PIMCO founder Bill Gross is defending his management style, after a piece in Tuesday’s Wall Street Journal largely pointed to it as the reason for Mohamed El-Erian’s unexpected resignation as CEO.
“It’s like dealing with family — you don’t always produce a productive family by sweet talking and always being inclusive,” Gross said in an interview published in Friday’s WSJ. “There’s a time for soft love and time for hard love … I can admit to both.”
El-Erian, 55, reportedly clashed with Gross, 69, on a number of key issues, including how Gross interacted with employees. Allianz, PIMCO’s parent firm, named El-Erian as its chief economic adviser on Thursday.
While most traders would agree that investment performance can’t succeed on just “sweet talking,” many would say that creating an overly hostile or intimidating environment could be counterproductive to strong results.
PIMCO seems to be admitting as much given the structural overhaul it put in place after El-Erian announced his abrupt exit from the bond shop in January. This new structure includes a new CEO, Doug Hodge, and six deputy chief investment officers.
Allianz CEO Michael Diekmann says the company is “very happy” with PIMCO’s new management structure, according to the WSJ, and addresses “the long-term question [of] whether PIMCO is a Bill Gross one-man show or more than that,” he said.
Gross says that he occasionally “uses humor to make points on the trading floor and that his jokes may be misinterpreted by some as denigration,” the WSJ reported.
“It’s hard to see yourself through other people’s eyes,” he noted. “I suppose they tend to think the big man at the top is calling the shots, but I don’t perceive it that way.”
Hodge, a near 25-year veteran of PIMCO, told the Financial Times: “This is a watershed moment in PIMCO’s history and one that requires all my attention.”
His interview appeared on Friday, soon after Allianz said it had lot €35.6 billion of net cash in the fourth quarter.