Chris Matthews: An early embrace of global thinking, a focus on the big picture

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Hay Group has a global profile that far exceeds what might be expected from a mid-sized management consulting firm based in Philadelphia. For the past 25 years, the keeper of the brand has been Canadian Chris Matthews, who serves as chairman and CEO of the 70-year-old entity that created the modern template for job evaluation and employee compensation.

At almost 69, Mr. Matthews sees the end approaching for an action-packed career, in which he joined Hay reluctantly, helped save it in the early 1990s, and saw it extend its reach to almost 50 countries and a much broader practice – while watching a revolution in the social contract between the modern corporation and its employees.

How did you end up at Hay?

In the mid-1970s, I started my own consulting business in Toronto and then along came something called Hay Group. I knew what they were and what they did, but I didn't want any part of them. My definition of going to hell was sitting next to some guy on the flight to Singapore for 18 hours and he says, "You guys evaluated my job one time. And let me tell you what was wrong with that." So I came into Hay Group's offices as a balanced Canadian – I had a chip on each shoulder. But then I met the people here and they couldn't keep me away.

Did you suspect you would be the boss some day?

I knew it was a possibility. I had been told by the managing partner that I had to stop being so Canadian and so parochial. There may have been some truth in it – that I really had to see things at a global level and once I did that I would be the heir-apparent.

How did you become less parochial?

We had a number of multinational clients that were always a little bit harder to work with, because the head office was in the U.S., U.K. or Germany. I started doing a lot of work with Canadian subsidiaries and that got me travelling a lot outside Canada. It allowed me to build a network.

Then I sold a project in the Philippines to the Asian Development Bank in 1980 and I had to be there, off and on, for two or three years. I got exposed to Asia and I got real keen on the global aspect of the business. Had I remained in Canada, I wouldn't have got that perspective.

What the toughest thing you've had to do?

We did a management buyout of the firm in 1990 [from previous owner, ad agency Saatchi & Saatchi]– and walked straight into a recession. We had $50-million in debt, we had interest payments, and it was really a difficult time. But the team pulled together, we got through it, and by 1997 we had paid off almost all our debt. Perseverance and resilience are what I focus on a lot.

What have been the biggest changes in the business?

This theme toward globalization. It is one thing to say we have to go global from Canada and the U.S., but now we see the Chinese saying, "We need our national companies to become global giants." They want to do what Samsung, Sony or Panasonic have done.

We, as a firm, embraced global thinking early on. Brazil, for example, is our third-largest country market after the U.S. and Britain. China and India are growing businesses but the ones to watch are [Southeast Asian]countries – Thailand, Malaysia, Singapore, Indonesia and now Vietnam. That business will double for us in three years.

Another big change is clients are looking for more holistic solutions. They are not looking for a compensation solution – they are looking for a much broader answer to a business problem. As opposed to looking at the narrowly defined problem, we look at the bigger issues. Strategy execution is the big issue – it is no longer enough to have a great strategy but you have to executive flawlessly.

Are other economies adopting the North American compensation model?

They are using more long-term incentives, particularly as they float their companies. For example, European companies used to be more about salary and bonuses, but now they make much more use of long-term, stock-based incentive plans, and it is the same in Asia and South America.

Excessive executive compensation is being criticized around the world. Is that affecting how companies look at their packages?

Most companies are on the defence and they realize it is something that is being scrutinized. Coming out of a recession, it is going to happen anyway. But they are thinking through all the pieces and processes – the governance aspect.

When I think of things like executive compensation, I think more about corporate governance than even the money side. Are boards of directors doing the right thing? Are they just following other companies or are they really putting together a unique proposition and acting in the best interests of shareholders?

We will see this go on for some time because executive compensation in many countries has risen at a faster rate than middle-level jobs. It partly reflects a shortage of skilled leaders and partly it is because we are always looking at the other guy. If you keep doing that, you will keep ratcheting up compensation over a period of time.

We used to look at the corporation as a career employer which at the end, would provide a good pension. What happened to that idea?

Those rules changed a long time ago. When Jack Welch was at General Electric, he said basically, "You're on your own – you guys have to figure this thing out. We're not the cradle-to-grave solution." It was a change in the contract. People did have different expectations. I had a grandfather who worked 46 years with one organization and got a pension and thought that was good.

The new reality is: Keep your options open. Make sure you've taken good care of yourself for your retirement through RRSPS and [similar vehicles] … It's been a shift away from the corporation taking care of you, to you taking care of yourself.

Are you thinking of retirement yourself?

That is a discussion I usually have on Friday afternoon with my wife over a glass of chardonnay. The answer keeps changing but I think we're getting pretty close to the end of the runway