The end of an era
While the Hermes acquisition is setting up the future for Federated, on another level, the company has gone through an ending.
Donahue’s father, John F. Donahue, died in 2017, and another co-founder, Richard B. Fisher, died in 2018. Both men’s sons are on the executive team, indicative of how the first generation set up succession.
“So, yes, it is the changing of an era, but one of my responsibilities is to maintain and enhance the culture,” Donahue says.
The painting on canvas analogy originally came from the founders; it was just how they looked at things, he says. They also wanted everybody to enjoy coming to work.
“If you enjoy coming to work, you have gratitude. Because if you have gratitude in your heart, you will have joy,” Donahue says. “On the other hand, if you feel entitled, then you will not be satisfied. You’ll be frustrated, angry or worse.”
Donahue’s influence has come from realizing that when people are unhappy, first look at whether it’s worth changing the structure. If not, then that person’s life work should be somewhere else.
“Then at least by the subtraction method, you end up with a lot of people who enjoy coming to work,” he says.
The company also continually looks at succession. Each year, the board reviews all of the major departments and articulates succession plans for each. That might mean one individual, a group of individuals or looking out to other parts of the company. With Donahue’s job, a handful of people on the executive staff have been identified as people who could take over if he’s hit by a bus tomorrow, Donahue says.
“We have to look at this. It’s part of your fiduciary duty, and our board is very, very attentive to it, as are our executives,” he says. “Then, this methodology is passed down through so that you’re always looking at ‘OK, who could do this?’”
Two years ago, for example, Federated’s head of sales retired. The company replaced him from a pool of five A-plus candidates in the company’s salesforce of 190.
“We are not infallible, and we do not live forever. These are two very important points,” Donahue says.
Takeaways:
- A long-term perspective is the foundation for a sustainable business.
- Successful acquisitions require a close cultural fit and similar business model.
- Keep breathing life into your succession planning.
The file:
Name: J. Christopher “Chris” Donahue
Title: President and CEO
Company: Federated Investors Inc.
Born: Roswell, New Mexico, at Maxwell Air Force Base
Education: History degree from Princeton University, law degree from the University of Pittsburgh
What was your first job, and what did you learn from it? My first job was buying a snow machine and trying to make money, shoveling snow in Pittsburgh. My father lent the majority of the money. I think the machine was $100; my sister put in $20 and I put in $10. This was during the snow season. We started making a few payments.
The next year, there was no snow, and my father foreclosed the loan. He took back the snow machine. We paid the labor first, so I had made more than $10. But my sister Kathy was only an investor; she lost everything. We were probably 12 or 13.
You come from a big family, right? Nine sisters and three brothers. Mom and dad had 84 grandchildren. In February, triplets were born, so mom now has 130 great grandchildren. My grandchildren are ninth-generation Pittsburgh, and by the way, there are 38 of those. At the family reunion last year, we had 240 of 256 show up.
How are you involved with the community? I’m on the board and executive committee of the Allegheny Conference on Community Development. I’m also on the board of the World Affairs Council of Pittsburgh, Saint Vincent College and the Lumen Institute.
I’m involved in a lot of church activities, including the Extra Mile Education Foundation.
Where might someone find you on the weekend? Last weekend is a good example. I picked up one grandson and met others. I slapped bikes on the back of car. We have breakfast and I buy lunch. We fish for a while, then we ride bikes for a while. Then we call it a day.
