Costs were skyrocketing at Associated Industries Insurance Services Inc. after the Sept. 11 terrorist attacks, and revenue dipped from $240 million before the attacks to $60 million in the years after as the company laid off workers and restructured its business model. Jon L. Shebel, president and CEO of the third-party administrator specializing in workers’ compensation insurance, says he learned the hard way not to rely on a narrow avenue of business, and the company’s resulting diversification into other forms of insurance forged it into a stronger unit. Now, AIIS has 160 employees and is growing again, with 2006 revenue of about $70 million. Smart Business spoke with Shebel about how he keeps employees motivated and sharp, even when the going gets tough.
Give employees the authority to match their responsibility. Set the example, be upfront, and always trust in your people. It’s basically a Marine Corps leadership style.
Give the people you give responsibility to the authority to carry out their missions. Have a team effort at all times. Get everybody to buy in and trust the leaders. We have created leaders at every level in the company.
Too often in the corporate world, people are given all kinds of responsibility but no authority to make decisions. Our people have tremendous decision-making authority.
That way, you have everybody on the same track. It also helps you develop leaders no one person can effectively run a company, there’s just too much going on. You have people at every level actually running their operations instead of sitting back waiting on orders.
You put out your goals and objectives on where you’re going to go. If you’ve got good people and you’ve given them the authority to go with the responsibility, they will move the company forward. Our company’s success is based on what our people have done.
Show employees they can operate without fear. Our people get credit for everything good that happens in the company. We give accolades to our people when they do something good. But when things go bad, I take full blame no matter who did it, because I give them the authority to do everything they do.
I don’t want to ever discourage them. Things are going to go bad and when they do and something negative happens, it’s my fault. When good things happen, it’s due to them. We keep that in focus all the time. People in management quickly take the blame for anything bad.
Employees appreciate that; it emboldens them to operate without fear. Go out there and get it done, don’t ever be afraid to try something that, based on your knowledge and experience, is a good thing to do for the company. They’re constantly making decisions, and they don’t back off we call that operating without fear.
It’s a strategy that comes from the Marine Corps. You take a young corporal and tell him to clear that street. He has to go down that street, operate without fear and get that street clear at all costs.
There’s no doubt that he’s going to get to the end of it, and it’s going to be clear. He has to get it done, and he has to operate without fear of failure.
You’re not going to succeed at first at everything you do. You may have to come at it three or four times. And that’s OK. We’d love everything to be perfect and every decision to the right one and everything to be accomplished the first time, but that’s not the real world, and that doesn’t happen.
You don’t want your workers saying, ‘Gee, I don’t want to try that because I’m going to get in trouble, or people will blame me.’ That really stifles your people if they feel that way. Ours don’t; they’re very bold, and they try things. They don’t do stupid things, but they do things that don’t work sometimes.
That’s OK; we’ll figure another way to get it done. We’ve never failed at a goal, and that’s because they’re not afraid to keep trying different things.
Be a shining example to employees. A CEO has to operate with total integrity. There’s no gray area when it comes to integrity, there’s
only black and white.
Your personal actions have to always hold the respect of your people. They have to believe you; you have to always be honest with them.
We’ve been through some tough times in our company, and I’ve just told them, ‘Here’s what’s going on, here’s the challenge, now let’s move forward.’
CEOs need to maintain focus and reality. You want to focus on your business. Never lose your focus and think you can do all these other things. Never lose your focus in terms of backing off a little bit and deciding you’re going to take a weekend off, because there are no weekends for CEOs.
Don’t lose sight of the reality of what you can do. Everybody wants to do more, but the reality is you can only do what you can do.
Get the message out. Everything is communicated through the chain of command. I never go to an employee in the company and tell him, ‘Here’s what we’re going to do.’
It goes through the management committee down to the vice presidents, and down to the managers. Then they get their people together very quickly.
We get out of a meeting, and a policy decision is communicated immediately, within hours. We have excellent communication; you won’t find people in our organization who didn’t get the word or don’t know what’s going on. We run the company like a Marine Corps battalion. I haven’t found a better way of running it.
It goes both ways in the chain of command. Managers are communicating to the people below them, and those people are communicating to the managers. We encourage discussion. We ask our people to speak up without fear and to make decisions without fear.
If it works out, fine; if it doesn’t work out, it’s something we tried and we can immediately change direction. Nothing drags on; we can make decisions and change our direction in minutes.
HOW TO REACH: Associated Industries Insurance Services Inc., (800) 866-8600 or www.aiisvc.com