Ken Chenault: That was the first mistake.
Andrew Baldwin: That was the first mistake — the only mistake that made sense. And they gave me a credit limit of $1500. And I told a friend the story. He said you’re an idiot for not being on American Express. So the next day I applied for American Express. The American Express gave me a credit limit of $25,000. And when I look back I can only think that you personally thought that I was 16 times more valuable than Visa did. So hopefully I can repay some of that appreciation through this time.
Ken Chenault: Thank you.
Andrew Baldwin: I want to start out the interview with a very similar question to what Roanak asked during his 2010 interview. You led Amex through a pretty incredible time right after you joined — right after you became CEO, 9/11 occurred. And then you also were the head of a financial services company during the worst financial downturn in 80 years and kept your job which is no small feat. Can you walk us through the one or two days that were the biggest tests for the largest challenges?
Ken Chenault: Certainly. First, just let me say it’s a real honor to be here. And obviously I remember Roanak very vividly and was just impressed with both his authenticity and his humility. So it means a lot for me to be here. Really appreciate it.
So let me just say that obviously 9/11 and the financial crisis were absolutely incredible. I would say the most horrible obviously was 9/11 from a emotional standpoint, because we lost 11 employees and the loss of human life is always a tragedy. What was most important there was to rally the organization, to understand both the reasons why they should be hopeful but also dealing with the reality that the travel industry was in total disarray. Spending on our credit cards had dropped dramatically. And what I recognized was that we had to transform the company in a relatively short period of time. And that leads me to one of, I think, the real challenges from a leadership standpoint, is how to be decisive and compassionate.
So within 60 days of 9/11 I decided that we had to substantially change our cost structure, which meant that we were going to have to lay off employees. And many people in my top executive team said this is not the time to do it. And from an emotional standpoint, they were absolutely right. The concern that I had was that the future of the company was at stake. And I said we have to do this in a compassionate way with our employees. But we have to do it.
And what I believe very strongly that one of things you’ve got to do in leadership is you need to tell people both the truth and you don’t talk down to people and you explain to people the reasons why. And I’ll cut to the chase just to simplify so we can also talk about the financial crisis, is what I explained to people were the reasons why what was happening to the company. And at that time we always do a employees survey. And a third of our incentive compensation is really based on the satisfaction and engagement of our employees because we really do believe in the service profit chain. And people said, Ken, if you’re going to lay off basically 12% of the workforce, the last thing you want to do is to do a survey on it. And I said not only are we going to survey the employees but we’re going to survey the people that we laid off. Because from a leadership standpoint everyone has to be held accountable.
And I think partially because of the times that we were in with 9/11 but also the leadership in the way that was done, we received the highest employees survey scores that we had in years. So that was very much a turning point for the company. And then frankly one of the most exciting things for me was over the last five to ten years is in fact to see some of those employees come back to the company because of the growth of the company and what was happening.
The financial crisis was very different. On one level, it didn’t have the emotion of the loss of human life. But you really felt that you were falling off the cliff. And in a crisis what I think is very very important and where it really hit me was when Congress voted against TARP. And I vividly remember my son is now a junior in college, calling me and saying, dad, everyone says that the company is going down and you’re going to be fired. And I said, Kevin, it’s not going to be that bad. Don’t worry about it. But the reality is that represented the fear. Because to me when messages permeate the playground, you know this is really serious that there are real problems. And for us where we were impacted is we were very reliant on the wholesale funding model. So we did not take deposits and so literally over a weekend and this goes to the power of a brand, I said we’ve got to get into the deposit business and both inside and outside the company, people said, given what’s going on with financial services companies in the environment, there was no way you’re going to get this up and running. The only way we could do it was in fact to work with third parties. So we, in fact, worked with other financial services companies to see to basically sell our deposit products.