This story was originally published in The Spectator in December, 2005
Paul Bates was nervous. The feeling surprised him a bit. A successful entrepreneur, Bay Street investment broker and storied CEO, he’d sat in his share of executive boardrooms.
He’d lectured auditoriums filled with some of the smartest, toughest, most egotistical business minds in the country.
Yet here he was, in a modest boardroom at McMaster University, his hands shaking.
This profile by former Spectator reporter Naomi Powell was published about 20 months after Bay Street veteran Paul Bates was named Dean of McMaster University’s DeGroote School of Business in March, 2004. The photo shows Bates with students at the school’s Allen H. Gould Trading Floor.
It was February 2004 and Bates was sitting his first job interview in 20 years, for a position he never imagined he’d fill: dean of the DeGroote School of Business.
“They told me there would be a small group there to ask me some questions, ” Bates says. “I walked into the room and there were 15 people sitting at a table. I thought, this isn’t an interview, this is a hearing.”
On the other side of the table, sitting quietly amid the panel of professors and administrative leaders, Dr. Milena Head considered the fit, charismatic man in the three-piece suit. Of the six candidates in the running for the dean’s job, Bates was most certainly the underdog.
She noted the shaking hands, the occasional quiver in his voice.
“It just struck me — he was actually nervous, ” she says. “Someone so successful, it just … well it floored me. We thought he might be sort of cocky but he wasn’t. But I guess he knew he was an unusual choice.”
For the first time in the school’s history, the dean’s search committee had decided to look outside traditional academic circles to consider candidates from the business world. Bates was the ultimate business leader — a 55-year-old Bay Street powerhouse and pioneer of discount brokerages — but the only candidate on the short list without a university degree.
“A few years ago we would have been laughed at for picking him, ” Head says. “But he was a perfect fit. He’d prepared a vision for the school and where he wanted (it) to go. He saw it as the culmination of his life’s work.”
For Bates, the job was a 75 per cent pay cut.
[I]t meant leaving the familiar world of Bay Street for the unfamiliar land of academia. It meant buying a farm in Flamborough where he’ll settle with his wife, Sally, in the spring.
But in some ways, it also meant coming full circle. At 19, living in East London, England, Bates planned to go to teacher’s college — a idea scuttled when he and his now-wife Sally learned they were expecting a child.
“I figured we’d be getting married pretty soon, so I went down to the employment office to look for any job I could find, ” Bates says.
The only job available was not in a business suit, but blue serge uniform of a traffic constable. Every morning, Bates directed traffic on Tregenna Hill, outside the National Westminster Bank.
He got to know bank regulars, including its manager — a tall, stern man named Stuart Guppy.
“He was straight out of Edwardian England, ” Bates recalls. “Very formal. Three-piece suit. Keep in mind, those days, a bank manager was as important in the community as a rabbi or local priest.”
One day, “Mr. Guppy, ” offered Bates a teller’s job. For the next two years, Bates was a banker by day and moonlighted as a taxi driver at night.
“These were my two rules: know everything and arrive early. I made it my business to know everything about the way a bank branch operates. If someone needed to wire money to Paraguay, I knew how. Those things have guided my career ever since.”
He climbed the ranks to become the second-in-command and by 1973, the average age of his peer group was 10 years older than he was.
“I realized that although I’d risen fairly quickly, my career was going to plateau for a while.
“So I started looking.”
He opted to take a job at Scotia Bank in Nova Scotia, where again he shot through the ranks. He eventually moved to Toronto, where at 36 he became Royal Trust’s head of investment and wealth management. By then, Bates was used to being the young pup on the executive floor, so when First Marathon Securities approached him to become president of their fledgling discount brokerage firm, he jumped at the chance.
discount brokerageS WERE STARTING UP IN CANADA
[T]here was big money to be made. Although brokers’ fees had been determined by the market for decades, deregulation meant for the first time brokers could set their own fees according to the services they provided. Investors who wanted to do their own research and choose their own stocks, could choose a discount broker to make the trade.
Bates took the helm of Marathon’s discount startup, eventually growing it to become the second largest brokerage of its kind in Canada. The largest firm, TD Greenlight, picked up Marathon and in a rare move asked Bates to take over as president of the new corporation.
“I stayed, but it wasn’t right for me, ” he says. “I felt this urge to become an entrepreneur.”
A year later, he started his own discount firm, Priority Brokerage, and set up shop on Toronto’s Yonge Street. He worked round the clock to build the company and maintain the volunteer work that had become a significant part of his life moving to Toronto.
While still a private firm, Priority was snapped up by Charles Schwab and Bates once again found himself heading up a new corporation, this time as CEO of Charles Schwab Canada. He moved into a spacious office on Toronto’s Queen’s Quay with a view of Lake Ontario and decided to settle down for a while.
“Then came Sept. 11 and that changed everything, ” he says.
The investment business suffered and Charles Schwab decided to close its international offices. This time around, Bates decided to build a “portfolio of jobs” that would allow him to split his time between directors’ posts on various corporate boards, teaching at the University of Toronto’s Rotman School of Business, his volunteer work and his family.
Always interested in the issue of business ethics, he volunteered at the Ontario Securities Commission, and launched into a project examining the relationship between broker and investor. The project led to new regulations designed to protect investors.
“It really was ground-breaking work, ” said David Brown, former chair of the OSC. “He has incredible passion and real knowledge of the ethical issues in the market.”
It’s Bates’ passion for ethics that is largely driving his vision for DeGroote’s future.
[H]e is now a commissioner at the Ontario Securities Commision and is attempting to reset the compass at DeGroote, identifying ethics, leadership and innovation as the three pillars for his overall strategy. He has hired a consultant to review how the school incorporates ethics into its courses and makes a point of providing real-world examples to his students.
“I can stand in front of a class and say, ‘You know this management book you’re reading? Let me tell you about a time when I was in that exact situation, ‘” he says. “That’s what I bring.”
But his lack of academic experience hasn’t been lost on everyone. As a way of addressing the gap, Head was named associate dean academic for the school. But there are some in the department who still worry that having a non-academic at the helm will mean less emphasis on research.
“There are probably a few, a handful, who perhaps if they were in a room without me, would say they’re not really sure about having a business person in here, ” he says. “But I’d say that the overwhelming majority of faculty understand that I’m not there to be a pretend academic, that I’m there to build a school and rely on their academic prowess. I’m not there to threaten their scholarly activity.”
He focuses his energy on building consensus among faculty — a new skill for a manager used to directing staff — and remoulding the relationship between dean and student. Each month he hosts “Dean on Deck, ” where he stands before students to answer their questions. And he tries to make appearances in as many classes as possible, often to drive home the importance of ethics.
“I want to see a business school that really develops these leadership and ethical judgment frameworks. That way, when people go out and they are in an ambiguous situation, which they will be, they have a better chance of making the right decision.”
After a year at DeGroote, he is still contacted by search firms anxious to draw him back to Bay Street.
“It’s a temptation on two fronts: one, there’s a lot more money in it, ” he says. “Second, it’s a world that I understand, that I’ve been part of for 25 years now.”
But he has no intention of leaving. DeGroote has never had a dean stay for more than one term. He wants to be the first.
“I’ve had some success in business. But what I do at this school, that’s what I want to be remembered for.”