Career Advice from ADP's Arthur WeinbachPublished: November 30, 2005 in Knowledge@Wharton
Arthur Weinbach's goal in every job he ever held was "to have nothing to do." One of the most satisfying periods of his career came when people were free to ignore his suggestions. And if one measure of a great CEO is his or her ability to hire and fire people, he has excelled only in the first.
Displaying the self-deprecating assurance of someone who has made it to the top, the CEO of Automatic Data Processing told Wharton students how he got there and how he stays there. Weinbach's recent presentation was part of the Wharton Leadership Lecture Series.
Based in Roseland, N.J., ADP has more than 42,000 employees and 550,000 clients in the United States, Canada and Europe. Over half its revenue -- more than $8 billion in fiscal 2005 -- comes from data processing services to employers, where it says it pays one in six private sector workers in the U.S. Other divisions service brokerage houses, automobile dealers and insurance company claims offices. Earnings per share grew 15% in fiscal 2005.
Weinbach traces his success to a formula based on luck -- which includes surviving your mistakes -- taking risks, hiring the right people and delegating as much authority to them as possible. For example, most decisions in a company are "90-10" or "80-20" decisions, he said. "And those should be made by other people. Save yourself for the 60-40 or 50-50 decisions," where there is a real risk of being wrong. "It forces me into great things and it forces me into hiring great people."
One of his luckiest breaks, he recalled, came right after he graduated from Wharton, where he got a degree in accounting in 1966. "I had one major objective," he said: "To make money." There were eight major accounting firms in the country then and all were hiring. Six of them offered him a job. The highest offer, $8,700 a year, was from Peat Marwick (now part of KPMG). The place he really wanted to work -- what was then Touche Ross -- offered him $8,400. So he said he would go with them only if they matched Peat Marwick: "My sense of perspective was that far wrong." Touche did match the offer, he said, "but it was a long time before they let me forget that $300."
After 10 years with Touche Ross, he was made a partner and the following year he was given the most challenging assignment of his early career -- opening a branch office in Stamford, Conn. He loved the camaraderie of the office when it opened with 15 people. When it grew to 100, "it was just different," he said. "But there's a time for each." The Stamford office was also where he learned the fear of having to do something he wasn't good at -- sales and marketing, including developing a client base in that area. "It was scary," he said. "People who can sell bring incredible value to a company. It isn't easy."
One of the firm's auditing clients was ADP. In 1980, the company offered him a job. Concerned that this wife might not want to leave Stamford, he disarmed her by first saying they would be moving to Des Moines. "She said, 'no.' Then I said, 'New Jersey,' and she said, 'Yes.'" The exchange illustrated his approach to balancing work and family. "There is never an easy answer," he said, "but if you have to make a choice, make it a family choice."
When he joined it, ADP was a company with under $300 million a year in annual revenues; today, its revenues are $8 billion. His title, he said only half-facetiously, was "vice president of nothing." The jobs he wanted were filled and he wasn't interested in some that weren't. So the company sent him into the field to meet clients. "I had a great time. They adopted the suggestions that made sense and rejected those that didn't. It was one of the most effective periods of my career." Now, since he has the top job, he realizes there is no way to have his ideas scrutinized that carefully from within: "If I say, 'Do it,' they do it."
Career Low Point
A few years after his first foray into the field came the low point of his career, an incident during which "I thought I'd get fired." He was placed in charge of the sale of ADP's pension services business to Continental Insurance Company. During the talks, it became apparent that the ADP division's financial success had been wildly overstated by some questionable accounting methods. Negotiations were suspended, but in the end, the sale went through at a lower price. And Weinbach of course kept his job, rising to CFO, COO and, in 1998, to CEO.
Asked what corporate leaders he admired, Weinbach sidestepped the question, saying he did not want to offend people whose names he left out. But he clearly surprised the audience by telling them one CEO he had no desire to emulate: Jack Welch of General Electric. "The company had become too much him," he said, "beyond what was appropriate."
Among Weinbach's views on other topics:
- Delegating authority: He likes to get to the point in a job where he has nothing to do because this means he has mastered enough to delegate and can "then go out and do something else."
- Hiring and firing: "I'm proud of my ability to hire great people." On the firing end, "I always have waited too long."
- Client Service: Too many companies, he said, are content simply to be rated better in this area than their competitors. What they really should be doing is not just remaining number one but raising the bar -- setting their own higher goals for reduced complaints and increased client retention.
- Motivation: "People don't take the hill because they're scared. They take the hill because they have confidence in you."
- Offshoring and Outsourcing: "It's something you have to do to compete globally today. You have to solve the larger problem."
- Corporate scandals: "Any CEO who doesn't react to the sentences being given out is nuts. Any CEO who doesn't worry about Sarbanes-Oxley is nuts."
- CEO salaries: "Some of them seem like excesses to me," Weinbach said, although he added one qualifier: "The reality is, that you always end up with very few choices" for the top jobs.
Weinbach's salary for 2005 was $1.8 million, according to ADP. Forbes magazine listed his total compensation, including bonuses and stock options exercised, at $7.4 million. This was 175th on the list of Fortune 500 companies and, as measured by the magazine's efficiency ratings, made him slightly underpaid by major company CEO standards.