Pacific Investment Management (Pimco) is a global investment management company that seems to have an organizational culture problem. Unfriendly employee competition, a dog-eat-dog mentality, and a cutthroat reputation have proved to be a liability for the bond giant which has found itself at the center of multiple lawsuits. Now, the company is attempting to improve its organizational culture and make adjustments that will appeal to the next generation of professionals.
What Is Organizational Culture?
Organizational culture, discussed in Chapter 7: Organization, Teamwork, and Communication, refers to a firm’s shared values, beliefs, traditions, principles, rules, and role models for behavior. Commonly called corporate culture, an organizational culture exists in every organization, regardless of size, organizational type, product, or profit objective. Organizational culture is expressed formally (e.g., mission statements, goals, and codes of ethics) and informally (e.g., work habits, stories, and activities).
Allegations of Discrimination, Harassment, and Retaliation
Seven current or former female Pimco employees have alleged discrimination, harassment, and retaliation at the bond giant, filing a lawsuit. The workers said the company is guilty of nurturing a fraternity culture. Pimco hired a third-party company to conduct an independent review of the allegations.
Interestingly, the third-party investigator didn’t find evidence of discrimination, harassment, or retaliation. The report suggested that the company had a “type-A environment” with high standards that not all individuals are suited to thrive in. While some of the claims have been dismissed by an Orange County Superior Court judge, the lawsuit is ongoing.
Earlier this year, twenty-one women, also a mix of former and current employees, wrote a letter to Pimco urging the company to offer equitable pay and promotions for women and people of color. This is not the first letter the company has received. Several years ago, an anonymous letter sent to Allianz SE suggested the company favored certain employees, offered limited career development opportunities for the others, and put forward superficial diversity efforts.
At the time of the anonymous 2018 letter, Pimco had already conducted an anonymous employee survey to gather input and insight. The feedback led to improvements in performance assessments, manager training, and diversity efforts.
Narrowing the Pay Gap
The pay gap between its managing directors and its other employees continued to cause friction. The managing directors split 30 percent of Pimco’s annual profits while the rest goes to Allianz. The Wall Street Journal estimates that in 2020, $500 million went to Pimco’s top 77 executives.
Pimco is attempting to narrow the pay gap by offering other financial incentives. For example, the company offered stock options that vest over time. Pimco has also made promotions and the criteria for promotions more transparent. Promotion decisions are now reviewed for bias. Today, nearly 30 percent of Pimco’s U.S. staff identifies as an underrepresented minority, and 25 percent of its U.S. officers identify as women.
A Culture Shift
Long work hours and excessive demands were seen as a rite of passage by older generations, but younger employees are less willing to accept these conditions. This widespread culture shift has affected many corporations across the country. Pimco has expanded its geographic footprint, adding portfolio-management teams in New York and an office in Austin, Texas, to attract younger and more diverse candidates.
In the Classroom
This article can be used to discuss organizational culture (Chapter 7: Organization, Teamwork, and Communication).
- What is organizational culture? Describe how performance assessments, manager training, and diversity efforts contribute to organizational culture.
- Why do you think excessive demands by employers were previously seen as a rite of passage?
- What characteristics do you personally look for in organizational culture?
This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell and Linda Ferrell.
Justin Baer, "Bond Giant Pimco Attempts to Change Its Culture," The Wall Street Journal, April 17, 2021, https://www.wsj.com/articles/bond-giant-pimco-attempts-to-change-its-culture-11618651802
Justin Baer, "Letter to Pimco Execs Alleges Discrimination Toward Women Employees," The Wall Street Journal, January 29, 2021, https://www.wsj.com/articles/letter-to-pimco-execs-alleges-discrimination-toward-women-employees-11611951608
Nicole Piper, "Judge Rejects Pimco's Request to Throw Out 'Frat Culture' Lawsuit," Citywire, July 19, 2021, https://citywireusa.com/professional-buyer/news/judge-rejects-pimco-s-request-to-throw-out-frat-culture-lawsuit/a1532479