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James E. Rohr

Grow Up Great

EDITORS’ NOTE

After receiving a bachelor of arts degree from the University of Notre Dame and an MBA from Ohio State University, Jim Rohr joined The PNC Financial Services Group, Inc., and has since held positions of increasing responsibility. He was elected Vice Chairman in 1989, a director in 1990, President in 1992, COO in 1998, CEO in 2000, and Chairman in 2001. This year, he was named “Banker of the Year” by American Banker magazine. Rohr serves on several boards, including Allegheny Technologies Incorporated, Equitable Resources, Inc., and RAND’s board of trustees. He is also Chairman of the Allegheny Conference on Community Development.

COMPANY BRIEF

Headquartered in Pittsburgh, The PNC Financial Services Group, Inc. (www.pnc.com), is a leading supplier of financial products and services, providing retail and business banking; specialized services for corporations and government entities, including corporate banking, real estate finance, and asset-based lending; wealth management; asset management; and global fund services. Employing nearly 28,000 people, the firm, through its PNC Bank flagship line of business, offers consumer and corporate services through 1,100 branches across the mid-Atlantic region. In addition, the firm owns about 35 percent of publicly traded fund manager, BlackRock.

Why is your commitment to improve early childhood education via the PNC Grow Up Great initiative so close to your heart, and have you been pleased with the progress since the launch in 2004?

When I joined PNC about 35 years ago, one of the first pieces of paper I was handed to sign was a United Way pledge form. The company has a history of giving back. We had disparate community initiatives through which our employees committed more than one million volunteer hours over several years. So we asked ourselves, “If we focus on one or two areas, could we do even more for our communities?” The answer was yes. So we asked our employees what they were interested in, and their answers were unanimous – education and children.

Right around that time, a number of studies had come out about the value of quality early childhood education, including Nobel Prize winner James Heckman’s study, which found that for every dollar invested in early childhood education, the return to society is as much as $16. We wanted a focus that would have a meaningful impact on the community, and an educational initiative seemed to fit with our employees and how they wanted to make a difference. We put a group of people together to create the PNC Grow Up Great initiative, and they did a wonderful job. We created an advisory council, including experts on early childhood education and school readiness, and they gave us suggestions. They pointed out the need for advocacy on a national level, and the need for financing and volunteerism.

The program has been very positive, but we had to learn quite a bit. We walked before we ran; and we’re still walking, to some extent. We seek out neighborhood preschool programs that can be improved by grants, and then our employees make them even better by volunteering. It has worked extraordinarily well. We have more than 5,000 employees involved in the program today, and we made a $100 million commitment that’s moving things forward nicely.

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James Rohr with First Lady Laura Bush

We have entered into several partnerships to make the program more visible. Our partners include the CED [Committee for Economic Development], as well as the State of Pennsylvania, among others. For the first time in state history, the governor has included $75 million in the budget for 2008 for early childhood education. I testified at [Speaker of the U.S. House of Representatives] Nancy Pelosi’s early education summit in Washington, DC; and we lobbied with regulators to get some credit under the Community Reinvestment Act. So the advocacy piece is gaining momentum, and clearly, our employees’ volunteer time and our contributions have made a difference.

Our efforts on behalf of a North Philadelphia preschool program contributed to a dramatic improvement in mathematics education. At a Pittsburgh center, there has also been a significant improvement, year after year, in vocabulary. We measure and monitor these things. As a result, we recently received commitments from the federal government to expand the North Philadelphia program to include tax preparation and financial literacy programs for entire families. We’re partnering in ways that we didn’t think of before and taking it to yet another level. So I would say the program is paying off as an investment in our communities.

Many companies have corporate social responsibility initiatives to improve education in their communities, but they tend to focus on secondary education. Did you initially find it challenging to create awareness for the importance of early childhood education?

People have discussed primary and secondary education for quite a long time. There’s a tremendous amount of infrastructure built into that, and we weren’t certain that we could make a big difference there. The timing was right for an early education initiative. Numbers were coming out that the average underserved child shows up at kindergarten with a 25 to 50 percent deficiency in vocabulary, and from that point on, the gap between those children and the average kid only grows. By the time children get to fifth grade, they actually start making life decisions. For example, if one child is getting A’s and B’s, and another is getting D’s and F’s, by the time they’re in the fifth grade, the early deficit now means that one gets to go to high school and even college, but that won’t happen for the other. So, by the fifth grade, you may have lost those kids. That’s what caught our attention about early childhood education. We knew we had to do something meaningful for the youngest, and we thought we could make a difference by advocating, by donating, and by volunteering.

Competition is stiff in the global economy, and many complain that the U.S. educational system does a poor job of providing math and science training to young people. How do you think this will affect the future competitiveness of the country?

When I was in high school, the average graduation rate was 80 percent; now, it’s 70 percent, and even 50 percent in some urban areas. So we’re not only losing math and science; we’re losing large blocks of people. Providing a quality early childhood education system couldn’t be more important with today’s knowledge-based economy.

How have you managed to communicate the importance of PNC Grow Up Great throughout your organization, in order to get your employees on board with the program?

We were very careful, and we asked educators from around the country to work with us. We partnered with Sesame Street and Family Communications, which produces Mr. Rogers’ Neighborhood, because we understood we’re not in the education business. We needed to better understand the situation, and our team did a remarkable job of researching it and putting together a totally integrated program. We took our time; we didn’t rush into this. They did a great job, and the employees have responded phenomenally well.

You have made a commitment to invest $100 million over 10 years through this initiative, which is obviously a significant amount of money. However, there is a lot of need, and you can’t give money to every worthy cause. Do you ever get frustrated by the limits of what you can do?

That has been a great revelation. You go into all of these things thinking you can help so much, but the reality is it’s a challenge to have a meaningful impact. The amount of need is staggering, but that’s why I feel so good about the advocacy piece of the program. When state and federal governments really get involved in this and gain a better understanding of it, we’ll be better off. It’s going to take time. We didn’t get here overnight, and it’s going to take a lot of people talking about these issues to make them more visible to the leaders who can make a difference.

As a CEO, you obviously understand the importance of the bottom line and having metrics in place to measure results. What metrics can you use to quantify the success you are having with PNC Grow Up Great? Is it challenging to measure its impact?

We track the effectiveness of our grants and, more importantly, improvements in skill levels of the children. From a broader perspective, we measure our overall corporate impact vis-à-vis the four constituencies we serve. First are our shareholders – if we’re not serving the shareholder, we lose our opportunity to do anything else. Second are our customers. If we don’t serve the customer, we don’t do well financially. Third are our employees. We have a high rate of employee satisfaction. Our 401K plan is in the top 10th percentile, and we have been honored for a number of years now by Working Mother magazine as one of the “100 Best Companies for Working Mothers.” Our fourth constituency is the community. Through Grow Up Great, we’re helping to educate our future employees in the communities in which we live and work, and these kids are our employees’ children as well. It’s important to us.

Do your customers and shareholders have an appreciation for PNC Grow Up Great? Do they understand the importance of your investments in early childhood education and how those investments line up with some of your business needs?

I really feel that appreciation is growing. Many customers and shareholders have complimented us on the program. Part of our mission is creating awareness of the importance of this issue and getting the word out that high-quality early education programs impact our children, our society, and the health of our economy for generations to come. So I think many of our stakeholders do appreciate and understand it, and clearly, the communities do big time. Our employees are very proud of it as well. They’re proud of the things we do for our community, and of the fact that we listen to them. It’s their commitment to their community, and it’s working.

The business community’s reputation has suffered greatly in recent years due to highly publicized corporate scandals. Yet, many companies, such as PNC, are doing good works in their communities. Does the public effectively understand that the majority of American businesses are socially responsible? Is that positive message getting out?

I think it depends. LEADERS has certainly done a great deal to communicate that message. You’ve made a strong point for this kind of activity. Your magazine has said, “This is leadership. This is making a difference.” While corporate social responsibility is gaining more visibility, it’s going to take all of us to inspire change.

You mentioned your address to the Building the Economic Case for Investments in Preschool summit in Washington, DC. Are other corporate leaders likewise involved in the discussion of these issues in the political arena? Is the dialogue between the private and public sectors effective in addressing these issues?

I think it is. We all have expectations and frustrations, but things are getting better. People are gaining a better understanding, and the media is focusing more on these issues. I’m very hopeful.

Even though your time is pulled in many directions, you still seem to make time for your community. You must get great satisfaction out of the impact you’re able to make.

I’m very proud of our team. They were able to identify an opportunity in a timely way and put together a first-rate program. I am very proud of what’s been accomplished. Our employees feel good about their ability to make an impact. It’s the right thing to do.

You talk about community involvement and PNC, as a whole, with a good deal of passion. Do you really still enjoy the work that much, even after 35 years?

Yes, I do. I’m very fortunate. My job has a lot of different aspects to it, and it’s a very exciting and competitive industry. I’m still very involved, and I’m very excited about being part of our journey to build a great company.