, we'll come back and hear from all the table captains uh to report on your dinner. So thank you and thank you. Thank you.