The Best Advice I Ever Got: William S. Thompson, Jr., Managing Director and Chief Executive Officer, PIMCO

Shortly after joining Salomon Brothers in 1975, I had an opportunity to rescue a troubled account. Our firm was getting almost no business from one of our huge institutional clients, but I made some headway and surprised everyone, including myself. As the new guy on the desk, I was eager to prove myself and win my boss’s respect. He was the partner who ran the Chicago office and an inspirational, if opinionated, leader—the kind you would work like crazy for but who drew a bright white line down the center of every situation and let you know if you were on the wrong side. With this particular client in turnaround, I was doing well—until catastrophe struck. One day, without warning, a large investor came into the market and took gigantic positions of bonds in a new issue. The transaction rocked our firm. Whoever covered this client had been asleep at the wheel. He should have been in constant contact with the company, known the trade was coming, and gotten us in on the action. I remember sitting on the trading floor that morning, computer screens blinking, guys shouting across the desks, the CEO furiously barking orders over the loudspeaker, while we scrambled around as though the roof were caving in. I had the fear of the Lord in me that the mystery investor might be my own client—and the feeling turned out to be justified. There I was at an especially sensitive point in my career—defrocked. I felt like an idiot. It was public, demeaning, and awful. Dazed, I wandered over to the window of our 42nd floor office and peered down. I thought this was a disaster and that I had no way to win back credibility. Suddenly my boss appeared. “Why do you think they’re so unhappy?” he asked me. “Because I lost the deal?” I replied despondent. “Because I’m a loser?” “No,” he said emphatically. “It’s because for the very first time this was our business to lose. A month ago we didn’t even have a chance of winning. You fouled up this play, but you were the one who got us onto the field in the first place.” For the next week, my boss took the heat from the higher-ups. When I made partner six years later, the mystery investor was one of our firm’s most profitable clients. In financial services, where the focus is on quarterly earnings and the daily stock price, what my boss did was exceptional. But it’s what all great managers must do to keep and grow top talent. When superstars, especially young ones, suddenly come up short, it’s your job not just to forgive their mistakes, but also to re-ignite their confidence. People who make errors and move on without a second thought aren’t the ones, in my experience, to count on over the long haul. Young potential A players, by contrast, suffer from terrible self-doubt. After a slump, they assume the game is over, begin to second-guess their success, and, without the right kind of management, stop taking the sorts of risks that first made them successful. No leader can afford that type of loss. I think of talent within our organization in terms of generations. My direct reports are, because of their experience, often able to avoid mistakes and can right the ship when they make them. It’s the red-hot performers the next level down that we have to watch like hawks. When they strike out, I offer this message: “There’s no one I want at bat besides you.” I encourage the older generation to anticipate exactly how they’ll handle underperformance by their best people. What you say in such situations can shape entire careers.

The Best Advice I Ever Got: William S. Thompson, Jr., Managing Director and Chief Executive Officer, PIMCO

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