How Vince Donnelly led PMA Companies through an acquisition by involving everyone Featured

7:01pm EDT January 31, 2012
Vince Donnelly Vince Donnelly

In October 2010, Vince Donnelly was in the position of being acquired. PMA Cos. Inc., which he leads as president and CEO, was acquired by Old Republic International Corp.

The acquisition came with a number of positives for PMA. It provided an infusion of capital and additional resources, allowing the company to increase its operational flexibility. Old Republic also allowed PMA to retain a high degree of autonomy in terms of its day-to-day operations and culture.

But change is still change, and Donnelly needed to pilot an organization of more than 1,000 people through a foundational transition. He needed to quiet concerns and define what PMA would look like moving forward.

“Never having led an organization that became part of another company, it was certainly a challenge from a leadership perspective, both in terms of the internal and external processes involved, talking to our existing shareholders at the time, in terms of what was going on and why we were doing it,” Donnelly says. “Then, it was talking to our customer base and to our employee base.”

In short, the acquisition tested Donnelly’s ability as a communicator. He was quickly reminded that communication isn’t about talking or making speeches. It’s about connecting with people.

“I talked with different people about what the future was going to be like as we made this transition,” Donnelly says. “I found that it is always most effective to physically meet with people and look them in the eye. So I started out by visiting every single one of our locations, talking to our employees and explaining the rationale for this, and most importantly talking about what the future was going to be for us as an organization.”

Start a dialogue

The acquisition became official on Oct. 1, 2010, but the process of informing employees began four months earlier. In June, Donnelly and the leadership team at PMA began travelling to the company’s 20 offices, answering questions and disseminating the information they had available.

Donnelly says one of his most critical tasks was to outline the specific ways in which PMA would change. On the whole, the effect on the employees’ day-to-day tasks was minimal, but that’s not the default mindset of most employees when they hear a big change is in the works.

“There were some transitions in terms of our back room financial area, since we were no longer going to be a stand-alone public company,” Donnelly says. “There were some other functions that became integrated, but mostly everything was going to stay as it was before. However, when you announce some kind of change, whether small or large, people always personalize it. The biggest question they have is ‘What does it mean for me?’ So first, I tried to address what this was all going to mean on a day-to-day basis for our operation. I explained that to them, I gave them some information about our new parent company, about their operating style, their people and so forth, and what it meant for us going forward.

“Second, I talked about how I perceived this as an employee and as the leader of the company. I talked about why I viewed this as a positive for the companies, knowing that the fundamental question in their minds was ‘What is going to happen to my job?’”

The jobs question was one that Donnelly had to meet head-on, in an attempt to combat any speculation originating from outside the company.

“As we announced the acquisition, some of the local press automatically made the assumption that an acquisition was being made, so tons of jobs could be lost,” Donnelly says. “That is why I had to quickly emphasize that most everything was going to stay as it had been. The changes were going to be more like, instead of preparing documents as a public company would and reporting to the SEC, we were now going to share that information with the holding company, and they would take care of that kind of reporting.”

The need for repetition in communication during the first months after the acquisition announcement reinforced a valuable lesson to Donnelly: leaders need to open a dialogue with employees in a time of change and transition, because you can’t simply lecture to your team. You need to give your team a voice to raise questions and concerns to you and the leaders of the company.

“I would tell other leaders going through a transition a few things,” Donnelly says. “First, there is no such thing as communicating too much. Second, you can’t just send out memos or anything like that. You have to talk to people directly. They need to hear from you. Opening that back-and-forth communication creates an environment where people feel free and open to ask the questions on their minds. Because, as a CEO, you can get caught up in the fact that these are corporate decisions, but from an employee perspective it is a very personal thing. You need to be sensitive to that and make sure that the communication strategy, while you need to deliver a big-picture perspective, you need to make sure that you are focused on the impact it will have on each individual employee. While you are not going to talk to each individual employee, you are going to create an environment where hopefully people can ask questions and address their concerns.”

And if you’ve done it once, or even a few times, you need to repeat the cycle of talking and listening.

“It’s not just one and done,” Donnelly says. “Communication needs to be continual. You need to continue to reinforce the messages that you want people to internalize. So you need to understand that communication is a continuous process and not something that you do just once.”

Work as a team

You need to have an excellent grasp of your role in leading your company through a time of transition. But part of that role is knowing how your leadership team should support your initiatives. That includes not only your direct reports, but anyone in your organization with a supervisory role.

“It is on me to make sure that I sensitize our management people as to how important it is to communicate,” Donnelly says. “Like communicating directly with all of our employees, communicating with management is a continual thing. The leaders of the company have had to enable the other management people to answer questions throughout this process, and if questions need to be fed upward to the senior management level, or my level, we coached them to be responsive to that.”

Donnelly created multiple avenues for people to interface with one another, even when they couldn’t be in the same room — or even the same city — together, including videoconferences to update employees on the status of the acquisition. Even with the acquisition itself in the rearview mirror, Donnelly has continued the quarterly videoconferences.

The point, he says, is to continually engage not only the lower-level employees who have the most organizational separation from management, but also to keep management on their toes. If employees are willing and able to fire off questions, managers at every level should be poised like an infielder ready to pounce on a ground ball — on their toes and paying attention.

“The way we handled it, our communication during this time wasn’t supposed to be solely a cascading thing,” Donnelly says. “It always has to be a two-way street. You speak to your people, and they respond by bubbling messages upward. I try hard to think about what might be on people’s minds in a given situation, but you’re never going to be 100 percent right. You want an environment where people will raise the questions they have. And that doesn’t just go for the primary situation you want to address. It should be a day-to-day thing, where people are stepping up to interact not just with the CEO, but with all management-level people. You facilitate that dialogue and open up those avenues because you have to create an environment where it is as effective talking upward through the organization as it is talking downward.”

Be human

If you want to foster a team mindset throughout your company, you have to set the example by showing your staff that you view yourself as part of the team. Donnelly accomplishes that by, as he puts it, “humanizing” himself. It’s more than just making yourself visible and accessible. You have to be willing to relate to your people and, at times, appear vulnerable.

In the months leading up to the formal acquisition announcement, Donnelly didn’t have all the answers that every person at PMA wanted to hear. So he had to tell them exactly that. It doesn’t mean you shrug your shoulders and walk away. It means you are frank and honest, and make the promise to your people to share as much as you know, and build a sense of trust that will allow them to believe that when you know more, you’ll tell them.

“Throughout the process, I told people that there would be consolidation of some functions, but I also came right out and told them that I didn’t know the specifics yet,” Donnelly says. “I told them that when I knew, I would communicate that. You can’t be afraid to tell people that you don’t know something at that moment, or that you aren’t free to talk about something at that moment due to regulations. What you are asking people to do is trust you, [trust] that you have the best interest of everybody in mind, and [trust that] when there is news to tell, you’re going to hear it directly from the CEO — good, bad or indifferent. It goes back to interacting with people and remaining consistent in how you communicate so that people build a sense of trust. I still tell all the people there that they will never hear any significant news about the company from anybody but me. You will never hear it from the outside world first.”

If you aren’t forthcoming with information, not only will you lose that sense of trust, you will allow the rumor mill to power up. If you remain silent, your employees — and even your lower- and middle-level managers, will fill in the blanks on their own, with whatever bits of pieces of information they can find.

“If real information doesn’t exist, people will fill in the blanks,” Donnelly says. “They’ll stand by the water cooler or the coffee machine, and they’ll say ‘You know, I think this is going to happen because I saw that Vince didn’t have a smile on his face today, and there was this closed-door meeting.’ People will make assumptions, and when they make assumptions, they often don’t get things right. That’s why it is important to share information, and while you can’t always tell everybody everything that is going on, in general you need to be out in front with communication so that people don’t start filling in the blanks themselves.”

More than a year after the acquisition, Donnelly has kept the same communication strategy in place. He doesn’t want the trust factor to erode, because the next challenging time could be right around the corner, and it will once again be critical to have everyone in the information loop throughout the company.

“It’s like any relationship,” Donnelly says. “If all you do is talk when there is a problem, you have no goodwill to fall back on, and you’re generally not going to be successful. It’s always a continual thing. You can’t just walk in one day and say ‘OK, I’m going to tell you what is going on, and ask me any questions,’ and then walk away. If you go away or don’t address the situation again for a while, you can’t expect people to respond to that. You lose the human element that is so important to good communication, and good leadership.”

How to reach: PMA Cos. Inc., (610) 397-5298 or www.pmacompanies.com

Looking back

In January 2009, Smart Business Philadelphia previously featured president and CEO Vince Donnelly and PMA Companies (then PMA Capital Corp.) on its cover. Great advice doesn’t have an expiration date, so here is a look back at some of the leadership insights Donnelly shared with us three years ago:

Donnelly on having passion for what you do: Passion comes down to the fact that you have to want to be a leader. Part of that, admittedly, is something to do with ego. But not in terms of titles and positions. It’s that you want that responsibility. I used to be a schoolteacher, and in addition to that, I coached basketball. Being a leader means you want to be the one to take the last shot in the game.

Donnelly on honesty:  As far as honesty, people see through whether you are BS-ing or not. It’s a lesson I learned from my mom. She told me that there are some people in life who are two-faced. When things are going well, they act one way, but when things aren’t going well, they’re going to act a different way. People are looking for that honesty and consistency from you as a person. An effective leader is someone who is respected not just for their title but is respected as a person.

Donnelly on expansion: Successful companies are constantly challenging themselves. We charted a course to expand into the fee-based business. But I think that whether you make a new hire, open a new facility or enter a new territory, you have to ask how this fits in to what you do. Does it make you better or is it just something to do? Some companies change for change’s sake. We don’t do that.