The Leadership Lattice presents: Ken Ross, President and CEO of Pinnacol Assurance in Denver Colorado.

The Leadership Lattice– an interview series conducted by Ann Spoor, CEO of Executive Lattice. These interviews are designed to cultivate conversation about building strong leadership in the public and private sector.  You can view the video of this interview by going to YouTube and searching “Leadership Lattice”   Please subscribe.

What is your approach to leadership and does your approach vary because Pinnacol is a quasi- governmental organization?

There is no quick answer to this question. It’s an approach that has evolved over time and through experience.  I have an open style and welcome ideas from all of our employees.  I may not always agree but I will always listen and receive you.  I believe in staying close to my employees and am honest with them regardless of whether it’s good or bad news. Employees want to know where they stand.   CEO’s have to be open to learning and evolving.  I have always been open to learning.  As a quasi-governmental company, my style doesn’t change, the same skills apply. The biggest difference is that we have additional stakeholders in terms of the Governor and the Legislature.

How do you create culture?

It’s common to hear a company say that they have a ‘strong culture.’  What does that really mean?  Culture evolves over time.  Our culture encompasses a number of things- we have a strong business culture of providing the best service in the industry.  We also believe that our employees are our strongest assets. We are a service oriented business; serving policyholders and our staff embraces this service orientation.  We hold everyone to the same standards at all levels.   Our culture and values are the subject of constant conversation. You can’t be complacent as a company.  I set the tone but it’s not just me that determines our culture, it’s all 600 employees that create the culture together.

How has Pinnacol weathered the storm of the recent recession?

We are very directly affected by the state of the economy.  Our revenue is directly tied to payroll.  Our bread and butter customer is the small to middle market company.  We weathered the recession well because of the financial strength we have built up over the past several years and so were able to reduce our rates and return dividends to our policyholders to help to ease their burden.  Colorado in particular was slow to go into the recession and is still slow to come out.  We don’t have the big companies that can be the big hiring machines as is the case in some other states. The signs are positive though but we are not there yet.

What have been some important leadership lessons?

Early in my legal career in New York, I was working in the prison system.  I received a call from a very angry Sergeant- he yelled and screamed at me, very colorfully.  I never forgot this.  The lesson I learned was if you treat people with respect, you get a better result.  If you just sit down with people and have a calm discussion, even if you disagree, you are more likely to get something done.  The CEO is in the spotlight, you set the tone, and your employees take their cues from you on how they should act.  You always have to keep your cool even in the most difficult situations to get to the proper solution.

Did you have a mentor that had a big impact?

My Dad was my most important mentor.  He was a self made man.  He put himself through college and law school and ultimately became a judge and leader in New York.  I don’t profess to be my Dad, he was a ‘take no prisoners’ type of guy but he was well respected. From an early age, I learned many valuable lessons on how to deal with people, how to support your people but also to motivate them.  He had a very strong work ethic.  He was the most influential person in my early career as a lawyer and also now as a business leader.

How do you hire?

We hire first for culture.  You have to fit into the team.  You may have the best skills but if you don’t fit the culture, it won’t work.  I am only involved in hiring my direct report team so I don’t interview candidates very often.  When I do, I focus on behavioral interviewing. I want to know how this candidate will react in a certain situation.  Past behavior is a great barometer for future behavior.  In addition, we hire very strategically.  Everyone has to make a business case to fill an open position. Just because we have an open position, doesn’t mean we’ll fill it.  We have a very high retention rate.  Getting the right people on board is the most important decision we make.  We like to see people move up the ranks and we promote from within. Our HR team does a great job.  We are working on an overhaul of our leadership development program now.  We try to identify our future leaders and what skills they need to develop their career. We also continue to work on succession planning at all levels.  We are always fine tuning and improving in these areas.

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Compensation Strategies and Communication

When there is no internal alignment on compensation

It is critical in an organization to have alignment across all functional areas on the compensation strategy.  All of the executive team has to understand and agree on what types of people they are trying to hire.  The strategy must be communicated and the Hiring Managers can’t operate in the dark

When HR says we want to be at 50% in the market and a business unit charges its staffing team to only go after the top players, you have a recipe for failure.  Those leaders are not talking to each other or are not communicating effectively to their teams. 

Let’s get everyone on the same page.  Compensation shouldn’t be a mystery.

My Prediction for 2010

My Prediction for 2010

I believe that as the economy turns and the job market heats up (I have already seen signs of this happening), there will be a significant uptick in turnover in companies, much higher than what we have seen in recent years.  Companies that will suffer most are those that have cut into the bone and therefore their employees have been doing the work of 2, 3 and more of their former colleagues.  These employees are tired, burned out and over-worked.  They feel under-appreciated and under-valued. The exec teams didn’t walk the walk.  Even if employees were satisfied before, they want a change and a new, fresh start.  Average leadership of the past didn’t impact retention, but this will become a very different story. 

A friend of mine recently met with an HR leader who was working with a nationally recognized out-placement firm.  My friend was coming in to talk to the recently displaced workers about social media and how it can help them in their job search.  She was doing this partly as a business development opportunity (she’s a career coach) and partly at the request of a friend of hers in this same company.  The HR leader told my friend that she didn’t actually care if and when the displaced workers found a job and that is wasn’t her problem.  The only reason she was using outplacement was to mitigate liability for the company.  Now, I didn’t just fall off of the turnip truck.  I know that this is one of the primary reasons that companies use outplacement firms.  But, for this HR leader to say this out loud, publically and in front of both her team and an external person, is shocking and unprofessional to say the least.  It goes to the heart of the fact that this company is not employee oriented, isn’t on the top companies to work for list, and isn’t likely to win any awards in this area anytime soon.  They can expect significant turnover in an up market.  The cost to the business will be significant. 

I read an article recently (written by Shaun Rein- What Sets Great Leaders Apart) that compared the NY Times to the Beth Israel Medical Center in Boston and how the leadership handled the downturn.  Bottom line is that the NY Times laid people off and asked for and received major concessions from their employees, while the top execs, gave themselves significant pay raises.  The exec team at Beth Israel all took pay cuts in order to save jobs and in doing so, will have created loyalty and good will.  I don’t think it takes a rocket scientist to figure out who will keep their best people, attract the best talent, and keep the turnover numbers low in the coming months and years.  Here’s to Beth Israel!  Kudos to the exec team!!

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