Today we’re sharing insight from guest blogger Greg Downes, Chairman Emeritus at Gibson. Tim Leman is taking the summer off from writing his weekly blog to spend time on an exciting project focused on culture and leadership. We hope you enjoy Greg’s wisdom and perspective.
My good friend and business partner, Dave Gibson, told me years ago after I had become one of the owners in Gibson that we should always “run the business like we’re going to sell it”. Quite frankly, that statement really startled me. The main reason I had come to Gibson was that Dave was fiercely independent. He made it clear during my recruitment that his intention was to always keep Gibson that way. Which is exactly what he did. What did he really mean? If we do what should be done, we won't have to sell it.
He was constantly comparing our Key Performance Indicators (KPIs) to those of the “big boys”, like Marsh, Aon, and Gallagher. He would say we needed to emulate them more and get our KPIs in line with theirs. In fact, he even told me we needed to grow organically at the same rate or better. Well, to me that was ridiculous for many reasons. Not the least of which was that, at the time, we were a relatively small company located in a small community in North Central Indiana.
Several years after that I became President and CEO and, taking a lesson from my former mentor, I agreed to meet with various people representing the “big boys” who had an interest in acquiring us. Not because I wanted to sell the agency. Absolutely not! Rather, it was to find out from them what would make us more attractive as an acquisition. In the process we could increase the value of our stock, as well as the performance of our company, in ways that would matter to our customers and employees.
So I asked one of our suitors, “if you bought us, what exactly would you do in the first 6 months to make us better?” The answer was, in not so many words, “we would make all the hard decisions you as owners have not had the courage to make”. That was like a slap in the face. So I made a list of all the things we needed to do that we hadn’t done because they were tough decisions. These involved people, performance, compensation, and expense control. In other words, all the things you know you should have done but never got around to. It made us a better organization. Most importantly, it forced us to be more honest with ourselves, our partners, and our employees.
It also made us more transparent, particularly with our clients. For the first time ever, we started to disclose how we got paid and how much we got paid. That changed the nature of our relationships with some of our largest clients. We disclosed more of our financial results internally, which caused our employees to ask some tough questions. We began to share financial results with our key carriers (suppliers), which immediately created a higher level of mutual trust. In short, being more transparent made us more accountable to ourselves, our employees, our clients, and our key suppliers.
Running the business like we were going to sell it forced us to plan for the long term, which acquirers like to see. It put in place a perpetuation plan, not just for ownership but, more importantly, for leadership. And those plans ultimately allowed us to remain independent and 100% employee owned, creating a smooth transition of both leadership and ownership.
What’s The Risk?
“Running a company like you’re going to sell it” carries with it some very negative connotations like slashing expenses, cutting staff, not investing in the future, even manipulating the books to look better than you are. But the real truth is that if you don’t "run the business like you're going to sell it" you will never make the hard choices or the tough decisions you need to make. You WILL end up selling it, just not how or when you choose.
This content was written and shared by guest blogger, Greg Downes
Greg is Chairman Emeritus at Gibson. After teaching school for three years in South Bend, Greg joined Travelers Insurance Company in 1973, where he received extensive training as an underwriter in all phases of property and liability insurance. He was assistant manager of the commercial lines department in South Bend, and subsequently joined Gibson in 1980. He worked as President and Chief Executive Officer for many years before becoming Chairman of the Board. He is now Chairman Emeritus.
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