ONLINE CROSS-FUNCTIONAL INTEGRATING CASE.
NATIONWIDE: SERVING HUMAN NEEDS
by Hal Babson
Serving Customer Needs
Nationwide, a global financial conglomerate based in the central Ohio city of Columbus, was started by Ohio farmers under a leader whose values and vision have produced an open environmentally interactive organization. The initial and subsequent leaders have created a culture directed toward meeting human needs. The initial focus was customer needs. That focus expanded to also serving the needs of employee and supplier diversity and the needs of communities, society in general and the overall international environment within which it operates.
Nationwide was originally known as the Farm Bureau Mutual Automobile Insurance Company and was founded in 1926 by Ohio farmers through their Ohio Farm Bureau. The farmers believed they were being overcharged by other insurance companies. After all, they were being charged the same as city motorists but they had fewer traffic accidents. As a result, their insurance company started with a $10,000 loan, a one-room office in downtown Columbus, three employees and twenty part-time agents who volunteered to sell auto insurance policies without commission. As volunteers, they did not receive extrinsic rewards in the form of pay but instead obtained the intrinsic reward of knowing that they were contributing to the well being of others. Thus these volunteers began a tradition in which the organization’s people felt committed to a worthy cause. Initially, the company offered only auto insurance and only to Ohio farmers.
The company was so successful that rural drivers in other states sought coverage and thus in 1928 it began to expand into other states with help from locally based “sponsoring” organizations. This was the start of a tradition of seeking change and adaptation to changing environmental realities. Over time it expanded into other financial products and across the nation - eventually overseas. It pioneered the sale of multiple insurance products in contrast to former traditional practices in which a sales person sold only auto or life insurance, etc. The innovation ran contrary to the industry belief that insurance agents weren’t qualified to sell both life and casualty insurance because those products are so different. (The competitors were much more resistant to change but eventually they copied Nationwide’s approach.) In the mid-1950s the company pioneered the sale of both life insurance and mutual funds shares by its agents - a move that was opposed vigorously by both the insurance and securities industries. (Today the sale of multiple insurance and other financial products is common among financial institutions.) In 1955 Farm Bureau Mutual became Nationwide Mutual. As the company organized other entities under its control bearing the name Nationwide, the group of companies became commonly known simply as “Nationwide.”
Today, the various Nationwide companies rank as the 30th largest financial services organization in the world with over 117 billion in assets - an amount which has doubled in five years. It does business throughout the U.S. and Canada, sells financial products in Asia, Europe, and Latin America and has over 35,000 employees involved in its core businesses: property and casualty, life insurance and retirement savings, and asset management. In 2000, Nationwide acquired Gartmore Investment Management, a London-based international funds manager with operations in the UK, Europe, and Japan and more than $85 billion under its management.
The transformation of a small organization serving Ohio farmers into a global financial conglomerate was largely due to a transformational leader with vision. That leader was one of the organization’s founders, the late Murray D. Lincoln who headed the company until the 1960’s. Murray Lincoln pushed Nationwide’s growth and expansion into diversified fields. At the same time, he served as a national spokesman for the cooperative movement such as farmer owned cooperatives (in which farmers pool their buying and selling in order to get a better deal) as well as non-farm cooperatives. He supported cooperatives through Nationwide in its investments and through other means. Such support was one of his and Nationwide’s ways to serve society.
Murray Lincoln’s vision and values were nurtured by subsequent CEOs. Until recently, Nationwide’s CEO’s were people who were involved with the organization for either their entire career or at least a significant portion of it. Lincoln, who died in the mid-1960’s, was succeeded in 1964 by Bowman Doss, who began his career with Nationwide in 1932 as a part-time insurance solicitor. Following Bowman Doss, George Dunlap - who started as a board member in 1939 - became the CEO in 1969. In 1972, Dean Jeffers, who started in 1940 as a part-time agent, became CEO. In 1981, a person who started as a home office underwriting trainee - John Fisher - became CEO. Dimon McFerson who became CEO in 1992 joined Nationwide in 1979 as vice president of internal audits. In contrast to previous CEO’s, W. G. Jurgensen, who became CEO in 2000, was a former vice president of Bank One Corporation.
Serving Employee and Supplier Needs
Leaders alone could not have built today’s Nationwide. In order to attain the leaders’ goals for Nationwide and society, Nationwide’s human resource managers recognized the need for recruiting programs, internships for undergraduates and MBA students, and other means to develop employee intellectual capital, trust, respect and diversity. In order to motivate and retain its recruits and to turn employee aptitude or potential into abilities with demonstrated outcomes, Nationwide used training and development as special events to recognize individual and team achievements, a business casual work environment, flexible starting times, alternative work schedules, a performance appraisal system which is essentially MBO (Management By Objectives in which workers and managers agree upon objectives yielding extrinsic rewards to those who exceed objectives) and various benefits. The benefits included child care/elder care programs, family illness days, in-house development programs, educational assistance, a work out facility in some locations (to maintain a healthy work environment and to combat stress), and various voluntary employee organizations. Many employee organizations not only enable employees to interact with each other in areas of common interest but to also serve their community and society with resulting intrinsic rewards.
For example, such organizations include the FAN Club which supports and recognizes active employees and agents who volunteer their time and talents in the community. Other employee groups and activities include: the Annual Show - a Broadway musical revue, a variety of musical organizations such as Flight (a small vocal ensemble that performs free of charge for various functions within Nationwide and outside organizations), the Black History Club, the Harley Club (sets up rides - charitable or otherwise- and holds discussion on safety awareness,) the PC Users Group, the Pride Gay and Lesbian Club, the RISA Club (Raising Interest in Spanish Awareness), and a wide variety of other groups. Through such groups, Nationwide thus supports diversity. Such groups also enable employees to go beyond social and other lower level needs in Maslow’s hierarchy to meet their esteem and self-actualizaton needs.
Nationwide seeks to support diversity not only among its employees but also among its vendors and suppliers. Minority and Small Business owners often offer high quality products and services at competitive prices as well as resources and experience equal to or better than their larger competitors, thus allowing Nationwide to receive a better return on investment. For example, Dwight SMITH, CEO Sophisticated Systems Inc. (SSI) describes Nationwide as “Minority and Small Business Friendly”. In 1990, SSI opened with one employee and revenue of less than $100 thousand but now SSI has 100 employees and revenue exceeding $29 million. Another example, Clara BROWN, President Clara I. Brown Interiors, had over 12 years of experience with corporate office furniture operations and residential design. Two years after incorporation, Clara approached Nationwide for business opportunities. Clara described that initial meeting with Nationwide as “very receptive. Nationwide was comfortable with the products we offered.” Within a few months, CIBI began selling its services to Nationwide.
Serving Community and Societal Needs
Within three days after the tragic attack on the World Trade Center and the Pentagon, Nationwide’s demographically diverse workforce united in its response and contributed one million dollars to disaster relief. In addition to responding to unique events and needs, Nationwide has ongoing programs to serve the communities where its employees live and society in general.
Part of that service is related to an issue which is closely related to its insurance business: safety. Nationwide plays a leadership role in the Air Bag and Safety Belt Campaign, a national program designed to educate the driving public about the importance and correct use of air bags, child safety seats and seat belts, and semiannual intensive enforcement checkpoints. Nationwide has long sponsored the National Sobriety Checkpoint Week which is intended to prevent needless deaths and injuries in alcohol-related crashes, to deter motorists from driving under the influence and to increase awareness of the importance of sobriety checkpoints. Nationwide’s Prom Promise program is offered throughout the U.S. to encourage students to sign a pledge promising not to use alcohol or other drugs, especially on prom night - more than 3 million high school students have signed the pledge since its inception in 1990. Nationwide has made great strides in developing partnerships with key organizations that are committed to saving lives and reducing property losses such as Advocates for Highway and Auto Safety, Insurance Institute for Highway Safety, International Association of Chiefs’ of Police Lifesavers, the National Conference on Highway Safety Priorities, National Highway Traffic Safety Administration (NHTSA), National Safety Council, Network of Employers for Traffic Safety (NETS) and National Association of Fleet Administration (NAFA)
In maintaining a system which interacts with and supports its environment, Nationwide’s interest in safety has expanded from the general population to meet the needs of specific groups such as Hispanics who drive half as much as non-Hispanics but are twice as likely to die in a traffic fatality. Nationwide began its partnership with National Latino Children's Institute (NLCI) in February 2000 with the unveiling of the Corazón de mi vida campaign. The campaign focuses on informing Hispanic families about the importance of placing their young children in child safety restraints. Nationwide has donated an additional $300,000 to NLCI for a new children’s fire safety program and donated car seats to Hispanic families in cooperation with governmental and Hispanic organizations. Nationwide is a corporate sponsor of the National Council of LaRaza, National Hispanic Realtors Association, participates in a partnership of the National Highway Traffic Safety Administration and the National Latino Children’s Institute to improve passenger safety for Latino children.
Serving overall society and local communities goes beyond safety issues or the needs of any one group. Other areas include the development of intellectual capital not just within Nationwide but within its environment. This has been done through educational and mentoring programs and programs oriented toward the development of positive self image. Service to society and communities has involved programs to provide for community health needs, affordable housing, and food for the hungry. As a result of these programs, Nationwide has received recognition from such organizations as United Way. In May of 2001, United Way of America awarded Nationwide with the 14th annual Spirit of America Award, its highest national honor for corporate involvement and commitment to building better communities. Nationwide was the first Ohio company and first insurance firm to win the award. Previous winners include Bank of America, Microsoft, IBM and United Parcel Service of America. Nationwide’s relationship with the United Way first began in 1971. The Nationwide Foundation matches contributions made by employees, agents and retirees dollar-for-dollar. In 2000, that combined pledge for United Ways across the country equaled more than $10 million. Nationwide touches more than 700 United Ways across the nation.
Examples of its varied programs to develop intellectual capital within society and individual communities include Nationwide’s financial support for minority education and its internship/mentoring programs at its headquarters in Columbus, OH. It has provided support to the United Negro College Fund for a scholarship and mentoring program as well as programs for Hispanics. (The Nationwide Foundation also matches the tax-deductible gifts of employees, agents and retirees to accredited colleges and universities up to $5,000 per calendar year.) Nationwide Foundation contributes to scholarships and operating funds for the Columbus United Negro College Fund and has created the Nationwide/United Negro College Fund (UNCF) Scholars Program with a financial investment of $600,000 from Nationwide to the UNCF. (Nationwide is the first insurance company to administer such a program with the UNCF. Three components make up the program: a student scholarship, summer internship, and mentorship - serving a total of 40 students over a four-year period.) Through a partnership with the Hispanic Scholarship Fund, Nationwide offers Hispanic students the opportunity to be exposed to the working environment of a Fortune 500 company, scholarship moneys and mentoring opportunities for Hispanic students over a four-year period. In addition to its own efforts and partnerships with other organizations, the Nationwide Foundation provides financial support for qualified tax-exempt organizations whose programs address basic human needs. (Since its inception in 1959, the Nationwide Foundation has contributed more than $150 million to such nonprofit organizations.) Nationwide is a longtime supporter of Inroads, a nonprofit organization designed to develop and place talented minority youth in business and industry and prepare them for corporate and community leadership.
On a national level, Nationwide sponsors the NAACP Image Awards. For example, on March 1, 2002, Nationwide sponsored the awards for the third year on Fox. The NAACP Image Awards recognizes the positive portrayal and accomplishments of African Americans in motion pictures, television, literature and the recording industry.
Nationwide provided a $1.5 million grant to The National Urban League's Institute for Opportunity and Equality to conduct research, policy analysis and advocacy focused on issues of critical importance to the African-American community and the nation as a whole.
Nationwide sets the example for its world wide locations by its community involvement at its headquarters in the City of Columbus which is in Franklin County, Ohio. The Nationwide International Headquarters in Columbus houses the country’s first full-time, onsite corporate Blood Donor Center. Nationwide’s headquarters supplies 17 percent of Franklin County's blood.