Designing a
Business Revolution


Al West
In a pastoral setting in rural Pennsylvania, Al West (above) has outlawed executive parking spaces, dropped the coat-and-tie dress code, abolished secretaries, tossed out the time-clock, eliminated office walls and cubicles, and shredded the organizational chart. And in 1998, his company, SEI Investments posted revenue increases of 25 percent (to $366 million), a surge in net income of 60 percent (to $43 million), and an appreciation of shares by 137 percent. Is there any connection?


Pastoral

By John Dunn
Photography by John H. Hill

“When we moved out here, it just didn’t feel right, everybody walking around with a coat and tie on. When our clients come in, they don’t want to dress up. So it works ... It fits with the landscape.”

Serious West

“In today’s environment, you turn the organization upside down. It used to be that information would flow up to one spot, and then the decision we make would flow back down. That’s no longer a good model.”

Smiling West

“The people who are actually doing the work can make better decisions than I can when they are dealing with this client or that product. My responsibility is to make sure that this company is aimed in the right direction and that we have a good vision and strategy.”

Another smiling West

“If you’ve got a great idea, Al is going to say, ‘Go ahead with it; go find a team.’ If you can’t convince people to believe in your cause, it isn’t going to get off the ground. We don’t have the infrastructure to make it easy for you to get where you want to go, so it’s power of persuasion.”

Squinting West

Al West steers his Audi into the parking lot near a cluster of colorful, farmlike buildings surrounding a pond in rural Pennsylvania. He finds a parking space half the length of a football field from the nearest entrance.

The distinctive—yet familiar-looking—buildings in the countryside of Oaks, Pa., are home to SEI Investments, the company Alfred P. West Jr. founded 31 years ago. And although he’s the chairman and CEO of the financial services firm, West doesn’t enjoy the perks most executives expect—not even reserved parking.

That’s his rule; so is the dress code. No coats and ties here. Comfortably dressed in a blue long-sleeved shirt and dark slacks, West surveys the 90 acres of rolling hills and woodlands just a half-hour from Philadelphia’s bustle.

“We have always dealt with banks and we have always dealt with chief financial officers,” says West, a 1964 aeronautical engineering graduate. “The dress had always been coat and tie. When we moved out here, it just didn’t feel right, everybody walking around with a coat and tie on.”

Clients agreed.

“When our clients come in, they don’t want to dress up,” West says. “So it works.”

SEI

And so does the deceptively agrarian architectural design. SEI’s corporate headquarters, a center of technology, has the provincial look of a mill village or farm.

“It fits with the landscape,” West says of the six buildings, connected by bridges and walkways on SEI’s campus near Valley Forge. Its authentic, rural look puzzled local residents, one of whom inquired if they boarded horses there.

The answer is no. The rustic appearance stays outdoors. Inside, even though structural supports are exposed and open space seems vast, the horsepower in this barn is all high-tech. Colorful cables, called “pythons” by West and his employees, spiral down from the lofty ceilings, serving as conduits for electrical, telephone and Internet connections.

Outlawing executive parking spaces and dropping the coat-and-tie dress code is just a hint of the revolution West has brought to SEI. West abolished secretaries, tossed out the time clock, eliminated office walls and cubicles, and shredded the organizational chart.

SEI’s operation is based on customer-support teams. At its Oaks, Pa., headquarters, 800 employees work on some of the 140 self-managed, multi-disciplinary teams. Another 450 employees work on 20 self-managed teams at SEI offices in seven countries. Some teams are permanent, created to serve major customers and markets. Others are temporary, employees who collaborate on a project or problem and disband. Desks, filing cabinets, pedestals and chairs are on wheels so employees can roll from one team to another. The company is so fluid it takes a software program to keep track of its rambling employees.

SEI is the embodiment of West’s vision of a 21st century company.

“In today’s environment, you turn the organization upside down,” West says. “It used to be that information would flow up to one spot, and then the decision we make would flow back down. That’s no longer a good model.”

West began seeking the right model in 1990, concerned that the firm’s three divisions were in competition with each other. Although one business was flourishing, another was laying off employees.

SEI had become big, but West wanted it to remain efficient, innovative, responsive—and maintain the sense of community it had as a small company.

West began an SEI Center for Advanced Studies in Management at the Wharton School at the University of Pennsylvania in 1991, drawing on the intellect of academia and experience of corporate CEOs to develop a strategy that anticipates the company of the future.

That’s when West began turning SEI upside-down.

Moving into the new headquarters in 1996 defined a break from the old culture and the beginning of the new. Employees could bring only two boxes of possessions, and the new facility had no offices, floor plans or secretaries. Teams were expected to create their own work areas.

West is plain-spoken and not one to play politics or games, says Carl A. Guarino, managing director of SEI’s global unit. A former SEI attorney, Guarino is responsible for expanding the company’s asset-management business outside North America. “There’s no pretense with Al,” Guarino says. “He’s very informal, very open, very down to earth.”

Abolishing secretaries forced SEI to make dramatic adjustments and slammed the door on its old top-down management style. Occupying a desk in a large bay area where almost everyone is in view of everyone else, West catches his own phone, takes his own messages, handles his own memos and e-mail, and makes his own travel arrangements. So does everyone else.

Judith Bavuso, a former executive secretary, had her doubts when West announced the elimination of all administrative support positions. She pulled him aside and asked, “Are you really thinking clearly here? Do you honestly believe this will work?”

Bavuso made both the move and an occupational change. Working on one of the teams, she is responsible for human resources. “It really does work,” she admits. “I’m amazed.”

The large work areas fall “somewhere between a newsroom, a trading floor and an ad agency,” West says, standing at his desk and surveying the area. “Someone came in from Taiwan and said, ‘This looks like my bicycle factory in China.’”

It doesn’t take long for someone coming in from a closed office environment to adjust, West says. “There are things that can distract you, but you learn pretty quickly not to be distracted. You also learn an etiquette about how not to distract somebody else. If I want to see someone, I try to get eye contact. If you don’t get eye contact, that person’s not open for business.”

Meeting The six buildings provide a total of 300,000 square feet, and each building serves as an extraordinarily adaptable, user-friendly high-tech center. Each fiber-optic python can accommodate two computers.

“To me, No. 1, the building has to be functional for the business that’s being transacted in it, and the No. 2 thing we were after was flexibility,” West says. “This is a totally flexible floor plan. Everything is on wheels. You can roll desks anywhere on the floor and connect in with pythons. You can wheel over to one of the elevators and go anywhere in the six buildings. You can rearrange your team any way it suits you. It used to cost us $1,500 to move somebody. Now they move themselves.”

Avant-garde art decorates the interior of the complex, with paintings and sculpture selected by West’s daughter, Paige, who promotes the work of emerging artists over the Internet and produces art documentaries in New York.

“It has gotten quite a bit of acclaim,” West says. “We want people to get out of the box—we want them to think creatively, so why not highlight these pieces? That’s what art is all about—doing it in a different way or not doing what has been done in the past.”

West’s two sons also have creative inclinations: Al is a published writer and poet living in Arizona, and Palmer, an actor, is producing his second independent film in New York.

West empowers employees to make decisions and he keeps a keen eye on the results.

“We want them to make the decisions, not somebody removed from the job,” West says. “The people who are actually doing the work can make better decisions than I can when they are dealing with this client or that product.

“My responsibility is to make sure that this company is aimed in the right direction and that we have a good vision and strategy for the company—and to make sure that everybody knows what they are. You can’t instruct people on what to do anymore. You’ve got to give up your control. You’re counting on other people to do what is expected of them.”

The strategy has received support in the marketplace.

In 1998, the company saw its stock rise 137 percent to $99.38. The cover of its 1998 annual report boasts, “Overall revenues increased 25 percent to $366 million. Net income surged 60 percent to $43 million. Earnings per share grew 61 percent to $2.25.”

SEI provides technology and out-sourcing services to bank trust departments, offers mutual fund and asset management services to institutions, and delivers professional investment services to wealthy individuals. The company administers $200 billion in assets, which includes $56 billion that is managed directly by SEI, mostly through mutual funds.

Once one of the largest pension consultants in the country, the company quit the pension-consulting business in 1996 to develop asset management and now has $56 billion in assets under management. In 1998, asset management revenues grew 46 percent to $90.1 billion, and operating profits jumped 451 percent to $18.1 million.

SEI was selected to provide trust accounting services for about 350,000 American Indians, who have a trust relationship with the U.S. government. West says it is SEI’s first major contract outside the banking industry.

“We’re providing services to the Bureau of Indian Affairs and that’s been in the news quite a bit,” West says. “We’re the solution—not the problem. But for 100 years, they didn’t keep proper accounting records. We went in last year and have been helping them straighten out what money is owned by whom, and we’re accounting for it from here on out.”

Last March, SEI joined with the International Finance Corp. and Tong Yang Securities in Seoul, Korea, to create SEI Asset Korea, the first foreign, majority-owned investment company in Korea.

SEI Asset Management doesn’t buy or sell securities, West says, but operates as a manager of managers, picking and monitoring investment managers for large corporate pension plans, endowment funds, foundations, union pension plans and wealthy individuals. It markets its services to small pension plans through intermediaries, such as bank trust departments.

“We find a manager to manage each segment,” West says. “They’ll pick the stocks, but we tell them exactly what we want them to do. We’ve got technology that monitors them on a daily basis, and also puts all of this together. You get a very straightforward portfolio.”

Murray A. Louis, vice president of corporate communications, has been with SEI 19 years and remembers the days of transition.

“We had a series of company meetings in which we talked about the fact that we were going from a conventional type of organization to a team-oriented organization,” Louis says. “The team is not necessarily a finite group, but one that could be flexible. People could be on more than one team, depending on what expertise they brought to whatever a particular team was doing. That gave a fluidity to the place.

“At the same time, we were de-emphasizing titles, and we were de-emphasizing private offices,” Louis says. “We went to an open environment in our old place. We tore the walls down and got everybody out in the open long before we ever moved. That was kind of a self-cleaning operation because the people that didn’t like it just left. It wasn’t without pain.”

People talking Allison Ettel, Econ ’97, of Marietta, Ga., knew about SEI through friends, and sought out the company recruiter at Georgia Tech’s career fair.

“I knew this was the job I wanted,” says Ettel, who works on the Investor Strategy Team and the Investment Advisory Group, which sells products to Registered Investment Advisors.

“I’ve become very spoiled,” Ettel says. “I don’t think I could go to a cubicle environment. Here everyone is interacting, talking with people, bouncing ideas around. It’s really a collaboration of ideas. It’s very energetic.”

Richard “Rich” Aguiar, a co-op student who worked with a utility company in south Florida before earning his electrical engineering degree in 1994, runs a team that sells SEI services to community banks in the New England, New Jersey and New York area.

“I like the fact that the only person here responsible for your career development is yourself,” Aguiar says. “There are no structured career paths.”

In a culture with no titles, the power of persuasion is the only power you have, Aguiar says. “Because your salary is based a lot upon incentive compensation, if you’ve got a great idea, Al is going to say, ‘Go ahead with it; go find a team.’ If you can’t convince people to believe in your cause, it isn’t going to get off the ground. We don’t have the infrastructure in place to make it very easy for you to get where you want to go, so it’s power of persuasion.”

West is serving this year as chairman of the American Business Conference, a non-partisan organization for CEO’s of mid-sized growth companies. He is a member of the Campaign for Georgia Tech Steering Committee, and is serving as a trustee of the Georgia Tech Foundation. He is a former chairman and member of the Georgia Tech Advisory Board.

A native of Brooksville, Fla., West came to Georgia Tech planning to pursue his chief boyhood ambitions: to become a fighter pilot, and, later, to start his own business.

“The work-hard/play-hard image of Tech appealed to me,” West says. A math honor student, he visited Tech as a high-school junior, and after an administrator told him he was accepted, he didn’t apply anywhere else.

A member of the Air Force ROTC program at Tech, West’s eyesight worsened during his senior year, which kept him out of the fighter-pilot program.

Instead, he attended the Wharton School of Business at the University of Pennsylvania, earned his master’s degree and decided to pursue his doctorate. He became familiar with a computer game that was a simulation of a number of companies, and teams of students ran the various companies.

“We would go out into the community and get business leaders to sit on the boards [of the simulated companies], and we would have mock board meetings,” West says. “The students really got into it.”

West and a friend recognized the potential of computer simulation as a teaching tool, and they dropped out of school to start Simulated Environments Inc.

The first product was a computer-based simulation to train bank loan officers. “We wrote up about 50 case studies on loans that had come into the bank, and then simulated them, so the student would run this simulated loan portfolio.”

First Pennsylvania Bank in Philadelphia was their first client, followed by Trust Company of Georgia and C&S Bank. SEI sold its loan system to 50 of the top 70 banks in the country. And the company developed a range of outsourcing services for the financial industry.

The business was in Philadelphia until 1972, when it moved to Wayne, Pa. That was also the year West’s partner decided to leave the company.

SEI also developed a system to automate bank trust departments, and in 10 years, about 30 percent of the banks in the country were using the firm’s services. The company diversified, moving into the mutual fund business, primarily through banks, and SEI went public in 1981. The money-market fund grew rapidly and SEI bought a performance-measurement company to measure the effectiveness of pension plans, which was turned into a consulting firm. That led SEI into asset management.

“Today we’ve got two business lines that are integrated,” West says. “One business is technology and the other is this asset management.

“We feel that if you scratch us, we’re a technology firm, but more of an application-technology firm,” West says. “We apply technology to helping solve financial and investment problems, but we include doing the laundry, too—doing all the accounting and not just making the decisions.”

West is developing Internet sites for each of the company’s services. The sites will offer market commentaries and video clips of the day’s financial news, and will explore such topics as portfolio strategies, financial management, investing and creating trusts.

Buildings

Teaching with Technology

Georgia Tech is in an ideal position to apply technology to enhance teaching and learning, says alumnus Al West, who founded SEI Investments more than 30 years ago using a computer game as a teaching tool.

Today SEI Investments is a provider of technology, mutual-fund and asset-management services to institutions, professional investment counselors and wealthy individuals.

“Technology can be used to improve the quality of education and productivity,” says West, a 1964 aeronautical engineering graduate. Computers could free professors from the drudgery of information transfer, and enable them to be facilitators that oversee the learning process, he says.

Education, West says, should not be boring. “I was one of those students who hated class,” he confesses. “The least effective way to transfer information is to have somebody standing there talking and somebody else standing there listening.”

Technology can turn teaching into a multimedia experience that invites students to interact with the learning process. For genuine learning to take place, he says students must recognize that whatever is being taught is relevant to them.

West has given $2 million to the Institute through the Campaign for Georgia Tech to support technological innovations in the curriculum and to enhance teaching and learning on campus.

His contribution, combined with funds from the Georgia Tech Foundation, permits “the extension of electronic media throughout the undergraduate curriculum” and supports “the plan to link the student body and faculty in a comprehensive learning environment,” says Dr. Robert C. McMath Jr., vice provost for Undergraduate Studies and Academic Affairs.

“Tech is in a great place to apply technology to the art and science of teaching,” West says. “We should work hard to make Tech preeminent in educational technology.”