Dismantling Traditional Hierarchy: Who Needs a CEO?

Phillips, Hager & North Investment Management Co. is on the cutting edge of dismantling traditional hierarchical roles by removing the need for the role of CEO.

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Phillips, Hager & North Investment Management Co. is on the cutting edge of dismantling traditional hierarchical roles by removing the need for the role of CEO.

John Montalbano’s first task as the new head of Canada’s largest privately owned money management firm was to ban the role of CEO. The move gives more airtime to the company’s line that it’s all about the clients, and the staff who make them money. That point emerged often during a recent sit-down with the 40-year-old president of Phillips, Hager & North Investment Management Co. The cautiously polite Montalbano says the company’s move to shed its top job reflects its distaste for the traditional hierarchical corporate structure. “If we want a flat structure that engenders collegiality and teamwork, we have to get rid of titles that suggest hierarchy – it’s counter-cultural,” he emphasizes during a boardroom interview at the company’s swanky downtown office. “It doesn’t mean it’s a rudderless ship. You can have accountability without hierarchy.” In April, Montalbano was handpicked to replace Tom Bradley by PH&N’s board for the way he “embodies the culture.” Under Bradley’s reign, PH&N put in place a row of middle managers, which Montalbano says allowed him to do away with the title of CEO.

“You can have accountability without hierarchy.”
~John Montalbano

Montalbano has spent his 18-year career at the company and shared a desk with one of the founders, Art Phillips, for seven years. After graduating with a commerce degree from UBC, he turned down a job in New York to work as a U.S. equity analyst at PH&N, and later managed portfolios for its pension, endowment fund and non-profit clients. The Yellowknife-born moneyman toyed with physiotherapy and law before discovering his passion for cash as one of six UBC students chosen to learn the ropes using the UBC Portfolio Management Foundation. “Once you get the rush for managing money, it never leaves you.” The Vancouver company – which boasts assets of $50 billion, of which a whopping 60 per cent reside in Ontario – manages money for non-profits, pension funds, institutional clients and investors with over $25,000 to hand over. Three local investment advisors started the company in 1964 and Montalbano says its success is thanks to a culture “that is all about partnership.” Indeed, its employees own PH&N – at least those directly responsible for making money for its clients. The board conducts an annual review of senior executives to determine what percentage of the company they should be eligible to own. Montalbano says the ownership structure has been key in helping the company not only land, but also keep, key talent. Of the 250 staff at PH&N’s five offices, 59 are active shareholders, most of them fund managers, research analysts or anyone managing client accounts. Don’t expect companies to start axing the role of CEO in droves. But for this local firm, it seems the move is paying off.

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