INTERVIEW WITH:
JOHN HOGAN, PRESIDENT AND CHIEF OPERATING OFFICER

Q. When you and Rich Daly set out to build what became Broadridge, what was your personal vision? What did you think you could achieve?

JH: It's a funny thing. I don't remember sitting down with Rich and planning to build Broadridge per se, but we had a common vision all along. We wanted to build a company that provided impeccable value to clients, unique value for clients.

Q: In what way?

JH: In the quality of service and the unexpected "client-centric" kind of approach we now take by working to understand the client's definition of success and then reaching a solution that helps to engender the client's success.

Q. Did you see that kind of thinking absent in the companies you had worked for, or the overall marketplace?

JH: Rich and I worked together in the late 80s at a brokerage firm prior to working at ADP. At the brokerage firm we ran an operation within that firm. The people that produced revenue were commissioned sales people who came and went. We decided we were going to build an operation that differentiated our company from those revenue producers. We had the unique idea to take operations from being seen as a necessary evil into something that brought such extraordinary value that it actually differentiated our company.

We worked on that together and then carried that philosophy with us when I joined Rich at ADP in 1993.

Q. To achieve that "client-centric" nature, were there any critical actions?

JH: Before we could fully express it, we had an intuitive idea that said, "Look, if you have a company that people really feel good about working for and which aligns the rewards and recognition people get for working there, people will provide great service, new ideas and passion around new products.

Therefore they'd improve client retention, loyalty and create additional buying behavior which then provides shareholder value, of course.

We had that idea before it was in vogue to call it the service profit chain.

Clearly, it was obvious to us that we had to be a special place for people to work that engaged their intelligence, imagination and engendered their commitment to our purpose. Second, we had to be a place that allowed people to proudly provide service and value to clients.

We believed if we did those things we could optimize the return to shareholders. In the case of ADP, we provided optimum return to shareholders, and I'm proud to say we continue to do so here at Broadridge.

But to reiterate: Rich and I didn't sit down in the conference room and say, "This is what we're going to do." It's just something we fundamentally believed in and therefore naturally gravitated to.

So no, there wasn't a plan B. This is the plan. This is THE plan.

We knew it would work. Of course, it's taken a thousand twists and turns as to be expected in each area, but we've stayed true to our fundamental beliefs.

Q. Tell me about those twists and turns.

JH: Let me explain what I've learned about the nature of people.

If you share with people a sense of purpose, an engaging vision that they can see they are directly helping to achieve, they will be very creative and help you achieve extraordinary results, results beyond what you expect. As an example, I'll explain a problem we had in the mid-90s.

As proxy voting was predominately done by mail back then, on any given "peak" day in the voting season we'd get 2 ½ million envelopes from the post office.

You probably never saw 2 ½ million envelopes in one place, but it's a lot of envelopes! In those 2 ½ million envelopes there were proxy votes, but the challenge was that some proxy votes were for one share, some proxy votes for 200,000 shares. Some proxy votes for a meeting that was for tomorrow, some proxy votes for a meeting next month. Clearly, it was critical to process the high share votes and the closest meeting dates first.

Q. How did you know which is which?

JH: That was the problem I gave to the team. We needed to find a way to prioritize these votes and process them in the appropriate order before we opened the envelopes.

Lo and behold, our team came up with a way to put a bar code that showed through the back of the envelope so you could sort the envelopes by meeting date and share amount before you even opened them!

Q. That was mechanically done?

JH: Yes. Who would have ever thought that this could be achieved, and the next thing you know, within a few weeks we were prioritizing all the votes.

Q. If you were to look back in your own background, where did your belief in the intrinsic ability and willingness of people come from?

JH: For a long time I worked in brokerage operations on Wall Street. At one time my job was to balance accounts. Every week I would try and balance my assigned accounts from Friday through Saturday. But by the next Monday I would begin again, never having finished the week before because you could only actually get them close to balanced, but not truly balanced. Even though, my supervisor at the time thought I was doing a fine job.

I would say to myself, "Ok, so this is right? You never even finish your job, number one. Number two, they shouldn't even be going out of balance, so forget about trying to balance them, never mind trying to reconcile them, they shouldn't even be going out of balance." I was getting so frustrated with the stupidity of the process that I said to myself I am not going to keep doing something that didn't even make sense to me. I decided I would find a way to make things better.

So, working alone, I figured out the processes that affected "my" accounts and then changed those processes in other departments so that they didn't cause "my" accounts to go out of balance any more. The director of operations for the whole firm ended up standing behind my desk one day, very skeptically, studying the computer run that showed "my" accounts were in balance. When he had had my job years before me he couldn't even balance the accounts, much less stop them from going out of balance!

Although I didn't realize it at the time, that was a very important moment for me and from that experience I've come to believe that people, given a chance, will do their job better than you've asked, if allowed. They want to get significance out of their work. They want to do something that makes them feel proud as opposed to simply coming in eight -- ten hours a day, following direction, and wondering, "how was that important?"

Q. That suggests there is a certain type of person you want to attract, hire and retain for Broadridge? Specifically, what attributes do you search for in associates?

JH: Well, there's two parts to my answer.

The Colorado River is an amazing force. It's carved a large canyon in planet Earth. If you ever went rafting there you'lld be told you can't go in the water without a life jacket, no matter how good a swimmer you may be. In a relatively calm part of the river, you're looking at the river thinking, "so what's the problem?" Until you go into it up to your knees and feel the force of that current.

We try to build a culture that's like that river in that it engages people, meaning it self-selects. You build a culture that's filled with people who are committed and engaged. If you don't join, you leave. We really try to build one that self-selects.

The other part of the issue though really is fit.

Of course, we try to select people who are prone to this type of environment and philosophy, but we have to make sure we get the talent to fit the job, that's urgently important to over-perform.

If you get satisfaction out of balancing, like I was just describing, that's evidence that you have an innate talent for that and maybe you should be an accountant. On the other hand, if your brain gets satisfaction from being creative, maybe you should be in sales or you should be in strategic planning and things like that. Building a culture that self-selects and also attempting to do our best to match talent with responsibility, are the urgently important things.

Q. And that becomes the challenge, I would think. Taking all the pieces and making sure they all work together is like putting together a good athletic team.

JH: It takes tremendous talent. It's always a challenge – a never ending challenge.

Let's say you're the coach of a hockey team with a minute left in the playoff game and you're up a goal and you're down a man. At that moment you've got to have Wayne Gretsky, the greatest offensive player that ever lived on the bench, right? You want Wayne Gretsky to feel good about sitting on the bench, right? How do you do that? You communicate, you explain that defensive talent is the right fit for the team in this situation. In another situation it's just the reverse. You have someone else sitting on the bench. That's a good analogy to what it takes to build a team, where people can recognize their talents and their strengths, recognize that the team needs them to step up and contribute in the right situations.

And that the team always comes first.

Q. Play within yourself?

JH: Yes, exactly. Find out what your talent is, find out how it fits and make the most of it for the good of the team. Then everybody needs to be rewarded, of course.

Q. Your name always seems to be attached to driving and nurturing Broadridge's culture. Given that, a) could you contrast Broadridge's culture to others you've seen? and b) what would you consider a perfect culture? What is it? How do you get there? What are you going to do to try to drive it?

JH: Broadridge isn't perfect either, of course. I haven't worked at that many places, but I've seen a number of companies that I think are less than optimum. Very often companies will give lip service to values. How many of them are going to say, "Associates are not our best asset." Most of them say, "People are our greatest asset. We are respectful, we are inclusive."

Yet I know other executives at other companies have told me that if their employees are not at work a certain high number of hours, they're not going to get a raise or they're never going to get ahead unless they're thinking about the company 24/7. I've had some tell me family is the most important value in their life and yet they never seem to go home. I have witnessed companies that will not walk the talk.

At another company I actually challenged the CEO, who I am friendly with in a social setting, about the amount of time spent listening and getting to know people. He said, "I don't have time for that." If you're telling me you don't have time for it, how can you also tell me it is urgently important?

There are other companies that truly believe obedience is the best associate quality because the bosses think they know best. They need people who simply do what they're told. Here's the playbook, we know what we're doing, we've done it plenty of times before, follow the playbook, you'll do good and we'll do good so don't bother me with ideas.

When a company is in business for let's say 40 years and has a good track record and is successful their thinking is, "We know how to do this. We've done it well before."

Of course you want to pass on that knowledge and experience, but if you're not careful you'll tell people the book is written already, take the book and follow it. That's arrogant. That's not being respectful. It's telling someone you don't have anything to offer other than your obedience. You're telling people leave your imagination, leave your passion, leave all that home, just bring your obedience. That's all we're paying you for. Do what you're told.

Q. By deduction you're trying to say the opposite of that.

JH: We're trying to say, "Look, here's our playbook. We've been doing this successfully for 40 years, we've learned a lot, but we know you're going to write a new page or write a new chapter, or change things because you've never been here before and you've got a lot to offer. We expect you, as a matter of fact, to change this book." We still want to pass on knowledge and experience, but we want to do it in a way that shows respect for the individual.

Q. Isn't that a management challenge to tell everyone you should or likely will make changes, and you end up with a whole collection of change agents. How do you harness that so it's not total chaos?

JH: First of all we pass on the knowledge. Second we attempt to have an entire organization of change agents, but we can never realistically achieve 100%.

What we're attempting to do is get everyone --- within their domain, their world --- to understand that they ought to be changing. If they're on the line doing a mailing operation, they ought to be looking at what they can do to make that different within the purview of their supervisor. It wouldn't necessarily throw the whole place out of kilter, but it still has to be managed, of course, and carefully managed.

We strive everyday to provide quality to our customers and consistency of service. We need to provide the service that they expect almost perfectly because we play an important and critical role in how our clients function. We can't have change done ad hoc. It has to be through a process of testing and verification and so forth. It has to be controlled.

Q. Implicit in the approach you outlined is good upward communications. How do you structure to encourage that. You mentioned before having compensation, work life, all those issues in line. That's obvious, but on a day-to-day basis, how do you do it?

JH: It's hard, I can tell you that.

We want our associates to understand the role they play in helping us to achieve our purpose in order to engage them. If we think, "Hey let's hurry up and run to get on the bus" what most people would ask is, "Hey, where's the bus going?" We want you running to get on the bus, so we need to make it clear to everyone what our purpose is, where we're trying to go and what your role is in that purpose. It's no easy thing to communicate, though. We want to do it so that we get you to be committed rather than just obedient. We want you to commit so you make sacrifices. We're not going to sugar coat anything here. You will make sacrifices when required if you understand our purpose and you're committed to it.

It doesn't mean we don't want people to enjoy life. We want that, so we also give flexibility in return for those sacrifices, we'll get your passion and imagination and everything else that comes along with that commitment. In return for your commitment, we want to give you a great place to work and a great future. The amount of transparency we must have cannot be underestimated. Transparency about everything. There's no reason not to be transparent about everything.

Q. You mean with your employees?

JH: With everyone about everything.

We believe strongly in the service profit chain as the best long term solution. Then we explain it.

Q. You've spent much of your career on Wall Street. If you look at today vs. when you started as a young man, what do you think have been the most dramatic changes in Wall Street for the financial markets?

JH: That's a tough question. I would say technology and its application in regard to increasing the market's availability to more and more people. Technology has allowed more and more households to participate in the financial services industry and capital markets.

Q. Technology has also created its own life, its own explosion of data and information. What is Broadridge's view on technology?

JH: Technology is an enabler. It's a strategy enabler, not a strategy creator.

Q. Broadridge's corporate description says it is focused on the global capital markets. In fact, Broadridge's business is built on Wall Street. So where did Wall Street and the markets go wrong?

JH: Right now on Wall Street there is a crisis of trust. There needs to be an effort to restore that trust which does seem to be happening. The challenge is it can't be socialism. The government can't run it. That's the antithesis of capitalism. The real challenge to Wall Street is to prove to the government they are trustworthy enough to provide service to the individuals, the pension funds and all the assets they're charged to handle.

Q. What's the first thing Wall Street needs to do to regain trust?

JH: Hindsight is such a wonderful thing, but let me say there are two things Wall Street could focus on: reigning in compensation and increasing oversight.

There's some good merit to the ideas around compensation not engendering undue risk in the long term especially, so is the idea of clawing back on bonuses, as they have been unduly enriched and have been rewarding the wrong type of behavior.

Oversight – much better oversight - is a good thing. But it's also fair to say it's hard to determine when enough is enough?

People need a place to invest and Wall Street provides liquidity for those investments, access to buyers and sellers. For that reason, among others, the industry adds value. That's why Wall Street's recovery and restoration of the confidence of investors is a critical factor in the current and future success of our Nation, as well as the global economy.

Q. Let's look into a crystal ball. Where's Broadridge in five years?

JH: Broadridge will be much bigger. We'll have at least three new fairly significant businesses and product initiatives that are still nascent right now.

Q. Can you give me a general sense of those?

JH: We're going to make great inroads in the mutual fund space. We'll make tremendous progress in the transfer agent business, and the BPO space. We have tremendous opportunity to bring value to our clients in those areas.

Q. How do you see that value being enhanced?

JH: I think one of the principal things we can offer is information and data aggregation.

"We interface with all broker dealers and banks regularly. We collect information from them every day and we are best positioned to make sense of all of that information in a way that allows broker dealers and banks to understand its implications so they can better run their businesses. No other entity in the United States does anything close to that."

Mutual funds, hedge funds and prime brokers all need access to the broker dealers and banks. We haven't yet begun scratching the surface of aggregating this data and offering that information to the mutual fund companies, ETFs, hedge funds, money managers and others.

The buy side hedge fund, for example, needs to manage money and has to have, as a result of the Madoff strategy – or the "made off with your money" strategy -- assets spread across a number of different custodians, yet still needs to be able to aggregate them so you can see your assets in one place.

The hedge fund needs to make sure that they are compliant with a growing list of rules and regulations.

The buy side needs to be able to quickly and efficiently aggregate data and have applications on top of that which allow customers to manage their assets holistically while they also stay in compliance.

We have a great asset to serve that whole world we haven't yet begun to tap.

Q. And you have the technology to support it?

JH: Absolutely.

We can aggregate the data today. What we need to do is build the applications that allow people on the buy side to use that data or buy companies that have those kinds of applications.

We deliver great value to our clients for the dollar. We always want them to feel their Broadridge dollars are the best dollars they spend. We have great opportunity to do that more often and across a wider spectrum. We have great potential to create opportunities for our associates in terms of leadership, promotions, and jobs, and continue to make this a great place to work. The number one place to work in New York, as a matter of fact.

We have an opportunity to create significant shareholder value. We hold the promise in our hands to optimize shareholder return when compared to market and market indexes because of the value I know we can bring to our clients.

We are trusted with vital information and we take that trust tremendously seriously.

We live in a fish bowl so we need to be conscious of that. Technology and the proliferation of tools on the internet and so forth are a constant security challenge so that is an area of continuous intense focus for us.

We can never afford to say no to investing in the latest and greatest data security technology.

We won the black book of outsourcing survey two years in a row. Number one overall and number one in 14 out of 18 categories. The second place company had two number ones. That's evidence that we are making progress, but we need to make sure we never become complacent or comfortable. The reason we got those marks is because we're always challenging ourselves.

The bottom line is we are trusted by the clients and markets we serve. That trust is the most vital asset of our company. Each of us thinks about earning and keeping that trust every day of every week of every year.