Conductor of a performance measurement orchestra

For someone who has to stay on top of the latest technologies because of her role as head of performance at Aegon, it may seem odd that Anne Harrison shuns the latest gadgets (ie, iPod) for her other passion — music. Nevertheless, Harrison’s happy to not have jumped on board the digital music revolution because she is completely content with popping in a CD or listening to the radio as she commutes to work everyday. Aside from listening to her favourite artists, Harrison sat down with PMR recently to discuss her other passion — the performance measurement field.

Where did you go to university and what did you study?
I went to Newcastle and I studied humanities, which is very relevant to what I’m doing today (laughing).

It is surprising you studied humanities because, looking at your career history, it seems you enjoy the maths side of performance measurement. Did you dabble in mathematics at university or were you partial to it?
No, it is just something that I’ve picked up throughout my career. I’m not the most academic in my maths ways, but I know enough to advise the people who are. I’ve been very lucky to have some very bright people working for me, so I have been able to achieve what is required.

You have more than 21 years experience in the performance measurement field. Can you give us some background on where you started and how you got to where you are today?
When I graduated from university I was one of those students who didn’t know what they wanted to do. I saw an advert in the job centre saying, ‘numerate administrator wanted’. I thought, well, I can count, so I applied and got the job. That’s how I started and it was at the WM Company and I ended up staying for 13 years. I started there as a performance analyst, worked my way through to senior analyst and then I was put in charge of the team. As a team leader, I was in charge of some big clients — Mercury Asset Management as it was known in those days — Merrill Lynch. I also had the Post Office and BT. The fund managers I dealt with were clients like Fleming and HSBC, so I got to experience quite a broad remit of different people. After that, I worked my way up to a service executive, which meant I jointly ran the department.

Some would consider performance measurement as a bit of a black art because there is a preoccupation with the mathematical approach and not enough practical application of the principles. Do you agree with this statement?
Absolutely. I think you have to have a balance between the two. Hopefully people are getting better at this, but over the years — and with the number of people I have met — you get a feel for which side they are on. It is bad when you have a company that goes in one direction or the other — and it is bad to go too far either way. You have to get the balance right. If you have a team of just five academics who are just sitting in a cupboard getting on with their business, dealing with calculators, I think you lose the element of what you are
doing. Conversely, if you have too many people on the application side and
they do not have the depth of knowledge to answer some of the more technical queries you can get problems also.

As the head of performance, when you are hiring someone, are you looking to find the most balanced individual in terms of practical versus theoretical?
You do not get too many balanced people, so what you have to do is look at the skill set of the rest of the team and see what it is that you are missing. You try to build a rounded team. I don’t think you can change people. You can’t change personalities and preferences. You can help people to grow in the areas that they are not naturally proficient, but I don’t think you can change people.

Recruitment and retaining employees is a big issue in this industry. As a leading performance analyst in the UK, and as a female, what are your thoughts on women entering this field or the lack of them?
There are not enough of them, that is the problem. I don’t know why this is. There are a few women who run performance teams but we’re definitely in the minority. We joke here that we need more women to balance the team— but it is a joke. I don’t go for positive discrimination. I definitely look at the experience and the skills of the individual — if it’s a girl fabulous but, if not, it doesn’t matter.

Since you have entered the industry have you seen more women join this industry?
I actually think there’s less coming in now than there was in the past.

What do you see as the reason for this?
I don’t know. It may be down to the fact that girls in school are still moving away from maths and science towards other things. It may be a bit biased but I honestly don’t know why. I know when we recruit at a graduate level there are far less girls who approach us with CVs that have maths, investment or economic backgrounds. It would be interesting to look at statistics from a university to see what the balance is between the two.

What do you see as the challenges for future graduates who want to work in performance measurement?
It depends on what company you’re going to work for. If you’re going to work for a company with lots of automation, the challenge can be to understand the underlying data. In the old days we worked a lot with fund accounting records so we got to understand how basic underlying accounting principles worked. In a lot of automated companies these days, they don’t do this because it just flows through. There is less need for analysing and working out data issues. I think this is an important part of people’s knowledge, which we’re kind of losing. Having said that, there’s more opportunity for people to progress and to develop the skills they want.

Can you give us some nightmare scenarios that you have encountered throughout your long career?
There are so many of them. I guess one of the things that stands out
is the battle that many performance teams often have, which are the political battles within companies. In terms of budget, resources, reporting lines and who’s going to support the team — this can also be an issue. The performance team, of course, make no income, it’s purely a cost. So, the question is who’s going to take on that cost? The fund managers need that
team to provide the numbers, the client reporting and all the client-facing teams need the figures, so everyone’s demanding the service but who’s going to actually invest in the team to get the systems, the training and everything the team needs to provide a good service? Who’s going to pay the bill and who’s going to make this investment?

How would you say the relationships between fund managers and performance measurers has changed since you started?
I think it is improving — definitely improving. My perception is that people are now realising that performance teams are providing good solid information and without them the rest of the business is going to struggle, so there’s far more communication between the fund manager and performance team. We can now understand what the fund manager is doing so we can measure things correctly. This allows us to pick out anomalies between the decisions we made that worked well or didn’t work well, as opposed to this is just dodgy fund accounting data that we haven’t picked up on. This communication has to be in place so we can act more effectively and more efficiently.

What do you see as the hottest topics within performance measurement these days?
It is definitely derivatives. GIPS had its day — since the beginning of 2000 — and most people are kind of beyond that hurdle now. It’s definitely derivatives and more exotic products and the number of those exotic instruments. Teams really need to understand these things and find the best ways to measure them. We all use proprietary systems but the question is can these systems handle these so we can get decent reporting out and into the industry. We want to be accurate — we absolutely have to be accurate.

Another topic that attracts of attention at the water cooler is software. What are your thoughts on this subject?
There’s a broad range of software out there. A lot of vendors haven’t put a lot of money in. In early 2000, when they were losing a lot of clients, there wasn’t the money around because of the stock market crashes, so the vendors weren’t getting the revenue and they couldn’t invest in the systems. Others sat back on their laurels and didn’t reinvest and all the time they should have been developing new solutions. At the end of the day, it’s all cyclical because when someone decides to invent a SWAP it takes a while for people to understand it, and it takes a while for people to start using it. The cycle of software vendors enhancing their systems to handle the new products takes time.

When you’re sitting with your coffee in the morning and reading the newspaper what stories are you reading in the financial section?
Everyone likes reading about companies that mean something to them, so we know if it is one of our pension funds or a company we’ve invested in, they are the ones that catch your eye.

Is there something you still want to accomplish in this field?
I am committed to making the performance team within AEGON Asset Management a viable unit, the best in the industry. I PMR