Robert E. Moritz, chairman and senior partner of PricewaterhouseCoopers LLP, the U.S. operation of PwC International Limited, recently spoke with Knowledge at Wharton about the experiences that have shaped him as a leader and the importance of financial literacy in nurturing the next generation of leaders.

An edited transcript of the conversation follows.

Knowledge at Wharton: Our guest today is Robert E. (Bob) Moritz, chairman and senior partner of PricewaterhouseCoopers LLP, the U.S. member of PwC International Limited. We plan to speak about two topics: leadership and financial literacy. Bob, thank you so much for joining us here today.

Bob Moritz: Happy to be here.

Knowledge at Wharton: You have been in your current role as chairman of PricewaterhouseCoopers since July 2009. But I wonder if you could tell our audience about your earliest experience of leadership. What was that like?

Moritz: Probably the earliest example of leadership was when I used to work back at home during my high school and college years. Believe it or not, I worked at a women’s clothing store. My role model was in charge of the back office, so to speak — responsible for deliveries, stock, management of the office and the functions. And over the first couple of years, while he was clearly a role model — someone whom people sought out — I ended up eventually becoming that person probably by the time I was a sophomore … in college. So it gave me a chance to see what it was like to be that sought-after individual, to have the responsibility to look after other people, and the responsibility for getting the job done each and every day in the [best] way possible.

Knowledge at Wharton: How did that early experience shape the kind of leader you became? Do you believe that leadership is inborn, or something that you learned?

Moritz: I personally believe that leadership can be learned. As I think about my own career progression — starting with the time I was at this clothing store — I saw many examples of people who inspired me, shaped me and even sponsored me in my own career. And if you have the right mindset — where every opportunity is a learning opportunity — you do have the [chance] to grow and learn examples of how to do things and how not to do things, and that applies both to management and leadership responsibilities.

So that particular role, I think, did give me an appreciation of what other [leaders] do, how they do it, personalities associated with it and how to think about pulling the strings to get the most out of people to get an effective team to operate as appropriately as possible. And for you to get some credit — not from a compensation perspective, but rather from a self-fulfillment perspective — in terms of what’s it like to have a high performing team and to actually be a major role player in that team. That means one day you might be leading it, one day you might be supporting it or one day you might be part of it. That’s the interesting part of leadership: It is not necessarily just [done] by those who have a title; it is [accomplished] by the actions and the behaviors that people bring to the job each day.

Knowledge at Wharton: You spent three years in PwC’s Tokyo office. How was leading in Japan, in an Asian culture, different than leading in the U.S.?

Moritz: Much different. It really was an inflection point in my career to understand for the first time ever — personally being outside of the United States — what it is like to interact with a business and, for that matter, a culture that was much different than [the one] I was used to. So the first challenge was: How do you become accepted? It taught me honestly the first learnings I ever had around the concept of diversity — because in Japan I was the minority without changing my skin color or gender or anything else associated with it.

Second was the responsibilities that were provided to you — you could choose to work 24/7 or you could choose to self-correct … and make each one of those personal and professional opportunities a leadership responsibility and a balancing act that you have to take responsibility for.

And, third, the position gave me a higher obligation — a higher sense of purpose. I was sent there to serve our U.S. and European institutions, particularly with a focus on the financial institutions. But … to then interact with the Japanese, the Japanese government agencies and other things like that … was all part of [shaping] what I will call an innate obligation to serve a higher responsibility, which I think really helped position me to understand a life outside of the U.S., and helped me understand the concepts of diversity and, for that matter, understand and appreciate the concepts of responsibility and people’s belief in you, that you can be accountable for those things. And then it is up to you to actually dictate what you want to do with them and how you want to do it.

Knowledge at Wharton: So, as you just said, it helped redefine the way that you looked at diversity. How has that translated into the way you lead PwC today?

 “[The] only way you are going to have the best talent is to have the most diverse talent.”

Moritz: It has translated into three different things. Diversity, in and of itself, and inclusiveness are a huge priority for me personally. It is something that I speak about all the time. And that could be across cultures, gender, race and sexual orientation. It does not matter. And, as a result, we at PwC try to then profile ourselves as we think about the type of people we are recruiting and the inclusive environment [they need] to individually succeed. And I have to role model that. I have to lead that from the front. And, as a result, that’s why I look to have a very diverse team. At the end of the day, diverse teams give you the best thinking. The best thinking gives you the best actions and, ultimately, the best results. I think this is proven by many different academic studies and the like.

Even though I oversee the U.S. operations, I still have a global responsibility. So making sure that people understand the cultural aspect of doing business globally and not making any assumptions about what is said or unsaid is hugely important. There are times where you need to set the right environment. There are times you need to actually interject and course correct. There are times you need to let people learn on their own, or interject to help them learn. That is hugely important as you think about a professional services firm like PwC having the best talent — the only way you are going to have the best talent is to have the most diverse talent….

Knowledge at Wharton: Based on what you said, I guess a very important aspect would be to develop a leadership style that is effective globally. How would you define your own leadership style and how did you develop it?

Moritz: I think leadership styles develop both by conscious dedication and change, but also by a lot of unconscious things that happen…. There were three things that really impacted me as I had my career progression. One was I actually spent a year in the human capital function. [Coming from] a professional services firm, it was a great opportunity to see the other side.

How do you meet and develop a relationship with people to understand what they want, figure out a way to match that with what you need, and how do you get the two together … to get the highest performance out of people so they can reach their fullest potential? It was a great learning opportunity that allowed me to then apply those same learnings … later on in my career path.

[Working in] Japan was [the second experience that impacted me.] The last one was probably the events in 2001, where you had the combination of the demise of [Arthur] Andersen, WorldCom and Enron. You saw people with tears in their eyes who lost everything. You also saw the events of 9/11. It gave me as a leader a higher moral obligation to protect and serve.

My style is very inclusive and more [about] consensus building. You have to strike the right balance between consensus building and decision-making. Second is transparency. The average age of [an employee in] our organization is 29. No one probably appreciates that when they think about an organization like PwC. So I have to turn the place upside down and engage everyone — as if they are coming off a campus — in the creation of our strategy, the understanding of our strategy and then their role … in the strategy and its execution.

So rather than me just talk from the top down, I actually want to engage from the bottom up, which is about making sure that communication and transparency is visible to all of our employees because, as I said, if I can get 39,000 people doing a little bit better each and every day, the place has unbelievable exponential potential.

And the last piece is how do you, as best you can, coach people individually and spend some time on that process? You do that in our organization with four key behaviors. You have got to have a relationship. Relationships take time. You have got to deliver value — that is value to the person next to you to the left or right — that you are able to invest in the long-term and the team together. You are both in this together.

In our firm, a professional services firm, I would argue that our work is not an individual sport. It is a team sport. And, last but not least, you have to have a degree of empathy. And if you are going to have empathy for the personal situation, you need to have a relationship — so that trust becomes really important — and you need to actually deliver some value to that person that helps them along the way. So those behavioral aspects are really important. So that is the other element of leadership, in terms of how do you demonstrate that more and more each, every day on a consistent basis?

Knowledge at Wharton: You have described your leadership principles. How do you apply these to developing leaders within PwC?

Moritz: PwC has a huge responsibility to enhance someone’s resume regardless if they stay or go from our organization. We are an extension of the universities and colleges around the world in terms of the learning that people can achieve on campus and that we continue off campus. I have to create the right environment for learning. I have to create the expectation of our leaders to engage with those right behaviors, and, as needed, put programs in place to help people’s individual development. Because in everyone there is a leader in some way shape or form.

This makes leading by example very important. How do you do that? How do you coach appropriately when needed? How do you challenge people respectfully to improve their behavior and, ultimately, performance and get them to aspire to be something they never thought they were capable of themselves? And inspire them enough to succeed? That is the kind of one-on-one conversation that has to happen. That is the role modeling [that you engage in] when you are in front of large groups of people to talk about the world and its possibilities and how they play a role. And that ties together engagement of strategy, individual role-playing, their individual performance and then hopefully the development of leaders.

It is amazing how many people have left our organization, for the right reasons, to go on to other things [like becoming] CEOs, CFOs, board members and the like. I would actually — at times when you look at the facts — say we are probably as good as the Goldman Sachs and the General Electrics of the world at having people who have been at some point at PwC and have left us to go on and do great things, or have stayed with PwC and done some great things inside the firm.

“How do you coach appropriately when needed? How do you challenge people respectfully to improve their behavior and, ultimately, performance, and get them to aspire to be something they never thought they were capable of themselves?”

Knowledge at Wharton: When you try to recruit people for senior leadership roles, what attributes do you look for?

Moritz: I have done this recently with my own leadership team. What I look for in terms of attributes is someone who is going to demonstrate behaviors that I expect. I am going to look for somebody who serves, not somebody who should be served. I look for agility. I look for — how did you deal with a challenging issue in front of you, and what did you do to work your way through it up until the point of making decisions? And what did you do thereafter? And how did you coach others along the way? This is not about your own self-image: It is [about] a learning opportunity for everybody else around you. So I look for those key things and, typically, in a recruiting process, try to get to examples of that.

While executives may be recruited for particular roles, I want to make sure they have an understanding of the culture and whether culturally they fit in PwC. And I also want to ask that question because I am hoping — at whatever age they are — it is for a lifetime. So I am looking to say this is only an option of a role that will create multiple options for many different roles over your career path.

I know in today’s generation people will leave jobs many times over. We continue to say two things. If you stay for two years versus six years at PwC, you probably have a ten times multiple of career earnings and a ten times multiple of career progression. The other thing we say is that you can have many different opportunities at PwC without ever leaving because of all the different things we do. And that’s what we want to make sure happens even with our senior people as we recruit out in the marketplace.

Knowledge at Wharton: During your leadership career, what would you say is the biggest challenge you have ever faced? How did you overcome it? And what did you learn from it?

Moritz: Probably the biggest challenge I ever had to deal with was the events of 9/11. I was responsible for our financial services practice. On any given day, we had 250 people in the World Trade Center buildings working with various clients. Thankfully, that day we had two training sessions. A lot of people had left the World Trade Center. A couple of us were at a training event across the river in New Jersey. Someone walked in and said a plane had hit the first tower. A lot of us went outside. We saw the second plane hit the tower. Then we saw both towers come down from afar.

Cell phones did not work. From a personal perspective, I knew my family and friends were generally safe. But I had as a leader 250 people that I had no idea where they were. That was a huge challenge in terms of … how do you organize people to track everybody down? How do you decide what to do and when to do it? And thankfully that day all of our people got out of the building. We had about 60 people in the building and they all got out. Unfortunately, because of our size and scale, we did have six people on the planes who lost their lives that day.

“You have to demonstrate to people that their values are consistent with the enterprise’s values. It is not always about just the bottom line. It is about doing both.”

The most challenging thing was day two. We closed the office down, but three of us came in to plan out how we would track everybody down [and reach out to them] from a personal perspective. And what will we do with our clients thereafter? It was always people first. By the afternoon, it became the most challenging point. If you had not heard from those people, at what point in time did you call mom or dad to say, “We have not heard from your son or daughter. Have you?” It might not have been top of mind for them to call us, but our worst fear was that they might be under rubble.

So the learnings then, which I do equate to going back to my time in human capital in the human resources function, was how do you make sure you take care of people first? If you do that, the rest will take care of itself. That was probably one of the biggest challenges I have ever dealt with from an emotional perspective, a leadership perspective, and from making the tough calls in terms of what to do, what not to do and when to do it.

Knowledge at Wharton: One thing I have often noticed is that truly responsible leaders look beyond the immediate bottom line and try to do things that affect society as a whole. And that is what brings me to PwC’s “Financial Literacy: Earn Your Future” initiative. In the interest of full disclosure, Knowledge at Wharton is a partner with PwC and is very proud to be a partner with PwC in this initiative. But what inspired you to make financial literacy such a priority for your firm?

Moritz: Like everything else, this was not a Bob Moritz decision. This was a team decision for us to go forward. We have two fundamental beliefs. One, if you look to today’s societal problems, government can’t solve them by itself. Business can’t solve them by itself. Nor can communities solve them by themselves. And, particularly, if you look over the last five years or so, that is ever more evident than previously. So we had an obligation to step up our game on corporate responsibility.

We decided to focus on four areas. One was around pro bono work in the communities because of the difficulties in the economy and the like. Second was this concept of diversity. Third was the concept of going green, if you think about the challenges of limited natural resources. And, fourth, was the education system and particularly, youth in that system. And then we narrowed it down to financial literacy.

The way we got to this particular topic was pretty interesting. Seventy-five percent or so of the teachers for kindergarten through 12th grade do not feel equipped to teach financial literacy. [PwC has] 39,000 people that know all of this stuff. It is what they do for a living. To not ask our people to engage in this I would argue is reckless as a leader because you misuse the assets to serve a higher purpose in society.

So we took the opportunity to say we will do three things. We will create the curriculum that we will put online for free for teachers to use. We started off with 20 courses and went to 30 based upon the demand…. Last but not least, we said we would dedicate a million hours of our people’s time to go into the classrooms and to teach.

It was a huge uplifting opportunity for our individual people. Because, again, our 39,000 people — who have an average age of 29 — want to give back, too. You have to demonstrate to them that their values are consistent with the enterprise’s values. It is not always about just the bottom line. It is about doing both. Giving them the opportunity to see where their values and our values align actually allows for the most stickiness — for them to see PwC as an institution that they want to be a part of and want to stay with.

We got great benefit in three ways. One is that the personal performance of those people [who participated] is higher now because they feel great that they have contributed. Communities get something back, and we are seeing test scores — post-instruction — go up significantly. And, last but not least, there is a business opportunity here in terms of the brand of PwC and what we are all about, which hopefully allows those 39,000 people to say, “Man, it is unbelievable what PwC does in the marketplace.” Not just how we serve our clients or the corporations or the governments, but rather what we do in the communities as well.

… We saw it was a great opportunity, and hopefully it is something we can continue for a really long time — but more importantly something that has a huge impact on society and the next generation of future leaders going forward.

Knowledge at Wharton: What is your ambition for the “Earn Your Future” program? Do you plan to go global at some point, or limit it to the U.S.?

Moritz: First, from a U.S. perspective, we want to have an impact on 2.5 to three million students. These are our future leaders 10-15 years from now. So we want to make sure that there is an impact on them and to allow those individuals — who may not be as fortunate — to have the world in front of them. We are taking this globally. We have talked to various other countries now in terms of what to do and how to do that. And, again, going back to the first part of the conversation, how do you do that in a culturally sensitive way, respectful of the different preferences or biases — conscious or otherwise — that might be in certain countries?…

Knowledge at Wharton: What words of advice would you have for young people who want to become financially literate, but who also want to nurture leadership qualities within themselves? What would you tell them?

Moritz: Leadership comes from doing the right thing when no one is looking, and from serving others, not just yourself — to maximize the team, not just you as an individual. And, as I say within PwC, all of the people on campus right now are great in terms of their I.Q. What we are looking for is the continued evolution of their I.Q., but more importantly the E.Q., the C.Q. and the P.Q.

E.Q. is the Emotional Quotient, which is leadership skills and communication skills. People who want to be part of your team want to be led by you and want to be inspired by you. Hopefully, you share some of yourself to do that.

The C.Q. is the Cultural Quotient. This country, and the world, is tremendously diverse with a lot of different perspectives. You have to get out of your own way and think about things that are different than just the way you were raised. If you are not willing to take a risk and open yourself up and not willing to at least allow for another point of view, you are missing a big learning opportunity and development opportunity for yourself to be a better leader.

And, last but not least, is this P.Q., what I call the Passion Quotient. If you can’t wake up every day energized to make and have an impact, you are not doing what I think has appropriately been given to you as a right to have a bigger influence than just yourself. And if you want to be a better leader it is about more than just yourself. It is about everybody around you, not you.