True confession: When I heard that I’d be interviewing Mike LaRocco, the ceo of Fireman’s Fund Insurance Co., at the State of Green Business Forum in San Francisco, I worried that we wouldn’t be able to engage an audience for 30 minutes. What, after all, could be more boring than the insurance business?
No worries. Fireman’s, it turns out, is a pioneering company, and Mike is an unusually thoughtful CEO. A unit of the German financial services giant Allianz, Fireman’s, which is based in Marin County, California, is leading the way when it comes to “green insurance.” What’s more, guided by Mike, Fireman’s is rebuilding its corporate culture to put employees first, customers second and shareholders third.
The thinking behind that is simple: If Fireman’s can attract and engage the very best workers, they will deliver great customer service, satisfied customers will stick with the company, new ones will join and all of that will drive long-term shareholder value.
This helps explains Fireman’s commitment to all things green.
“The next generation of employees, this current generation as well–they want to work for companies that care,” Mike told me. “I really do believe it’s important to have a strong social conscience about the way we run Fireman’s Fund.”
Fireman’s has a storied history. The company began in 1863 in San Francisco, and got its name because it paid 10% of its profits to the widows and orphans of firefighters. While rival insurors were bankrupted by the Great Chicago fire (1871) and the Great San Francisco earthquake (1906), Fireman’s paid all claims and endured. It wrote the first policies for “horseless carriages” and planes. Making promises and keeping them is what the company is all about, Mike said.
Fireman’s went through a rough patch before Mike became CEO in 2008. A previous CEO lasted just six months. The company was financially sound but, he said, “we weren’t innovating, growing or realizing our potential.”
Energizing the workforce–the company employed about 3,200 people–become a top priority. Pay and benefits are competitive, but what sets the firm apart, at least according to Mike, is its commitment to openness and a strong sense of purpose, including its’ “green” offerings.
“We want to be completely transparent, completely candid. We want to empower our people with information, let them speak up, let them challenge us,” he told me. “There’s no BS. Good news and bad news, it’s shared openly and transparently.” When Mike meets with employees, he said, he tries to talk for no more than five or 10 minutes, and then spend the rest of the hour taking questions.
If Fireman’s can earn the loyalty of its people,”they will think like owners. They’ll care deeply. They have a passion about the company and its business,” he said
Then “customers get fantastic treatment because employees would never think about not meeting their needs.” And the bottom line will take care of itself.
By contrast, putting the shareholder first can lead to short-term thinking which over time erodes the value of the company.
Fireman’s introduced “green insurance” in 2006. Its Green-Gard Commercial Building coverages offers 5 percent discounts to properties that are certified as green. It also enables customers to replace systems and materials with environmentally-preferable choices after a loss. About 1,500 customers have purchased Green-Gard endorsements, on policies with premiums totaling $150 million. For consumers, Fireman’s offers discounts to homeowners who live in green buildings as well as policies that replace vehicles, after losses, with new hybrid models.
As for its own operations, Fireman’s has pledged to reduce its carbon emissions by 25 percent by 2012. It operates in LEED-certified buildings at its headquarters in Novato, Ca., and in Dallas and St. Louis. This year, the company is installing Bloom Energy Servers at headquarters.
By the way, the idea of putting employees first and customers second seems to be gathering steam. I first heard it from Herb Kelleher and Colleen Barrett at Southwest Airlines when I was writing my 2004 book, Faith and Fortune. It’s been a big part of the success of Zappos.com and its ceo, Tony Hsieh, author of Delivering Happiness. In a book, called, appropriately, Employees First, Customers Second: Turning Conventional Management Upside Down, Vineet Nayar, the ceo of global infotech giant HTL Technologies, explains how he turned the hierarchical pyramid upside down by making management accountable to the employees, and not the other way around.