A Simple Plan: Three Goals for Everyone

A Simple Plan: Three Goals for Everyone

NY Times

Published: November 13, 2010

This interview with Shivan S. Subramaniam, chairman and C.E.O. of FM Global, a commercial and industrial property insurer, was conducted and condensed by Adam Bryant.

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Earl Wilson/The New York Times

Shivan S. Subramaniam, chairman and C.E.O. of FM Global, a commercial and industrial property insurer, says that everyone at his company, from top executives to file clerks, knows about its three K.R.A.'s, or “key result areas.”

Q. What were some early leadership lessons for you, when you first became a manager?

A. One is that people don’t necessarily do things the way you would do them. And if they don’t follow precisely the way you think about something, that doesn’t necessarily mean that they’re wrong. That took some maturity to understand — also, that not everybody will behave the way you behave.

But the bigger picture is to make very sure that everybody in the company has the same goal in mind. That was always the more important thing I learned over time. It matters less what people do or how they do it, but do we all agree on the same goals?

Over the years, that has led to us having very simple goals at our company. We call them “key result areas” or K.R.A.’s. We’re multinational — we’ve got 5,100 people, 1,800 of whom are engineers. We’re very analytical. But we have three K.R.A.’s, nothing terribly fancy. And everybody focuses on them. One is on profitability. One is on retention of existing clients. And one is on attracting new clients. That’s it.

You can talk to people in San Francisco, Sydney or Singapore, and they’ll know what the three K.R.A.’s are. All of our incentive plans are designed around our K.R.A.’s, and every one of those K.R.A.’s is very transparent. Our employees know how we’re doing. And, most importantly, they understand them, whether they’re the most senior manager or a file clerk, so they know that, “If I do this, it helps this K.R.A. in this manner.”

Q. Those three goals — did you inherit them when you became C.E.O.?

A. We went through a major transformation in 1999. We put a five-company merger together. And that’s when we had to focus on these kinds of things, because everybody had a different way of looking at things. That’s why these K.R.A.’s really resonated well.

We had people who were in fairly small to medium-size companies, and now they were part of a large company. They wanted to still be treated the way they were treated when they were in a small company. The kind of communication system that we developed helped enormously.

Q. What were some other big influences?

A. When I worked for one of our predecessor companies, I took a leave of absence and went to M.I.T.’s Sloan School of Management. I came back, and the company went through a major change and hired a new C.E.O. to run the company. He got to be a very, very important person in my life at the time. I was an analyst assigned to the C.E.O. So he would say, “Go look at this” or “Find out that.” I would crunch the numbers, come back, and work with him.

I learned many things from him. He took a long-term view of virtually everything, and he would be very measured, whether it was good news or bad news. Sometimes you could tell that he was angry, because we were going through a crisis at that time, but he would just make very sure that he didn’t react. Privately he might spout off. But in any meeting where there were more than two or three people, he would be very measured and sensitive about how he reacted.

And yet he was known as a tough guy. He kept us focused. He’s the one who really started to teach me about the importance of simplicity. Things like, “If you can’t explain it to me in a couple of sentences — what the idea or what the concept behind it is — it’s obviously something you don’t know how to do. If you’ve got to write a whole page to describe something, that doesn’t make a lot of sense.”

Q. What about leadership lessons you learned early in life?

A. I tend to be a little more of a risk-taker than most people, because I was one of those kids who came to the United States in their 20s. I didn’t have much money, so I had to survive and do things and get along. I got a job at a manufacturing company in Brooklyn and went to school at night. It’s just an environment where you’re taking a lot of chances, so later on, when you do need to take a chance, you’re a little more sensitized to the ability to do it.

Q. And your parents? What about them influenced you?

A. My father was in the merchant marine and helped start the first merchant marine academy in India. This was right after Indian independence, so everything was new. Every two or three years we would move, and that also made me less averse to taking risk. That’s how life was. Every new place, we had to start all over again. I wish we had had the Internet and text messaging back then, because I would have kept in touch with everybody.

Q. What lessons did you learn from your father?

A. Not lessons as such, but there were things that made an impression.

We would have kids over from the academy on Sunday night for dinner. He wasn’t too taken in by the power of his position. He was very down to earth about those kinds of things. He would go and play sports with everybody else in the evening, and he’d be happy doing that. And those were all things where, essentially, he had a sense of humility about his job.

And I think that happens even for me today. At FM Global, I try to eat lunch with everybody. There are no special executive dining areas or anything like that. I get my tray along with everybody else. If there’s a seat open anywhere, I’ll sit down at lunch and talk with people.

Q. How do you hire? What are you looking for? What questions do you ask?

A. If it’s a technical position that I’m hiring for — let’s say finance — I first want to assure myself that this person is good at that function. But the second thing for my company — one very, very important issue — is, how well will they work with the rest of the people? They might be the best finance person in the world, but how well will they work with the other senior groups and other managers in the company? So I’m trying to assess that, trying to assess that person’s experiences, in terms of how they’ve dealt with those kinds of situations. Also, how will they work with my directors, and how will they be perceived in the marketplace?

Q. But what about the intangibles? How do you interview to see if people have the qualities you’re looking for?

A. If they’re coming from another organization, I’ve probably done a lot of research about that organization before they come to interview with me. So I’d be asking them very specifically about what I’d read, especially some of the challenges their organization had faced. I’d ask them what their role was, and how they responded.

Q. If you could ask somebody, say, only two questions in a job interview to decide whether you’d want to hire them, what would they be?

A. For a senior position, I would ask them why they want to work for FM Global. It’s not a publicly traded company. It’s not someplace where you can have the opportunity to make enormous amounts of wealth or anything like that.

The second question would be, under what circumstances would they see themselves not having a long-term career in our organization? What kinds of things could happen, where they would then look to leave?

Q. What advice would you give to a chief operating officer who’s about to be named C.E.O. for the first time in his or her career?

A. Well, that step is always a very dangerous thing. The reason I say that is the chief operating officer always thinks that they know every possible thing about their organization. That’s why they’re the chief operating officer. And when you move from there to chief executive, you need to come with a very, very clear notion that there’s probably a lot of stuff that you don’t know about.

The chief executive is really facing the world far more than the chief operating officer, who’s facing inward. That’s a whole different dimension. Those are skills the chief operating officer needs to really develop quickly.

Q. When you became C.E.O., was there something that surprised you about the top job?

A. Absolutely. I didn’t fully comprehend how much external work there was — just something very simple, like making sure you have the right set of directors. Recruiting directors is a full-time job. You’re really interviewing somebody to be your boss. And that takes up a lot of time — far more than I would have ever guessed.

Q. How would you finish a paragraph that begins with the words, “My philosophy of leadership is. ...”?

A. My philosophy of leadership is that four or five of us can come up with a much better decision than just I can alone. And if you follow that philosophy, you’ll probably have a very good, talented management group around you. People can always perform a whole lot better than how you think they’re going to perform. You need to really give them the opportunity to do that.