Insurance
Insuring innovation
How Robert Chappell keeps Penn Mutual Life Insurance adapting to a changing marketplace
By Erik Cassano
Smart Business Philadelphia | February 2007
Robert Chappell is overseeing but a chapter in the long history of Penn Mutual Life Insurance Co.
For 160 years, the Horsham-based company has changed and evolved to better fit the needs of its customers and the demands of the marketplace, and to continue to thrive, it must keep doing
so, says Chappell, CEO of the company since 1995 and chairman since 1997.
His job, he says, is to foster the innovations that will keep Penn Mutual at the top of its industry for years to come. You must enable your employees to cultivate and share ideas, and to do that,
you must provide them with the tools and the environment to make it happen.
“The big thing for a company like ours, with a product that’s changing but has some stability to it, is to be able to make sure you can keep an excitement and keep innovation going on in that
arena,” Chappell says.
Chappell’s ability to keep Penn Mutual adaptable has allowed the company to become one of the pillars of the life insurance industry, with 40 offices and nearly 870 employees and 2,000 agents
across the United States, and an estimated $1.2 billion in 2005 revenue.
Starting with communication
Chappell says if you want employees to innovate, you have to start by asking for innovation, then you have to keep reinforcing it.
“We say, ‘We want you to innovate,’” he says. “Then it goes through some trial and error. It’s not a once-and-done, here’s the speech, let’s do it. It takes time to keep reinforcing it.”
It starts with the written and spoken word, but that only takes the message so far. What employees truly respond to is action.
Communicating through action means constructing a corporate culture that values what employees have to say and allows managers to consider and implement ideas that come from below.
“You have to have people in leadership roles who are responsive to suggestions,” he says. “You have to have people below working across the organization who are comfortable making
those kinds of suggestions, so you have to have an environment where it’s safe to suggest something new.”
Chappell says that doesn’t happen naturally in a corporate setting. To help turn ideas into action, he has put in place interdepartmental organizations that are able to cross boundary lines
within the company. The organizations are made up of people from different departments, and their goal is to get the various departments to pool their resources on projects.
“It helps more than just saying, ‘We’d like you to do this,’” he says. “It really helps show them that we mean what we mean, and as a management team, we’re fine with those kinds of [inter-departmental] conversations.”
With innovation come mistakes. Ideas will fall flat, miscalculations will be made and potential contingencies will be overlooked. The key is how you respond when a mistake is made.
“When you think about what a mistake is, a mistake is when you go off the standard,” Chappell says. “Then you have to think about the consequences if I go off the standard.”
If employees get off track, then get back on track without doing damage to themselves or to the company, you should look at it as “no harm, no foul.”
“It’s not the end of the world,” he says. “People aren’t trying to make mistakes. They’re trying to make things better.”
Sometimes a project encounters a speed bump, or even an all-out roadblock. Sometimes it’s beyond the control of the people working on the project. Regardless of the cause, if you bring
the hammer down on your employees when something stalls out or fails, it sends a bad message to the rest of the company.
“If you come down on them and have severe consequences, you send word to the atmosphere of the company that making an idea where there is a potential for a mistake is a bad thing,”
Chappell says. “It sends a message that the negative consequences are so severe, you don’t want to pursue the idea in the first place.”
The key is developing an attitude of positive encouragement. There must be consequences for major mistakes or repeat offenders, but when possible, accentuate the rewards for doing a
job right as opposed to the potential punishment for doing something wrong.
Chappell makes successes well-known throughout the ranks at Penn Mutual, using them as a benchmark to get his associates to achieve to higher standards.
“You have to give your associates recognition,” he says. “Once a month, we have associates nominate other associates for going above and beyond the call of duty. Most of the time, it’s innovation they’ve done that gets them recognized.
“Then we meet in the atrium of our building monthly, and recognize the associates that have been nominated.”
The monthly atrium gatherings are as much for the benefit of the audience as for the honorees.
“It’s important for the people being recognized; it tells them that what they’re doing is the right thing,” Chappell says. “It’s important for their associates because it shows them that this is
something that is considered of value within the company, so then they want to emulate that kind of behavior.”
Sometimes the honorees receive monetary rewards, but Chappell says that isn’t necessarily the point.
“It’s being recognized by their associates,” he says. “That’s what you’re doing to create the culture of innovation because money doesn’t change the culture as much as recognition.”
Changing with the times
More than 25 years ago, Penn Mutual was like a lot of businesses that needed to process large amounts of information in a hurry, and it had a typing pool.
For those not old enough to remember, a typing pool was a group of clerical staffers that would take written notes or voice recordings and turn them into typed letters and memorandums.
They were the word processors of their era. Then the personal computer rendered typing pools obsolete, and those workers had to be re-trained.
Companies have to be able to adapt to shifts in the business landscape, and a big part of that is adapting your workers. Without properly trained workers, there can be no innovative ideas
that push the company forward.
Chappell says keeping employees up-to-date is an ongoing task. It starts when an associate is hired and continues yearly.
Penn Mutual runs a learning center for ongoing employee training that includes classroom, seminars and online training on both new product specifics and new skill requirements. Penn
Mutual associates spend between 20 and 40 hours a year in formal training.
“What we look at for any associate in the future is what are the skills that will be required, what kind of skills will be needed for the job,” he says. “Then the job changes as new technology
comes in and new products are developed, and a different set of skills is needed.”
Chappell says the advent of computers has turned more jobs into “thinking jobs.” More jobs now require a higher level of technological sophistication, along with an increased emphasis on
communication and organization.
Employees need to be trained not only in how to handle new technology but also in the peripheral skills that go along with it. Chappell says that as information moves faster and the variety of the products and services you offer becomes more complex, the workload will require your employees to develop interdisciplinary abilities.
“In some of our new products, we’re guaranteeing the equity values,” he says. “What that requires is for us to have a crossover of skills between the investment people and the actuarial people.
“We’ve told them that we need skills that are not normally in either one of your disciplines. We need a set of skills that transcends both of them. We’ll help teach you on it, and then we’ll
also need you to learn the language and communication of each of the different disciplines.”
If you have versatile people who are willing to learn the tricks of another department’s trade, it will make your company much more adaptable in the long run.
“Collectively, you can be much more effective than if you worked separately,” Chappell says.
Distance learning
Penn Mutual has a challenge that is becoming increasingly common among businesses as markets go global. The company has more than 2,000 agents throughout the United States, and
Chappell needs to drive home the same company standards to all of them.
Communicating across long distances can be a headache for any CEO, and Chappell says if you’re looking for an easy way out, you won’t find one. You have to keep hammering away at the
same basic messages that you preach at the home office but using means that are less direct than face-to-face communication.
“It all goes back to communication,” he says. “You have to be able to talk, you have to be able to hear what they say and communicate. Different people learn in different ways, so a
lot of it is repetition, to follow up and make sure the words I use with you are the words you use with me. It’s not just a one-shot deal. You can’t do it for 30 days. It has to be done over
a period of weeks, months and years to get the message consistent.”
Chappell uses every communication method available to frequently communicate his messages, be it e-mail, Web broadcasts, phone calls or the occasional personal visit.
“We do every capability that is there,” he says. “You have to use all the available capabilities in different situations. It depends on what kind of point you are trying to make.”
If you have a major message to communicate, or really want your managers in the field to get their hands dirty working on a problem or a project, you might need to take the time for a face-to-face meeting.
And Chappell doesn’t use e-mail or phone calls to hash out an issue that requires more direct attention.
“If it’s a short point, you can make that in an e-mail,” he says. “But other times, when you want to have people really work through something, it needs to be a group meeting.”
Good communication practices come back to having your hand on the rudder of your company and steering your employees in the proper direction.
“You have to set the playing field,” he says. “You have to keep the relevant topics on the minds of your people and make sure that leadership teams are behaving in the way you’re asking
for. And then you have to make sure they’re carrying that communication through the company.
“It’s not just one person, it’s everybody, so you have to help cascade that through the organization so people on all levels have the same message.”
HOW TO REACH: Penn Mutual Life Insurance Co., www.pennmutual.com
