If you have not done so already, we suggest that you start with the earlier posts in this series: CalPERS CEO Marcie Frost’s Misrepresentations Regarding Her Education and Work History During and After Her Hiring and Cover-Up of CalPERS’ CEO Frost’s Misrepresentations of Her History: Document Destruction/Loss at CalPERS, Pressure on Evergreen State College.
A short update: CalPERS does not appear to have a good response to our posts yesterday. Via e-mail:
If a reporter calls Calpers about the story, Calpers is saying you’re a crazy person with a vendetta out to get Calpers anyway you can over private equity.
They are still saying Marcie is pursuing her degree.
I guess they mean in her own mind not as an actual student.
This is an admission that Frost cannot dispute any of the information we presented. More troublingly, it also says that the Board has not intervened to restrict her authority. In a well-governed organization, the Board would take over the handling of the press on this matter.
And for private equity, we don’t have a beef with CalPERS investing in private equity. We do with how they are going about it.
We are again posting the resume that Marcie Frost presented as part of the recruitment process for the CEO position at CalPERS. It is such a slipshod piece of work that the resume in and of itself should have warded off anyone considering hiring her. We have embedded it at the end of the post.
It isn’t just that it is rife with spelling, grammatical and composition errors, which points to a lack of care and worse, a lack of respect for the process and for CalPERS. As one pension fund officer who looked at it said, “This might be acceptable for an assistant manager at Applebee’s but not anything more serious.”
If you read it carefully, most of what Frost says about her most recent jobs are mere statements of job duties. They are tantamount to saying she sat in the seat.
For the secondary aspects of a job, this sort of description is informative to give a full picture of job scope. However for a senior role, a candidate for a step up in job scope (and CalPERS is a huge step up from the minnow where Frost worked before, the Department of Retirement Services), one expects a big portion of the patter to be a description of accomplishments. And for the last two decades, recruiters have increasingly pressed for specific description of those accomplishments, with them being quantified whenever possible.
Instead, as we’ll discuss in more detail, what Frost provided was a combination of inappropriate management bafflegab plus claims about performance that were so non-specific so as to come off as handwaves.
Having said that, one of Frost’s only true bona fides and significant achievements may go a long way towards explaining why CalPERS board did so little in the way of due diligence. Frost by virtue of being the Executive Director of the Washington Department of Retirement Services (DRS) was an ex officio member of the Washington State Investment Board. It is the State Investment Board that manages the pension assets.
Frost became chairman of the State Investment Board. That is a testament to the fact that she has highly-developed interpersonal skills and as we said of Timothy Geithner, gives good meeting.
However, while those soft skills can be very important in a managerial or executive role, they are far from sufficient. Moreover, the financial services industry is rife with successful CEOs who are openly abrasive and that is part of how they instill internal discipline, such as Jamie Dimon. On the other end of the spectrum, former Citibank CEO John Reed, who managed the impressive task of switching the giant bank off paper-based transaction processing to computers, was an introvert whose idea of a good time was spending a night at home reading Scientific American, back in the day when the magazine was much wonkier than it is now.
And let us not forget that the financial services industry CEO who had the nice guy act down cold, John Stumpf, the former chairman and CEO of Wells Fargo, claimed to know nothing about the rampant consumer abuses in his bank in Congressional hearings. That is a long winded way of saying that there is too much potential for fraud and franchise-destroying mistakes to run a financial services operation on a “let’s all be friends” basis. But that appears to be Frost’s modus operandi.
Frost’s Shoddy Resume
While it may seem pedantic to hector Frost over her error-rife resume, it is actually telling evidence of her failings as a manager.
Remember that Frost’s last two positions before joining CalPERS were as Deputy Director and then Executive Director of Washington Retirement Systems (DRS). DRS is the operations unit responsible for the customer-facing activities of the Washington public pension system, which consists of 15 pension plans plus a defined contribution scheme. A close analogy to DRS in terms of operational scope would be a branch-free retail bank. DRS handles accounting and payment processing for all beneficiaries, as well as participants in the state’s health plans. It also has a web portal and a call center.
As anyone who has worked in a high-transaction-volume financial services business will tell you, accuracy and consistency are paramount. Most people don’t even think about what an amazing accomplishment it is that your bank can take and make huge volumes of payments correctly and then send you an accurate statement, every month at the same time, of your account activity.
At a middle and senior level, accuracy again matters because spreadsheet errors and even minor mistakes in contracts can have dire consequences.
For someone in a top role to present such an appalling work product as their calling card in a job search sends all the wrong signals, even before you get to the cute choice to omit the obligatory “Education” section entirely. It says she regards getting things right as unimportant. That is a terrible signal for a leader in a processing business to send to her “team members”.1
Even if Frost has as bad a case of typo disease as I do, the resume gaffes are still unacceptable. This is presumably a known problem for her. How hard would it have been for her to get a good friend, or at worst spent $50 on TaskRabbit, to go over the resume carefully and clean it up?
So as not to weigh down the post, we’ll list some of Frost’s errors in the second footnote.
Frost’s Sketchy Accomplishments
We’ll focus on Frost’s three most recent positions at DRS. Recall that in our initial post we found both a clear as well a probable misrepresentation in her job history before that.
Parsing her narratives about her jobs is like nailing Jello to a wall. Too often they string buzz phrases together without stating a concrete result. That is so abnormal as to raise questions. It makes the resume come off as evasive.
Applicants typically state accomplishments in a specific manner for several reasons. First, giving detail has consistently been found in research on cognitive biases to greatly enhance credibility. Someone as interpersonally skilled as Frost would surely know that.
Second, giving color about achievements encourages interviewers to ask about them. It’s a way of steering the recruitment interviews in advance to favorable terrain.
And the reason this is particularly worrisome in the case of Frost is her insinuation that she’s an effective operations manager. Notice she doesn’t even say that directly but expects her audience to accept that by virtue of her being asked to speak about it. From the “Career Snapshot” section:
…guest speaking a course [sic] at the University of Washington Evans School on performance management, including how the Department of Retirement Systems is implementing lean, and the role of leadership in creating a high performing organization.
Lean should be “lean” as in “lean management techniques”. They are a consulting industry repackaging of the ideas of statistician W. Edwards Deming, famed for his having worked closely with Japanese executives in improving process control and other management systems, and helping propel Japanese manufacturers to world leadership, and their further development in Japanese companies.3
The State of Washington in 2011 launched a state-agency wide “lean” initiative, with the focus on reducing waste, which is code for costs. This appears to be a response to the post-crisis plunge in state revenues, which also led to headcount cuts.
One of the hallmarks of “lean” is the implementation of metrics for processes and services to measure performance and track the success of initiatives (as well as flag failure so corrective measures can be taken). If Frost were a successful “lean” practitioner, you’d expect her resume to give at least one or two examples of tangible improvements. Instead, text like this makes her seem like a “lean” poseur:
… sustainable outcomes can only happen through the support of the right people doing the right things in an accountable management system..
I have been leading significant organizational change to become a customer-satisfaction driven agency with a high level of team engagement. I have also implemented a comprehensive management system, which includes a fundamentals operational system for all expected outcomes and core processes. Performance is discussed in a quarterly target review format, attended by all agency leaders and lean green belts and black belts. Performance management is a cornerstone to the five key goals of Elated Customers, Engaged Team Members, Vigilant Resource Steward, Best Practice Leader and Reliable Partner.
What this reveals is Frost string together buzzwords that at best say she has only gone though the motions.
Similarly, an article by Washington State’s guru on “lean” describes successes by other agencies, and curiously mentions Frost without setting forth a single achievement by DRS.
And while it is hard to prove a negative, despite making a considerable effort, we could find Frost having spoken on “lean” only twice, once in 2012, the second time in 2015, at state government conferences on “lean” where many other agency officials spoke as well.4
We’ll discuss the growing evidence at CalPERS of Frost’s failure as an operations manager, which should have been her strongest point, in our next post. But one data item points to failure of her “lean” efforts at DRS. In this late 2012 video from the first Washington “lean” conference, Frost says that DRS has 220 employees. Her resume says DRS has 250, which is presumably the headcount when she left. That is an over 10% increase in staffing. And Washington State data in 2015 for fiscal year 2014 shows 303 employees, although that could include part-timers.
Another revealing part of Frost’s resume, and not in a good way, comes in the first paragraph of her description of the Executive Director role:
The Washington governance structure is unique and requires a high level of strategic agility to be effective. My role is to provide that strategic agility ensuring that members, stakeholders and decision makers are well informed about benefits, contribution rates/funding and investments.
“Pension funds” and “strategic agility” are not in the same universe. Anyone who tries to put them together either does not understand the pension fund businesses or is a management fashion victim, the executive version of a matron who ought to know better sporting knee high patent leather platform boots because they are in this year.
Pension funds are or at least ought to be stable operations where changes are made after careful deliberation and when possible, testing. Consistency and accuracy are paramount. Pension funds are subject to exacting legal, and for private sector funds, regulatory requirements that govern how they operate.
By contrast, the sort of companies that are exhorted to be “strategically agile” are ones in highly dynamic fields where the risk of being outrun by competitors is real. Pray tell, what is the competition for the Washington pension system?
Misleadingly, Frost equates the complex (or perhaps more accurate, compartmentalized) structure of the Washington pension system to complexity of the role of the head of DRS. That is far less true than she implies. If Frost were the head of a unit in a self-contained pension system like CalPERS with the same functions as DRS, the big differences would be that the Executive Director would not be responsible for submitting an external budget (although it probably would still have to prepare one for internal purposes) and would not have its own staff functions, like human resources, public relations, information technology, and legal reporting to the unit head. So the any additional complexity is due to DRS being its own little empire up to a point, and not to any “strategic” issues.
In fact, even suggesting that DRS has or should have a strategy is a stretch. While formally DRS’ long term budgets are called strategic plans, DRS as a customer-facing operations entity is on the receiving end of decisions made elsewhere, most importantly, by the legislature. And as we indicated above, those don’t come often, by design.
Finally, the text under Frost’s 2009 to 2013 position, Deputy Director, starts with:
Washington was the first public system to implement hybrid retirement plans. As a result, the entire organization went through significant change and ultimately a culture shift. Part of this shift was
due to the newly required daily environment, new knowledge requirements, new on boarding processes, communication requirements, and new relationships with third party record-keepers and the WSIB. The hybrid plans were brought into existence in three separate waves with Teachers (TRS Plan 3) being first. Public Employees (PERS Plan 3) second and School Employees (SERS 3) third. I held various roles in each successful implementation and accumulated both technical and management skills in their delivery.
What’s wrong with this?
As Frost’s own resume reflects, Washington approved the launch of hybrid plans in 2000 and Frost claims to have worked on IT implementation that year. Given the state of search engines these days, I cannot find start date for the SERS 3 plan, but a result in Google shows it to be live in September 2004.
By listing this change much later than it took place, and therefore also much later in her tenure at DRS, Frost is implying she was in a far more senior capacity while the roll-outs were underway. That would result in her being given more credit for these success than she actually deserves.
So we are left with ugly questions. Did any member of the Board actually read the words in the resume? Or did they merely rely on their search firm to do all the work? It looks like both Heidrick & Struggles and the board punted on what is the most important decision CalPERS makes, that of who they put in charge. The fact that the board can’t be bothered to do this right says they are not fit to serve and need to be replaced.
1 It isn’t clear whether this choice predates Frost, but DRS fetishizes the use of “team members” to refer to employees. It’s anti-accountability because by blurring roles and responsibilities, it is designed to foster the idea that everything is a group effort, and the implication is that no one in particular is responsible for anything. That was one of the big excuses made for the failure to prosecute anyone over the damage done by the crisis: everyone was responsible, so no one was responsible. It is also pandering because it implies a faux egalitarianism. You can be sure that no executive would go so far as to suggest that all “team members” including the top brass, should be paid the same.
2 One of the distressing things about Frost’s resume is that she is so addicted to bad managerial blather that she can’t even write in English. In her first paragraph alone:
“Results orientation” should not be hyphenated.
“Teaming” is not a noun.
“working with people through the unique challenges” does not make sense
“began guest speaking a course” is presumably “guest speaking for a course”
“implementing lean” may be acceptable usage for Washington state department members who’ve been required to implement so-called “lean management techniques” but the only acceptable version for a resume would be, at best, “implementing ‘lean'”.
We’ll be sparing with our examples from the rest of her resume:
Second page, first text para, no dollar signs before “80 billion” and “103 billion”
“Pension assets managed by the Washington State Investment Board are 80 billion with total AUM at 103 billion” is contradictory as written. The sentence scans that the total AUM of $103 billion are also managed by Washington State Investment Board, so assets are both $80 billion and $103 billion. Nice. The $23 billion difference between the first and second figure is presumably defined contributions plans. But that may not be.
“The Washington governance structure is unique and requires a high level of strategic agility.” Governance structures are not agile. The retirement system does not go around regularly changing its board structure, its appointment practices, its policies and goals, for starters.
Last sentence in this para is incomplete.
Second para, second sentence: “I have become…a customer-satisfaction driven agency.” Now that is really something!
“fundamentals operational system for all expected outcomes and core processes.” “Fundamentals operational system” makes no sense. “Fundamental operational system” is presumably what was intended but still makes no sense. And if outcomes are expected, why do they need supervision?
Third para ends with an obvious unfinished sentence: ” As a cabinet appointee, it’s important
to demonstrate a sound knowledge of the system in order to build trust, respect and ”
Same page, under “Deputy Director” job description, second para, lack of parallelism via shifting from past to present tense.
Last page, last entry. “Department of labor and Industries” is not capitalized correctly.
3 It would be difficult to have been more cost efficient than Sumitomo Bank was when I worked there. Citibank at the time had a similar number of retail branches as Sumitomo had, which is the big driver of headcount. Sumitomo had about 2/3 of the international branches of Citi, but those were smaller on average. Citi had over 100,000 employees. Sumitomo had 16,000 and was working on getting that down to 14,500. And I was in the Japanese hierarchy and can tell you that Japanese management isn’t cuddly or touchy feely (in fact, Sumitomo was ruthless internally) yet it is successful at achieving high levels of employee engagement. Of course, back then, lifetime employment was also a big contributor, since the corollary was that leaving meant there must have been doing something seriously wrong, like embezzlement. Lifetime employment thus led people to jockey hard for internal recognition and advancement.
4 If you watch Frost’s presentation, the first step she took in what she depicts as her ‘lean” initiative was to survey “team members” to find out how she could improve their satisfaction levels. There’s nothing in “lean” methodology which talks about employees’ morale, much the less improving it. And on top of that, there’s no evidence that happy employees are more productive. For instance, in an oft-told story at McKinsey, the then managing director of the firm, the patrician and well-spoken Ron Daniel, met with a consultant who McKinsey was considering engaging to look at the firm’s organization and human resource approaches. At the end of the session, Daniel said, “Whatever you do, don’t fuck with the insecurity.”Marcie Frost Resume