In a Richfield business park full of unremarkable structures, National Interstate Insurance Co.’s brand new B building, muscled in between the company’s two other facilities, is also unremarkable — aesthetically speaking. Symbolically, however, it stands as a physical and fiscal promise the commercial automotive insurance company has made over the past five years to the growth and development of its workforce.
National Interstate has taken the steady 18 percent revenue growth it’s realized over the past five years and invested in its employees through programs addressing their trajectory from career cradle to career grave. The company is recruiting and training college graduates while working to bolster the current and next generations of National Interstate officers.
President and CEO Tony Mercurio talked, aptly enough, from within the B building’s Starbucks-driven coffee shop on the ground floor of the $25 million, 120,000-square-foot, five-story headquarters. The building is a culmination of sorts of a series of initiatives that got their spark in 2013. At the time, National Interstate saw dramatic market changes manifest in more distracted driver incidents and a significant shortage of commercial drivers in the U.S., negatively affecting the quality of the average driver. These issues, as well as a climate of greater litigiousness, led to higher losses, making it more difficult to produce the results the company was used to.
Seeing the threats, the company asked how it was going to deal with them and essentially shook its head. National Interstate just wasn’t prepared.
“We had always been an enviable organization, in my opinion, relative to our key competitors, relative to what we did, but we weren’t as good as we used to be. We weren’t as good as we wanted to be, and we certainly didn’t have the brand awareness, the identity, that we wanted to have in Northeast Ohio,” Mercurio says.
Healthier, happier employees
In taking a critical look at itself, the company began to re-evaluate its practices. Underwriting, IT and the state of its then-senior management team were all up for scrutiny. But regardless of the area of practice, every department shared one thing that needed to be addressed.
“It is a people business. We sell a contract. We sell a promise. We sell a relationship,” Mercurio says. “It can’t just be about price. It has to be about customer service. It has to be about relationships. It has to be about integrity.”
The company began changes at the campus level and vertically integrated them throughout the organization. On the surface, it was about recruiting practices and training, but deeper than that, it was about employee retention, morale, happiness and people wanting to be at National Interstate, being proud of who they work for and work with. And that started with where they work.
Much of the company’s B building took shape around attracting future generations of National Interstate employees — today’s high-schoolers, tomorrow’s college grads. The building was created not just to facilitate work but also to accommodate the nonwork needs of National Interstate employees. It embedded social components in the building, including collaboration areas, a game room, fitness centers, the aforementioned coffee shop and a company-subsidized cafeteria.
“It’s really not about being better at selling insurance or marketing insurance or being better underwriters or claims people. It’s being healthier people, having a positive state of mind and giving them the opportunity to have outlets at work,” he says.
Moving up the ladder
The floor-to-ceiling changes were about more than providing a foosball table for employees to tamp down stress. The company created programs designed to build a better workforce, an initiative that would benefit both employees and the company.
Facilitating the inflow of candidates is its internship program, which the company shifted from traditional intern grunt work to more of a long-term interview process that gives National Interstate a chance to get to know interns and interns to learn about National Interstate. Internships culminate in a project in which interns present to senior managers a solution to a problem they were given at the beginning of the summer.
“It’s a much more formal approach, with a lot more senior management interaction,” Mercurio says. “The idea is that we’re recruiting these young people so that when they have to make a decision when they come off campus, hopefully they’re choosing us. And we hope that we make good decisions during the intern interview process so that we want to choose them as well.”
Post-college, the company’s Ignition Training Program works to onboard candidates. It transitions well-rounded, hard-working college graduates into the ranks of National Interstate by first putting them though insurance 101 — a literal classroom with rigorous coursework, weekly tests on property and casualty insurance principles and National Interstate-specific presentations and lessons from outside speakers on general professional development and complementary services such as reinsurance.
“The expectation for the employees that have gone through there is that the retention will be higher, the morale will be higher, the promotion speed will be faster,” Mercurio says. “The average promotion time for Ignition candidates is a little over one year, which is pretty fast. Way more important than that, though, for me, is that I know every one of them. I’ve spent time with each one. I know we have some future officers that have come through the Ignition Training Program.”
Also promoting growth is National Interstate’s performance management system, which replaced year-end reviews with more frequent performance evaluations and employee manager check-ins, addressing employees’ capabilities and career trajectories. Employees commit to their own personal objectives and work with their direct reports to guide their progression, which Mercurio says engenders greater empowerment and accountability. More frequent check-ins — at least every other month — also mean objectives can better align with the changing needs of the business. Mercurio emphasizes that aspect of the program during the onboarding process and any time he speaks to new hires.
“I tell them, ‘Please don’t expect us to own your career. You have to own your career,’” he says.
That means employees looking to take hold of the next rung on the career ladder need to look for opportunities to do more than what is in their job description and affect the organization in a positive way. It’s also about what employees can do outside of National Interstate’s newly erected walls to improve their lot, such as earning an MBA, ARM or CPCU designation.
“Once you get them to start thinking that way, you can’t slow them down. That’s the beauty of this place, that people are chomping at the bit,” he says.
For those further up the proverbial ladder, National Interstate’s Leadership Academy and extraordinary leadership programs help further hone skills. The Leadership Academy’s five-month program identifies potential officers of the organization who need formal development to take the next step. Should an employee move up to the rank of senior manager or officer, National Interstate’s Extraordinary Leadership program at Great American, National Interstate’s parent company in Cincinnati, helps further their development.
Promise of progress
All the promise of progression means little unless National Interstate continues to create opportunities, which is happening by virtue of the company’s strong and consistent growth, Mercurio says. As the company launches new products — which it did twice in 2018, with two more in the works — it requires more underwriters, more marketers and more claims adjusters, which keeps the recruiting door open.
When National Interstate began looking inward, it had some 400 employees; today, the workforce is about 700. Further, Mercurio says employee morale is up significantly in every department since 2012, employee turnover is down across the organization and there have been a record number of promotions and new hires in each of the last two years.
“We are as strong as we have ever been organizationally, and the talent averages are as strong as they’ve been at National Interstate,” Mercurio says.
And the company’s internal work has not gone without notice. Mercurio says the company is a three-time Cleveland Plain Dealer Top Workplaces winner and a seven-time NorthCoast 99 winner.
“We use the tagline, ‘An insurance career built around you,’ because really we want this to be an experience for our employees, not just a job,” he says. “This building, every corner of this building, we had that thought in mind.”
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