By Tim Leman, President & CEO at Gibson

Ron Johnson, the former Apple executive, was hired as CEO in 2011 by struggling retailer JC Penney to revive the organization. He embarked on an aggressive vision – something he labeled a “transformation” – that ultimately ended with his recent firing.

What happened? Danielle Sacks provides her thoughts in an online Fast Company article I read recently during some down time between flights. It got me thinking about some of my own experiences with change management.

In late 2005 I joined Gibson, in part because of its private and independent ownership structure. I had been collecting a mental notebook of ideas and strategies during my time at the national firms and was just itching to put them into practice. As one of my clients said when I told him I was going to buy in to a smaller firm, “Tim, there’s nothing like owning a piece of the rock!”

Change came quickly to the business unit I was put in charge of at Gibson. In a matter of months, we had created a new vision and were aggressively implementing it: new tools, systems, technology, and people. In my familiar player-coach role I was not only actively involved with creating the vision (the “coach” part), but personally overseeing its implementation and utilizing it as I built a personal client base (the “player” role).

Almost immediately, we were blessed with amazing growth. There were significant contributing factors well beyond the new vision and client value proposition:

• We had a great reputation in our marketplace, established over the prior 70+ years
• Incredible, hard-working, smart and talented employees
• Great partners in the other business units
• Supportive company leadership and ownership

Unfortunately, I didn’t understand a couple of additional factors that allowed for the results. In my mind, emboldened by the relatively fast turnaround and similar past experiences, I had come to believe that it was all about the “idea” itself. My rude awakening was just around the corner.

Within a few years, I was named President of Gibson. I began the work of implementing an even broader platform of new initiatives and strategies throughout the entire organization. This included changing the way our salespeople were paid, modifying our client experience with systems, tools and technology, and reducing the number of business units. Almost immediately turf wars crept up. My reviews were pretty rough, and I was reeling.

So what caused the resistance? First of all, I had not invested the time to understand the unique issues and build consensus. There were some rather obvious (not to me) differences in geography, market size, culture, and technical experience that I had overlooked.

It wasn’t entirely that my ideas or strategies were wrong – although there were some clunkers in there! And it also wasn’t that our company wasn’t capable of rising to the challenge. It was about how I was implementing the change, not what we were implementing.

I thought much about the earlier successes in the business unit versus the friction I encountered at the overall company level. Over time, it really dawned on me that in a player-coach role, you can get away with less communication and consensus building on the front end because it will be replaced with “in the trenches” work, discussion, engagement, and relationship building. As player-coach you likely know every role on the team and have even done most of them at some point in time. Your team members respect you, know you, and trust you as you focus on a common goal.

Working from afar in the executive leadership role, I wasn’t able to build that trust and consensus in the trenches like I had in the past. I was also more removed from many of the people most impacted by the change on a day-to-day basis. Unfortunately I didn’t appreciate the magnitude of this subtle shift in my role.

Ultimately, I modified my approach to fit the role as CEO. I sought feedback from stakeholders and adjusted different initiatives based on what I learned. I communicated often and asked our leaders and managers to do the same in a cascading style. I also wasn’t afraid to take the message directly to our employees when needed.

Lastly, there is a reason they say “Rome wasn’t built in a day”, right? While your initiative or vision may not be on par with building Rome, allow the time to do it right. If you’ve done the legwork, have the courage to forge ahead even when others can’t see the end game.

What’s The Risk?
If you don’t invest properly in implementing change, you run the risk of a truly innovative idea failing for all the wrong reasons.

• Understand the process by which you implement change is just as important as the change itself
• Do your homework, gain feedback, adjust if necessary, and build consensus for your ideas
• Realize that not everything will work the same as it has in the past
• Have patience and persistence in proportion to the initiative itself

Doing homework, getting feedback, and building consensus around big initiatives will be great for your organization. Practice them enough and they’ll become part of your culture. However, my major caution to leaders is this: you can’t run the organization by a daily vote.

For some ideas, initiatives, and expectations, you just can’t compromise. Sometimes that’s because your core values are at stake. Other times, even after all the feedback, your position and experience allow you to see the bigger vision that others can’t. Your leadership will require the sometimes difficult task of sorting through the push-back and determining which cautionary flags are real and which spring from a natural human tendency to avoid change.

Have you dealt with change in your organization? Whether as the leader or someone on the front lines living it? I’d love to hear your story below.

As it became clear that this was a horrible accident, another misguided assumption began to emerge. As the facts materialize, the factory carried just $1 million in liability coverage, while the damage from the explosion has been estimated at around $100 million. The owners assumed they had sufficient coverage or that they would never need it. They were very wrong.

The Risk Of Inadequate Coverage

Inadequate coverage often comes back to assumptions.  Business owners choose reduced coverage because they assume they will be able to cover the shortfall. Others see insurance, like liability coverage, as a means to underestimate true value to keep the premium cost to a minimum. A reduced premium for something that might never happen may appear to be the ideal option. Of course, the reason you have insurance is to make sure you are covered when accidents do happen. Without that coverage, a business may not survive.

When You Assume….

At the West Fertilizer plant, an accident did happen. That accident killed 15 people. It destroyed 75 homes, a middle school, an apartment building, and a retirement center. The sheer volume of losses is still unclear. What has become clear is the company will not be able cover the losses and it will be added to the list of casualties caused by the explosion.

Underinsured risks are risks in themselves. Because of inadequate liability coverage everyone loses.

It may be easy to assume this is a special case. Disasters like this don’t happen very often. However, for an underinsured risk to cause damage, it doesn’t need to be a huge disaster. If something goes wrong and you have inadequate property or liability coverage, you will end up with the bill. And as we’ve learned, assumptions can rarely be trusted.

On Thursday the Internal Revenue Service issued Revenue Procedure 2013-25, heralding changes to health savings account contributions for individuals and families for 2014. As well as this, employee out-of-pocket expenses are also set to change. These changes are to reflect the changes in the cost of living.

Savings

Available to those in high-deductible health plans, health savings accounts, or HSAs, are funds contributed to by policyholders primarily used to pay for qualified medical expenses.

Funds contributed are not subject to taxation at the time of deposit. If they are not spent during the year, the funds are allowed roll over and accumulate year on year. This fund can be used to purchase over the counter medications, with a doctor’s prescription, or withdrawals can be made for non-medical expenses also. Tax penalties on these types of withdrawals vary depending on when they are made.

Contributions

The changes brought in by the IRS are increases to the maximum contribution that can be made to a health savings account. Individuals can now contribute $50 more and families $100 in 2014.

Up from $3,250, employees with single coverage can contribute a maximum of $3,300. Those with family coverage will see their limit extended to $6,550, up from $6,450.

Out-of-pocket

HSAs, as we know, are held by those enrolled in high-deductible health plans. In line with the increased maximum contributions, these out-of-pocket expenses and deductibles are also set to change.

The IRS has announced that the maximum out-of-pocket employee expense will rise to $6,350 for single coverage – up from $6,250. This is including deductibles. In 2014, out-of-pocket expenses and deductibles for those with family coverage will increase by $200, from $12,500 to $12,700.

Cost of living

Cost of living, the amount of money consumers need to buy good and services in their daily lives, has seen steady increase in the last few years. At this moment in time the Consumer Price Index for the United States, excluding rent, stands at 78.80%, groceries is 77.08%. The average monthly spend for an 85m2 apartment on utilities such as electricity and heating is $174.22. Many of these increases have been linked to the increase in the cost of oil. Increased cost of living has a knock-on-effect to many areas including, as we have seen, health cover and health savings accounts.

By Tim Leman, President & CEO at Gibson

With Mother’s Day on Sunday, I feel compelled to devote this post to our Moms. A short blog won’t do them justice, but it would be worse to miss them all together.

My three favorite Moms are my lovely wife Kimra, my mother Ruth, and my mother-in-law Marilyn. I have, of course, listed them no particular order. Obviously if you’re my favorite you know who you are so really no need to spell that out here, right?

I’m not perfect and I’ve learned a lot from these ladies. What I’ve realized is that the more I handle situations the way they would, the better off I am. They make it look effortless, but for me, it’s real work.

• They’re gracious and humble, whereas I’m considered a “Mr. Know-It-All”. My Mom has probably read this on my report card every year since the third grade.
• They’re inclusive and accepting while I can be intimidating. As my wife reminds me, I need to take the intensity level down a notch or two sometimes.
• They’re self-less and kind, but I often wonder, what’s in it for me? On a whim, my mother-in-law will drop everything to help someone out.

All three represent what I try to be on my very best days. If only that were every day…I’d be a better boss, better leader, and better friend.

I have also learned a lot from the mothers I work with. They amaze and inspire me. Their varied and hectic experiences in life, balancing so many competing demands, give them a special perspective.

• They have two jobs and both involve putting others first. They spend all day pleasing clients and then go home to their #1 customer of all, their family. They always play second chair and never complain as duty calls.
• They are uniquely gifted to deliver the toughest of messages, in a way that the person receiving it feels safe and inspired to make a change for the good. Believe me, I know through first-hand experience!
• They balance incredible demands while somehow seeming cool and collected in the heat of battle. Work is challenging, no doubt. But they see the world through a different set of lenses that puts perspective on their hourly demands.
• And then they get up in the morning and do it all again. There is no timeout. There is no offseason. There are only people to please and demands to meet.

To all my Moms at Gibson, thank you. Just like at home, you make us a better place and you help us become better people.

And to my three favorite Moms of all, thank you as well. Unfortunately, as it pertains to me, your work is not done. But with your example, I’ll keep trying. Happy Mother’s Day.

Implementation got off to a rough start because the Obama administration didn’t want to release unpopular rules before the election. Regulators have been working hard but are clearly overwhelmed, trying to write rules that influence the entire health care sector — an economic unit roughly the size of France.

The process has been made more difficult with Congress refusing to provide enough money for implementation.

It seems most everybody involved is in a state of anxiety.

• Insurance companies are trying to put out new products, but they don’t know what federal parameters they have to meet.
• Small businesses are angry because the provisions that benefited them have been put on the back burner.
• Health care systems are highly frustrated. They can’t plan without a road map.

There is a minority, including some supporters of the law, who think the whole situation is a complete disaster. They predict Health Care Reform will collapse and do serious damage to the underlying health system.

The clear majority, including some of the law’s opponents, believe that we’re probably in for a few years of shambolic messiness, during which time everybody will scramble and adjust, and eventually we will settle down to a new normal.

Experts talk about the problems that lie ahead in cascades.

The Structural Cascade

• Everything is turning out to be more complicated than originally envisioned.
• The Supreme Court decision made the Medicaid piece more complicated.
• The decision by many states not to set up exchanges made the exchange piece more complicated.
• The lines of accountability between state and federally run exchanges have grown unclear.

The Technical Cascade

• At some point, people are going to sit at computers and enroll. If the data process isn’t easy & streamlined, the public opinion hit will be catastrophic.

The Cost Cascade

• Nearly everybody not in the employ of the administration agrees this law does not solve the cost problem, and many of the recent regulatory decisions will send costs higher. A study in California found that premiums could increase by an average of 20 percent for people not covered by federal subsidies. A study by the Society of Actuaries found that by 2017 costs could rise by 32 percent for insurers covering people in the individual exchanges.

The Adverse Selection Cascade

• Under the law, young healthy people subsidize poorer, sicker, and older people.
• But the young may decide en masse that it is completely irrational for them to get health insurance that subsidizes others while they are healthy. They’ll be better off paying the fines, if those are even enforced, and opting out.
• Without premiums from the young, everybody else’s costs go up even higher.

The Provider Concentration Cascade

• The law further incentivizes a trend under way: the consolidation of hospitals, doctors’ practices, and other providers. That also boosts prices.

The turmoil around Health Care Reform could dominate politics for another election cycle, and the changes after that — to finally control costs, to fix the mind-boggling complexities, and the unintended consequences — will never end.

Regulatory regimes can be simple and dumb or complex and sprawling. When you build complex, it takes a while to work through the consequences.

Coverage

The main aim for gun liability insurance is specialized protection in case of injury or loss resulting from using the firearm. Policies are already available that cover high-risk activities such as reloading ammunition or liability insurance for gun ranges or manufacturers. Insurance policies would be available for those who carry a weapon as part of their job and want extra protection on top of their company’s policy, or those who own guns for personal protection.

Variations

Just as Gun Liability Insurance is a very specialized type of insurance, the policies would also be very specialized. The insurance provider would determine an individual’s risk according to specific circumstances. Policies would vary for those carrying a concealed weapon or those carrying for work, as this would impact on the exposure of the firearm, which would influence the premium.

It is also not uncommon for risk levels to fluctuate according to the area in which the owner lives. This is largely a reflection of the areas legal climate and litigation history.

Applications

Similar to auto insurance, responsible gun owners could see their premiums lowered for taking gun-safety courses or using gun safes. The application process can see owners give details of their previous training, whether it is carried on their person or stored in the house and in some cases providing a schedule for when the firearm is being carried – this would largely apply for those carrying the weapon for work.

Many hobbies can require specialized insurance. Gun liability insurance is one form. If you have a question about your liability as a gun owner and the options available, speak to one of our advisors who can detail how this type of insurance can protect you.

By Tim Leman, President & CEO at Gibson

“I need to know whether you’re going to be part of the 20% out there that actually gets things done?”, said Don Wood as he paused and looked me directly in the eyes. It was 2007 and Don had just finished telling me his previous experiences with salespeople – specifically insurance salespeople.

I knew Don had named his company “80/20” with a nod to the Pareto Principle, but I didn’t know, until that very moment, exactly how he applied it. Turns out Don’s been in sales himself for most of his life and has definitely been on the side of “getting it done”.

Don, who turned 80 this year, founded 80/20 Inc. in Columbia City, Indiana, in 1989. From humble beginnings in a 3,000 sq ft shop, the company is adding another new addition that will take them to nearly 300,000 sq ft. Governor Mike Pence even held a press conference in March to announce their latest expansion.

Don’s been a devoted follower of Dr. Stephen Covey for many years and is actually a licensed facilitator. “They’re timeless principles”, said Don. When I asked him about his daily routine, he didn’t hesitate. “I get up at 5:00 a.m. and the first thing I do is to read: Forbes, USAToday, the Wall Street Journal. But I also enjoy business books. Daniel Pink is my new favorite author.” That’s followed by a workout session which may include weight lifting, Tai Chi, or the treadmill.

“Think like a customer!” is one of Don’s favorite sayings. He ensures that motto is lived out every day at 80/20. That means providing a quality product in exchange for a customer’s hard earned money and figuring out a way to make things right if something goes wrong.

“There are two things I can’t handle”, said Don. “Excuses: it’s what we give ourselves and others for not doing what we should do. The other one is deception:  there is no other but the truth!”

Don has lived by and guided his crew with the simple outlook of If it is to be, it is up to me. “You gotta have a plan,” says Don. “I am amazed at how many don’t.” And part of having a plan is ensuring it is implemented and followed. Don will tell you that in his view 90% of success is showing up. “There is no such thing as absentee ownership,” he tells me. In other words, you must be present to win. How many folks do you know in business that have a great idea or product, but never fully leverage themselves to ensure it happens? Unfortunately (or fortunately) too many!

I asked Don a question that I think he’s been asked a lot over the years. So what is your secret? He immediately began telling me how curious he’s always been for “person, place, and thing”. He’s a continual student of the game, constantly studying the latest ideas and strategies in business and life. “It’s exciting!” exclaims Don.

And of course hard work was mentioned next. “My Dad used to say that if someone was paying you $100 per week, you better give them $150 per week of effort. That’s always stuck in my head.”

He tried college at Drake University after serving during the Korean War but realized he felt a yearning to “get after it” and decided to enter the workforce. He went on to tell me about his early jobs in sales and then as a toolmaker. Don clearly enjoys every day at 80/20, but I wanted to seek his motivation for the continual drive and effort.

Hard work and success in business provided resources. And the resources gave him freedom. “Even as a boy, I was a hustler. I would sell things. I wanted a little change in my pocket. It was empowering even if it was just the ability to buy a candy bar at the store. I wanted the freedom to do that,” said Don.

What’s The Risk?
“If you set limits on employment or life in general, you will only get there. Be totally open to opportunities that occur that you’ve never even thought of!” He exclaimed, looking intently at me, as it began to sink in. It’s the thing he is most concerned about for leaders and businesses today.

He continued, “You have to be unconditional.” I repeated it. Be unconditional. I began to think about what he meant. So often we build glass ceilings, pre-determining in our minds, what is humanly possible. The thing is, we get to exactly where we thought we could go. But it’s all self-imposed. Instead, we need to be unconditional!

What a great message. In fact, I’m going to devote next week’s blog to being unconditional. As always, your thoughts and comments are appreciated.

By Keith Stone, CFO & COO at Gibson

When we formed our GESOP in 2010, we knew we were providing a unique benefit to our employee-owners to help them accumulate wealth throughout their career with us.  Beyond the incredible impact on our teammates’ engagement, retirement nest eggs are growing more rapidly with the GESOP than they would have with “just” our 401k plan.

And it’s not surprising. ESOPs build wealth. According to the Employee Ownership Foundation, ESOP participants have approximately 2.2 times as much in their retirement accounts as participants in comparable non-ESOP companies.

First, a brief explanation about our 401k plan.  We knew that Gibson’s financial investment in the 401k (our company match) was better than most plans, especially after the decreases many businesses made to their contributions during the Great Recession.  While many companies were either reducing or eliminating their match, we maintained our policy of matching 100% of the first 5% of every employee’s elective deferrals.  It costs us more to provide a higher level of benefit, but we think it’s worth it.  It’s meaningful for both recruiting and retention purposes.  And we feel good that we are doing more to help our employee-owners’ golden years.

But the story doesn’t end there – far from it.  With the GESOP, we’ve made it more lucrative for everyone – contributing even MORE to their retirement accounts.  In addition to the superior match contribution, the GESOP now also receives annual dividends on the stock it owns.  These dividends are additional contributions to the GESOP and are allocated to the employee-owners, helping to build wealth for everyone much faster over their tenure.

We’re Committed For The Long Haul.

With the GESOP, we “doubled down” on our commitment to the long-term financial health of our teammates.  We’ve also created exceptional engagement throughout the firm now that everyone is an owner.  We believe this is a very good thing for all of us here at Gibson. It’s also very good for our clients, who are always served by an owner of our agency.~

Have you considered an ESOP for your company?

Navigators are organizations that will provide unbiased information to consumers about health insurance, the new health exchanges, qualified health plans, and public programs including Medicaid and the Children’s Health Insurance Program.

“Navigators will be an important resource for consumers who want to learn about and apply for coverage in the new marketplace,” Centers for Medicare & Medicaid Services Acting Administrator Marilyn Tavenner said in a statement.

For those who are not familiar with health insurance, have limited English literacy, or living with disabilities, the administration says navigators will serve an “important role in ensuring people understand the health coverage options available to them.” Navigators will provide accurate and impartial assistance to consumers shopping for coverage plans in the new marketplace.

In regulations released by the Department of Health and Human Services, navigators cannot select a plan for their clients and are not in charge of determining whether customers are eligible for federal subsidies.

They do, however, play an “important role in facilitating a consumer’s enrollment by providing fair, impartial, and accurate information that assists consumers with submitting the eligibility application, clarifying the distinctions among qualified health plans, and helping qualified individuals make informed decisions during the health plan selection process.”

In its 63-page rule, HHS says “holding an agent or broker license is neither necessary, nor by itself sufficient, to perform the duties of a navigator, as these licenses generally do not address areas in which navigators need expertise, including the public coverage options that would be available to some consumers.”

Navigators also may not be paid by insurance companies.

In addition to navigators, consumers will have access to assistance through services such as a call center, where customer service representatives can provide referrals to the appropriate state or federal agencies, or other forms of assistance programs including in-person assistance personnel, certified application counselors, agents, and brokers.

Open enrollment in exchanges begins Oct. 1, 2013 with coverage beginning Jan. 1, 2014.

By Tim Leman, President & CEO at Gibson

David Findlay

History Of Success
“Well the simplest answer is that we are constantly trying to manage our role as a key contributor”, answered David Findlay, President & CFO at Lake City Bank, as we discussed why his organization is so involved in the communities it serves. Findlay continued, “The only way to survive is by helping our clients and communities be successful too. We believe that we have a depth of commitment that is stronger than any of our competitors. We serve the community in every market we’re in and have committed our people and resources to our clients and communities to support their success.”

Lake City Bank was founded in 1872 in Warsaw, Indiana. It serves Indiana with 45 branches located in northern Indiana and now in Indianapolis as well. The holding company, Lakeland Financial Corporation, has over $3 billion in assets. That’s over 140 years of continuous service under the same name.

This long term record of success got me thinking. Are you and your organization committed for the long haul? A few years ago a joint study by researchers at Thunderbird School of Global Management, ASU and, Penn found that when leaders balance the concerns of customers, employees, and community their employees see their organization as more visionary and participatory. Employees report being more willing to put in extra effort. The engagement drives better corporate results.

Community Is Part Of The Strategy
I asked Findlay about their strategy for growth as they have branched out from Kosciusko County over the past twenty plus years. “We’re an Indiana bank serving Indiana communities. That’s where our strategy starts,” said Findlay. “When we started our expansion, we started in Elkhart County. It has one of the most entrepreneurial business environments in Indiana. The market had undergone a dramatic change in the presence of local banks. The two leading community banks in the market had been acquired, and we felt that the market would be receptive to the Lake City Bank approach to community banking. The same factors have influenced our subsequent expansion into the South Bend market in 1997, the Fort Wayne market in 1999, and the Indianapolis market in 2011.”

Author John Jantsch, in his book The Commitment Engine: Making Work Worth It, talks about building your company around a purpose. Employees need something simple and straightforward to rally around. And it needs to be more than just the bottom line.

Findlay continued, “It’s an understatement to say that we encourage our team to be involved in their local communities. We are proud of the fact that our team takes a prideful ownership in their respective communities. We aren’t bringing banking officers in from out of state or out of town. We are developing and hiring local bankers. Community involvement is a company-wide effort, and truthfully, it’s one that we don’t have to work very hard to accomplish.”

For Lake City Bank, it permeates their entire organization. “It’s part of our DNA as we commit hundreds of thousands of dollars and thousands of volunteer hours to our communities every year. If there is a parade in your town, we’ll be in it. If there is a Chamber of Commerce event, we’ll be at it. We think it’s part of our culture that comes very naturally to our 500+ team members”, said Findlay.

I think it’s interesting that in spite of technology bringing more retail banking to the internet or apps on a smart phone, Lake City Bank still likes to demonstrate a physical commitment to a community as well. “We build offices that represent a real investment in the community and indicate our long term intentions,” commented the Lake City Bank President. “We also make every community a priority. While the bank is headquartered in Warsaw, the entire leadership team is engaged and involved in every market we serve. We put a lot of miles on our cars every year, but we think it’s an important statement to the communities that we serve that we are an Indiana bank serving Indiana communities.”

What’s The Risk?
In talking with David Findlay, it’s clear that the bank’s focus on taking care of clients is a key differentiator. But the ability to do that best is directly tied to their commitment to independence. Being and remaining independent and community focused requires an additional level of engagement and support by their team. As he says, it’s part of their culture, but I think over the years it can become difficult to maintain. The risk comes when organizations lose their connection to what made them great in the first place. With each new batch of employees, the mission becomes watered down, and before you know it, nobody knows why you do what you do.

So what is Lake City Bank’s winning formula?

1. Take care of clients – “They aren’t just clients; they are our neighbors, our friends and our centers of influence.”
2. Consistent execution – “We are an execution and results-oriented culture, but we all understand that the results are only as good as the client service.”
3. Grow, but keep what you got – “While we focus on who our next customer will be, we focus more on the clients we already have. Taking care of them will give us the ability and the reputation to develop the next relationship.”
4. Be engaged locally – “We believe that our Hoosier communities find value in our community-driven culture and it will be the difference as we move forward.”
5. Return value – “We’re very mindful of shareholder value and have a mission and strategic plan designed to help us remain independent.”
6. Independence – “As a result, we think we do a better job at taking care of the clients.”

As author Jantsch says, “Have you ever encountered a business where everything felt effortless? The experience was perfect, and the products, people, and brand worked together gracefully. You made an odd request; it was greeted with a smile. You went to try a new feature; it was right where it should be. You walked in, sat down, and felt right at home… Businesses that run so smoothly as to seem self-managed aren’t normal. In fact, they are terribly counter-intuitive, but terribly simple as it turns out.”