#2 at the world's largest retirement fund: TIAA-CREF President Tom Jones is poised to join corporate America's elite club of chief executives.

IT WAS SUNDAY, APRIL 20, 1969, and Cornell University senior Thomas W. Jones was prepared to die for a cause. It was the cause of the times: the fight for justice, inclusion and self-determination. Specifically? It was about black power. In an effort to break the school's resistance to their demands for an African-American studies program, black students had seized Cornell's Willard Straight Hall, armed themselves, and refused to leave the building until the administration was willing to negotiate.

Once inside, the student leaders lost control. That's when a reluctant Jones took center stage, making tough decisions on tactical moves and mapping out negotiation points that forced the university to listen.

Jones was the last student to leave the building that day, holding a rifle in his right hand, the other raised in a clenched fist--a symbol of defiance, solidarity and victory. It was that image that was blazed across the cover of Newsweek magazine--a symbol of just how far the student movement of the sixties had come.

Despite his dramatic exit, Jones, focused leadership resulted in a peaceful release of the student union. And equally important, his perseverance helped establish Cornell's renowned Africana Studies and Research Center, one of the nation's leading institutions of black studies.

When asked about the incident on the eve of the 25th anniversary of the Straight Takeover, Jones just answers in his own quiet, thoughtful way: "I did what I had to do."

DETERMINED TO DELIVER

As president and chief operating officer of the Teachers Insurance Annuity Association-College Retirement Equities Fund (TIAA-CREF)--the world's largest pension fund with $130-plus billion in assets--and a trustee of Cornell's governing board, Jones has built quite an impressive career doing what he felt was right.

Sitting in his elegant corner office high above the chaos of midtown Manhattan, Jones speaks easily about his career, his company and the futures of both. He has pulled on his suit jacket for the interview, his hands are freshly manicured, his shoes shine. Jones looks like the type of man he is: disciplined, intellectual, honest, intuitive. Always diplomatic and politically savvy, he doesn't hedge or shy away from tough questions or controversial issues. He is neither pretentious nor arrogant, but he is very proud, and with good reason.

During his five years at TIAA-CREF, Jones has been at the very center of moving the 76-year-old financial giant to where it is now--in a position that is not only dominant, but competitive and progressive, offering innovative products and superior customer service. (The Teachers Insurance and Annuity Association is the nation's third largest insurer, and the College Retirement Equities Fund stock account is the world's largest managed equity fund, based on assets under management, and is more than twice the size of Fidelity's Magellan Fund. TIAA-CREF is a non-profit pension fund.)

In recent years, the competition--mostly in the form of mutual funds--has been muscling in on TIAA-CREF's formerly untouchable market. While the advantages of longevity and consistently high performance are secure with TIAA-CREF's 1.7 million existing shareholders, they are aging. And those in line to follow them, incoming academics and staffers at the nation's 5,000-plus colleges, universities, independent schools and related nonprofit educational organizations, are a tough sell in a universe where competitors with names like Fidelity, Vanguard and Prudential have much greater visibility.

Beyond that, customers are demanding--and expecting-more than ever before in the way of products, options and responsiveness. Their mandate: Deliver, or we'll find a company that will.

Though he may become the second African-American ever to run a Fortune 100 service company (Clifton Wharton Jr., TIAA-CREF's chairman emeritus, was the first), Jones insists it is this mandate that motivates him, not the prospect of someday running the company. "My focus is on being an excellent COO so that I can be considered for CEO not just here, but at other major companies as well."

A FRESH FACE

Tom Jones came to TIAA-CREF already a standout. Chairman and CEO Wharton was putting together a team to overhaul the old-line nonprofit organization that, back in 1989, was getting knocked by analysts and shareholders alike for being stodgy, inflexible and out of touch with the times and desires of its customers. (For more on Wharton, see "What's Next for Cliff Wharton, " Newspoints, this issue.)

Under the leadership of Wharton (who left TIAA-CREF to serve briefly as Bill Clinton's deputy secretary of state), the organization was revamping its financial portfolio to create a wider range of financial products for college and nonprofit employees. These products were to be as flexible and profitable as the retirement plans offered by the nation's leading mutual funds and insurance companies. Equally important, the financial powerhouse had to calm the fears of its investors, who were concerned about sinking real estate values and financial scandals that were rocking other heavy hitters in the insurance industry.

To help address these concerns, TIAA-CREF's board of trustees had gone outside the organization to recruit Chancellor Wharton, head of the State University of New York. Still looking for an injection of fresh ideas, Wharton personally conducted an outside search for a chief financial officer: "I made calls throughout corporate America asking, |Who's the best CFO material out there?' Tom Jones, name kept coming up. So I called him directly. Although he had gotten many calls from headhunters and always turned them away, he told me that this was the first call he,d ever received from a CEO, and he liked that."

Jones had little reason to entertain the advances of headhunters. At age 37, he was already senior vice president and treasurer at John Hancock Mutual Life Insurance Co. in Boston. As head of its treasury and corporate financial analysis department, he had earned high praise for managing the firm's rating agency relationships, capital allocation recommendations, corporate finance functions and strategic business unit performance analysis. After seven years with Hancock, Jones was told that he would become CFO in 1991 and, by the late '90s, would be among a handful of people considered for the president's slot.

Still, Jones says, he could not ignore a call from a CEO, particularly an African 7 American one of such high repute. Ultimately, he could not refuse Wharton's offer either.

"What impressed me most was TIAA-CREF's governance structure," Jones recalls. "Here was one of the fastest growing, most well-established companies in the business. Yet, two years earlier, they had gone outside to find a CEO. That doesn't happen very often in big business," particularly in a conservative industry like financial services.

"That told me that the board was not a |club' of the kind you find in most big businesses," he adds. "I decided I would rather work in that kind of organization, because even though I was treated well at Hancock, at the end of the day, you never know what the rules of the club are until you,re a member."

A HARD TASKMASTER 

By all accounts, Jones was the right man at the right time. Says Wharton, "He was everything I expected and more. Bright, able, hard-working and tough, he had a very strong command of financial structure. He's a hard taskmaster, but he doesn't demand of others what he doesn't demand of himself."

All true, says Thom Williams, an 18year TIAA-CREF veteran and former being Wharton's pick didn't keep Jones from having to "overcome the reluctance of some individuals to accept that a new person--an African-American, and someone they may have been unaware of-would leapfrog over in-house executives," says Williams. "His talents overcame any residual resistance."

Perhaps the most important contribution Jones made early in his tenure at TIAA-CREF was his insistence that the best way to shore up confidence in its financial quality and strength was to get Triple-A ratings from the nation's leading rating agencies such as Moody's and Standard & Poor's--something TIAA-CRFF had never done before.

Given the savings and loan and junk bond scandals of the time, insurance agencies were under siege. Real estate was sinking, taking some agencies with it, and customers everywhere were growing tense. TIAA-CREF, with one of the nation's largest portfolios of real estate and junk bonds, had to do something.

"Shareholders need independent evaluations and validations of a company's strength, rather than just hearing a company toot its own horn," says current CFO Dick Gibbs, who was a vice president under Jones at the time. "His foresight in that area proved crucial to us," Gibbs adds. Today, TIAA-CREF is one of only four life insurance companies with Triple-A ratings from all four top ratings agencies. Says Gibbs, who still reports to Jones, "Tom gained respect from the outset by deeds. He's incredibly knowledgeable and has the ability to tackle and explain complex issues in an easily understandable way. He's extraordinary on both ends of the spectrum--the big picture and vision, as well as the fine points You don,t see many managers who are great on both."

Nevertheless, some staffers are overwhelmed by the process of getting Jones the information he demands. "The paperwork required is unbelievable," complains one staffer who requested not to be identified. "As we continue to reorganize into more flexible, decentralized business units, our senior management team, which is dominated by accounting types, relies heavily on reports to stay in touch." (Jones, who is a C.P.A., reports to Chairman and CEO John Biggs, an actuary by training.)

Despite a penchant for numbers, being effective, Jones insists, is not about being the smartest person, or always having the right or best answer. "It's about getting the best out of other people, creating harmony, cooperativeness and a sense of purpose."

Mark Wright, second vice president, pension and annuity services, and Washington, D.C., branch office manager, says Jones does just that. "I've been around here for 15 years and have reason to be jaded, but I've sat in meetings with him and I feel uplifted. I see it in other peoples faces--the pride, the good feelings, the belief that what TIAA-CREF is doing is not just right, it's good. The bottom line for motivating people is getting that kind of buy-in. He gets it."

But JONES-AT-A-GLANCE

Current: At 45, Tom Jones is president and thief operating officer of TIAA-CREF a $130-plus billion pension fund institution. Hand-picked by TIAA-CREF chairman emeritus Cliff Wharton as thief financial officer five years ago. Director of Eastern Enterprises and Thomas & Betts Corp. Member of the Board of Overseers of Cornell University Medical College and a trustee of The Brookings Institution.

Roots: Youngest of four children. His father was a minister/nuclear physicist. Married twice, currently to the former Adelaide Knox. Two children, ages 5 and 25.

Education: B.A. and M.A. degrees from Cornell University. M.B.A. from Boston University.

Lifetime Philosophy: "Other won't define me. I define me!"

Time line Highlights: Entered high school at 12, Gun-toting Cornell campus student lender at 19. Senior vice president and treasurer of John Huntotk Mutual Life Insurance Co. in Boston at 37.

Descriptive Adjectives Used by Colleagues: Leader, soft-spoken, determined, committed, quick-study, financial wizard.

TAKING CARE OF BUSINESS

The youngest of four children raised mostly in Queens, N.Y., Jones excelled early, skipping the fourth and eighth grades. Withstanding the taunting that comes from starting high school at 12 years old seems to have helped mold the self-contained determination that would drive his future.

"In every new class, boys would put me down because I was younger," Jones says, his eyes narrowing. "I remember very clearly deciding that others wouldn't define me. I define me. There's nothing anyone can do to put me down or hold me back." He traces that early centering to his father, a Southerner who pursued a career in the ministry as well as in engineering, getting a master's degree in physics from Indiana University.

When the defense industry geared up during the Cold War, Jones, father got a job as a nuclear physicist. His title was never commensurate with his talent, Jones notes. But, given the obstacles his dad faced, Jones adds, "His success far surpassed what I've accomplished."

At the end of Jones, sophomore year in high school, his father's work relocated the family to San Diego. There, Jones was elected class president, but couldn't serve because the family was moving again, this time to Ohio. At the end of his senior year there, he was voted most likely to succeed. Entering Cornell at 16, he was elected freshman class president.

After receiving a master's in public health from Cornell, Jones began a career at Boston's ABT Associates, a social science research consulting firm, and was soon introduced to the business world through a friend at the accounting firm of Arthur Young & Co., also in Boston.

Charged by the confidence and enthusiasm he saw in Young's ranks, Jones took a job there, earning his C.P.A. and M.B.A. at night and passing all five parts of the certified public accountant's exam in one sitting. Although he rose steadily, serving clients in insurance, banking, real estate and other industries, Jones clearly recalls having to constantly draw on that inner drive first galvanized at age 12.

"In the early going at Arthur Young and at Hancock, that internal centering was critical to my being able to maintain confidence in myself as a black man," Jones says. "Every time you deal with a client, every time you deal with a manager, every time you deal with your peers, you have to reestablish yourself. |Were you really good enough?, It was never stated explicitly, but you could see it in their eyes." Frustrating as that may have been, Jones says that such attitudes ultimately worked to his advantage. His colleagues "weren't looking to do me in," he says, "because they completely discounted me."

Meanwhile, African-Americans in the insurance industry didn't underestimate Jones; many simply didn't know him. Thus, when Wharton tapped Jones to be CFO, black industry executives, such as Equitable's senior vice president Darwin Davis, were surprised they had not heard of him sooner. Since then, says Davis, "I've been making it my business to get to know him."

Fletcher "Flash" Wiley, senior partner at the Boston law firm of Goldstein & Manello P.C. and a close friend of Jones' since their days together at ABT, explains his low-key ascension this way: "Where some rise in the business world by being in the center of the social swirl and doing a lot of back slapping, Tom's TCB all the way--taking care of business."

THE ULTIMATE AMBASSADOR

Since becoming TIAA-CREF president in 1993, Jones has turned his attention to getting the same high marks for the company's products and services as he secured for its financial quality and strength. That requires empowering TIAA-CREF's rank and file to develop and deliver products and services competitive with the big guns in mutual funds and insurance. These competitors are already attracting retirement dollars from such institutions as University of Southern California and Duke.

The problem? The strength and stability of these TIAA-CREF funds are their prime weaknesses. Although CREF outperforms most mutual funds (its size keeps expenses low, and Biggs and Jones have put a lid on expenses to keep them that way), the myriad investment choices of the better-known funds are appealing. On the flip side, the inflexibility of TIAA's withdrawal policy may be great to invest in jumbo mortgages (it put up the $625 million mortgage on Minnesota's Mall of America), but individuals want more access to their money.

Such is the charge of the company's year-old Service Council, which was developed and is led by Jones. Also reporting to him are pension and annuity services, insurance services, finance and planning, operations support and incidentals, such as the office of the ombudsman.

Jones and CEO Biggs have transformed the company culture into one that is perceived as more open, progressive and democratic than before. Wharton "was a tremendous ambassador for us," explains Thom Williams, who was recently promoted to vice president and manager of a new Denver-based customer center for the western region. "Jones and Biggs have turned much of those ambassadorial impulses inward to great benefit."

Although TIAA-CREF's senior management team is committed to the development of its staffers, glass ceiling issues are becoming more of a reality. Highly-trained younger professionals are often frustrated by middle-level managers who have settled comfortably into their positions. Says one staffer, "Firing is unheard of in this ivory tower, paternalistic culture."

On the other hand, it was this team under the direction of Wharton that has pushed for an enhanced level of diversity throughout the company's ranks. TIAA-CREF also has a procurement program, started under Wharton, that identifies and develops business relationships with minority vendors, contractors and consultancies. There is a similar banking policy as well.

The way Jones sees it, TIAA-CREF's future--and his own over the next decade--lies in renewing and sustaining what's been built so far. "It's the challenge of avoiding complacency," says Gibbs, who serves on several corporate boards. "Look at the GM story, the IBM story, the Kodak story and, to some extent, the Amex story. These are all companies that were once dominant that have found themselves forced to restructure because they've been passed by. Some of the most dangerous moments are at the very pinnacle of success because you face the challenge of not taking for granted what got you there."

As for Jones, future at TIAA-CREF? "There's no question that he's a strong candidate to eventually move into the CEO position," says Williams, who is black. "We have a short but very potent history of recognizing talent over color. Jones, advancement would serve as proof that [Wharton] was not a fluke."

YESTERDAY'S PASSION, TODAY'S POWER

To say that Jones has been transformed from being anti-establishment to ultra-establishment would be far too simplistic, and actually wrong.

Nevertheless, ever since Jones was appointed to Cornell's board in 1993--the same year that he moved into the number-two slot at TIAA-CREF--he has found himself in the position of analyzing and answering for the provocative choices he made at age 19. Despite his candor about his days on campus, the 45-year-old executive, who takes time after his Cornell trustee meetings to discuss campus issues with the students, is adamant that he didn't define himself by the events of the day then, and he certainly doesn't now.

Wiley, who introduced Jones to his second wife, Adelaide, and recently marked 20 years of their friendship, says the dramatic turn of events at age 19 "is part of the man [Jones] still is. What it says is that when he's serious about something, he's willing to put absolutely everything on the line. That has never changed."

TIAA-CREF's Wright agrees. Calling Jones "a man of strong views and great passion," Wright uses Jones, leadership at TIAA-CREF as an "expression of the same commitment" he showed 25 years ago at Cornell. If he did brandish a gun then, maybe it's a pen today, or a speech--all with sharp edges and powerful results.