Righting the ship Featured

8:00pm EDT April 25, 2007
When Michael L. Browne was named president and CEO of Harleysville Group Inc. in 2003, he was taking over a ship headed in the wrong direction.

Browne, who had served on the company’s board for more than 18 years, was becoming the captain of a corporate vessel that was experiencing its worst year in a history that spanned almost a century.

Reserve charges had wiped out the property and casualty insurance company’s profits, it was behind the curve with technology, and the lines of communication were withering among the company’s employees and independent agents, resulting in a teamwork breakdown.

Harleysville, once a sleek ocean liner in the large fleet of Philadelphia-based insurance companies, appeared to be turning into a leaky tugboat, gathering rust.

But Browne saw something else. He saw a company that, at its core, was still strong, and he used that message as one of the key components in engineering a turnaround.

“I knew what the strengths of the company are, and I wanted to preserve those,” Browne says. “That was really the message we gave to employees early on. Yeah, there are a lot of things that need to be fixed, but there are also a lot of things that need to be preserved.”

What ensued was a multiyear process devoted to team-building, improving the technology infrastructure and refocusing the company on the basics of good communication and customer service.

“It was about changing the momentum of our business,” he says. “It was about getting people to embrace change. It’s like turning a ship. If you’re trying to change the direction of a company, you can’t do it overnight. It takes you awhile to get things going and change the momentum.

“And you do that by building a team. No one person can accomplish that much by himself or herself. You have to build a team.”

Team first
When refocusing the company on teamwork, Browne said he had to answer one question before all others: Were the right people performing the right jobs?

It was one of the most time-consuming answers to find, he says, but it’s an essential answer for any company.

“I tried to be very careful in assessing the senior leadership in terms of whether I thought the people in the jobs when I got here were the right people,” he says. “I certainly didn’t make any snap decisions. I took quite awhile before I made my decisions.”

Through a series of one-on-one conversations, Browne began to develop a mental picture of each member of his senior leadership: their skill sets, their leadership qualities, their teamwork capabilities.

“It was a lot of discussion with each individual,” Browns says. “How they saw their job and what they thought they could accomplish, their attitude and also, quite frankly, what kind of team did each of the people reporting to me have?”

Browne says how a manager oversees his or her own team is usually a clear indicator of how that person will perform as a member of the senior leadership team.

“Because one person can only do so much, if you’re not pushing to have a stronger team for yourself, you’re not going to be that effective,” he says. “That’s always been one of the early signals for me as to whether I think someone is the right person for a job. Do they have the right team around them?”

He says getting a read on a person’s potential is not an exact science. Much of it is gained through repeated interaction with your team over a long period of time. As you get to know your senior leaders better, you’ll see what they value in a team and if their goals and objectives mesh with those of the company.

“One of the ways I look at somebody is I think of our (company) goal, which is to be the best superregional property and casualty insurance company,” Browne says. “When I look at people, one of the questions I ask is if I think this person can help us to be the best. Are they not only good at what they do, but can they help us to be the best? If I think the answer is, ‘No,’ that tells me something.”

Finding the right people and putting them in the right jobs is critical to a company’s ability to adapt in changing market conditions.

“It’s hard sometimes to keep pushing yourself about wanting to have the best people, because a lot of time you’ll have somebody working for you who you really like, but they might not be the best person for the job,” he says. “You need to work with them to get them to improve, or, if they can’t, you need to find somebody else.

“If you resist change, it’s going to sweep over you like a wave. But if you have the right people, you’ll be able to embrace change.”

Getting with the program
Harleysville has experienced personnel cutbacks during Browne’s tenure. From about 2,400 employees in 2003, the company now has fewer than 2,000. But it’s still a sizeable work force, and getting every person on the same page is a huge challenge.

To help steer the company back toward calmer waters, Browne says it was important to get every corner of the business thinking and operating the same way. He initiated a strategic planning effort during his first months at the top and asked every level of the company to get involved in creating Harleysville’s refined strategic vision.

“To get 2,000 people on the same page, it doesn’t happen overnight,” he says. “Early on in the first year of the recovery, we basically embarked on a strategic planning effort. We didn’t bring in outside consultants or experts. We just got about 100 of our top performers from every level of the company — senior people, mid-level people, lower-level people — and that cross-section of the company became our strategic planning committee.”

The committee scanned the company in detail from top to bottom, examining processes, policies and strategies. Browne says it revalidated parts of the company’s strategy and identified areas in need of change.

Getting every area of the company involved in the revision of the strategic plan was instrumental in achieving buy-in with employees. He says your team members will be much more receptive to an organizational shift if they had a hand in forging your company’s new path.

“A cross-section of the company helped get people’s buy-in that this is where we need to go,” he says. “If you get everybody working together, you’re going to be much more successful than if you have just a few people from the top telling everyone what to do.”

He says the alternative, bringing in consultants from the outside, wasn’t as appealing from an employee-interaction standpoint.

“I thought our employees would better understand the company,” Browne says. “A lot of times, you’ll have a consultant come in and give you advice that’s really only partially pertinent to the company. They might understand the industry, but they really don’t understand the DNA of your company.”

However, if you are going to use internal groups to refocus your company, you have to be willing to be brutally honest, lay everything your company does on the table and, Browne says, work under the assumption that there are no sacred cows among your company’s policies and practices, no matter how long you’ve done something a certain way.

“We didn’t need a consultant, as long as we were willing to be very open and honest with ourselves about our problems,” Browne says. “Are we doing things right? Do we need to change? What do we need to change? It’s important to stay true to who you are.”

Open communication
When a company is undergoing a major strategic shift, it will cause tremors to rumble throughout the company work force.

Browne says many employees at Harleysville were initially concerned about the future of the company and whether it would be sold.

Browne says he had to eliminate the speculation before it turned into a rumor mill with a life of its own, and the only way it could be done is with open, clear and consistent communication about his intentions.

Many of the communication methods Browne introduced in 2003 and 2004 are methods he still uses today, including a recorded companywide broadcast every couple of weeks.

“When I travel around, employees tell me they like the recordings,” he says. “I don’t pull punches; I try to tell them what I’m thinking. Honesty and openness is very important. You can’t try to kid people.”

Browne says all successful companies have at least one thing in common: They all keep their employees in the information loop on a daily basis. He says that company leaders who paint a murky picture of their intentions and future plans are far more likely to have employees who don’t trust them.

“The great companies, the well-run companies, are places where everybody feels engaged,” he says. “I’m not suggesting that we’ve gotten where we need to be in regard to that, but we’ve made a lot of progress.”

Browne emphasizes e-mail as a way for him and his team members to stay in touch with each other.

“I frequently tell employees I like to get e-mails from them,” he says. “If they have a suggestion or idea or criticism, I’d like them to e-mail me. I get e-mails every day from employees.”

He says e-mail communication is a simple, effective way to engage employees and give them a feeling that their input matters to upper management.

“If people feel like you want to hear their suggestions and criticisms, that it will turn into change in the company, people are encouraged to do more of that,” he says.

An open communication policy has to be more than something you bring out when the situation calls for it. Browne says it should be based on a guiding principle of honesty. In many cases, clamming up is every bit as bad as lying when it comes to the morale of your work force.

Today, morale is improved at Harleysville, and so are the numbers. Three years after posting a net loss of $47.6 million, Harleysville garnered a net income of just more than $111 million in 2006. Its total revenue was slightly less than $1 billion last year, compared to $925 million in 2003, the year Browne took over.

“(Honesty) is kind of a core value of mine,” Browne says. “The success of a company is based on your people being good and having good teamwork, and I think honesty is very conducive to having a teamwork ethic.

“To me, in the long term, I don’t see how you can have success in a company if you don’t treat people the right way.”

HOW TO REACH: Harleysville Group Inc., www.harleysvillegroup.com