‘Management by hypocrisy’ and other leadership red lines, by insurance tycoon Henry Engelhardt

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There was no natural light, Engelhardt recalls – or rather there was, but only in the 15-odd managers’ offices positioned next to the windowed stretch of wall. The remaining space had been divided up using six foot-high partitions that gave the impression of “vertical caskets”. “It was a terrible environment,” he says.

“We said we would have to strip all those offices out. We would probably lose most of that management team, and we weren’t big enough at the time to be able to carry that,” he continues. “So we killed the deal, pretty much on the fact that all their managers had offices.”

Because for Engelhardt, this was more than a matter of poor interior design. The company’s leadership were guilty of one of the cardinal sins of their profession: what he likes to call “management by hypocrisy”.

It was this – and similar transgressions – that Admiral’s colourful former chief was seeking to put an end to when he published his book, Be a Better Boss, last year.

The first iteration was actually a manual given to Admiral managers, he tells MT, but he decided to produce a book for the wider public, after realising “there’s an acute shortage of great leaders and managers in the world today”.

Lessons in management

There’s more than one reason Engelhardt is flying the flag for good management.

Yes, it’s about the people who suffer at the hands of “lousy leaders”. Witnessing his own daughter slowly wilt in the face of a boss who was, in Engelhardt’s words, a “screamer” and “had to prove he was the smartest guy in every room”, brought home the impact of bad management. “People like that don’t have the right to ruin people’s lives,” he says.

But there’s also the business case.

If you think directing time and resources to boosting your management capability is a distraction from the bottom line, Engelhardt has a message for you. “Hey, that’s what this is all about,” he says. “Good managers, great managers: they get much better economic outcomes than those who aren’t.”

Since stepping down as CEO of Admiral, Engelhardt has focused on sharing his accumulated wisdom, mentoring people from within and outside the company, as well as giving management talks. He likes to pose the question, ‘who here has targets?’ in response to which many in the audience will duly raise their hand. He’ll then ask, ‘who here can hit their targets on their own?’ at which point “they look at me like I’ve fallen out of a tree”, he says.

“Of course they can’t hit their targets on their own.” And that is “the best management lesson you’re ever going to get”, he adds.

It follows, then, that the role of a leader is three-fold. One, they have to make sure they’ve “got the right people on the bus”, which means do they have the talent they need to achieve and overachieve what they are targeted to do? Two, they need to make sure those people have the right training and tools to do their job well. And three, managers “need to motivate those people all day, every day”.

Toxic cultures, on the other hand, take root when leaders develop an overinflated sense of their own importance. “If you…[perceive] that you’re at the top and everything else falls below you, that’s the beginning of the poison. That’s when your ego starts to take over.”

And this isn’t just about not imprisoning your employees in artificially-lit, coffin-like work spaces. “I see a lot of things in companies that divide the internal workforce,” Engelhardt says. This includes perks, company cars, and (from his own bitter experience) bosses whose seats are conspicuously empty by 4.30, as they hotfoot it to the pub leaving their team to toil away for another couple of hours.

Fundamentally, “you have to have some scruples to be a good manager”, Engelhardt says.

The missing bonus

Even the story of Admiral’s founding has shades of a cautionary tale about the perils of bad management.

Engelhardt, as he recounts in his book, fell into his first insurance job at what became Churchill Insurance somewhat accidentally. The role was advertised under the vague banner of “financial services”, and his initial reaction on learning the details was: “Oh no. What could be more boring than car insurance?”

But he went for it because he “really didn’t like being a management consultant”, negotiating a bonus as part of his contract. And, as it turned out, insurance proved not to be such a drag after all.

The company was in the pre-launch phase and Engelhardt’s bonus – along with those of a number of other managers – was contingent on hitting the target date of 19 June 1989, a deadline he ‘worked his socks off’ to meet. Come the day, the company started selling policies “right on time”, but no bonus materialised – something the MD attributed to the imperfect IT system (meaning, he said, he wasn’t sure it was a truly timely launch) when confronted by another senior manager. While Engelhardt eventually persuaded the MD to give him his bonus, the damage had been done.

“There was a delicious karmic consequence to his behaviour,” Engelhardt writes. “That disloyalty eventually led to the creation of a competitor, which outshone Churchill at every turn.”

“I think you know who that is,” he adds cheerfully.

All about the customer

It was only a year or two later that Engelhardt was scouted by headhunters working for a managing agent at Lloyd’s of London to spearhead plans for a new insurance business, one that like Churchill would sell direct to the public rather than via intermediaries.

Admiral launched in 1993, and it would be another 23 years before Engelhardt handed the reins to his co-founder David Stevens, who has in turn now passed the baton to Milena Mondini de Focatiis.

During the period he was at the helm, Engelhardt met every new starter (a group he estimates at 20,000-25,000 people), famously gifting them all a piece of jigsaw puzzle to symbolise that they were part of a team.

In those meetings, he would also explain that Admiral believes in an inverted pyramid, at the top of which is the customer, he says: “The customer, the customer, the customer, the customer.”

Next in importance is anyone who touches the customer – whether that’s, for example, on the phone, or through writing code – then the support departments, and so on. Crucially, in Engelhardt’s model, leaders are at the bottom, their job being to “help every stage above …[them] to do their jobs better”.

Other hallmarks of Engelhardt’s idiosyncratic leadership style included his hands-on approach to recruitment, personally scouting business schools for the best talent. “I would never see another CEO there,” he says. “But what in the world is more important than that next generation of leaders?”

Engelhardt – who originally aspired to be a journalist – has a soft spot for a metaphor and a penchant for quirky catchphrases, christened ‘Henry-isms’ by employees. On his last day at Admiral, staff wore a T-shirt bearing 22 of these, including, unsurprisingly, ‘the team, the team, the team’ and ‘the customer, the customer, the customer’.

The sweet spot

Insurance is a “very curious business”, says Engelhardt, among its many quirks ‘irrational competitors’ that secure business through low prices but end up losing money down the line.

Still, he managed to navigate these challenges, overseeing Admiral’s growth into a £4 billion company (nearly £9 billion today), and Wales’s only business listed on the FTSE 100. The year Engelhardt stepped down as CEO, he and his family were worth £700 million, according to The Sunday Times Rich List.

The decision to make way for new leadership, by his account, was sparked by a conversation with the general manager of a professional baseball team.

He explained that, for most athletes, their peak period of performance is in their mid-twenties. But for baseball players, it’s in their late-twenties, maybe even early-thirties. It is at this point that players hit a sweet spot between their physical capabilities, which have been gradually declining since their early- to mid-twenties, and their growing experience.

This got Engelhardt thinking about what the sweet spot might be for a leader. “What’s this trade off between energy, youth, creativity [and] vitality…[versus] experience? And I realised it was probably [between the ages of] 40 to 50.”

After this point, “you rely more and more on experience, and less and less on creativity and vitality and energy. And that was what was happening to me. I saw that I was relying on the experience much more.”

“And you do read stories,” Engelhardt adds, “especially about founder-CEOs, who hang on, hang on, hang on, and then they’re part of the problem, not the solution.”

If you ask Admiral’s former boss whether he is glad he stepped away, he will admit there are days when he’s not, when he wishes he was still involved in the “thrust and parry of business”.

“But I tell you what, I was in our house gym at 9.30 this morning, and they’ve been at work for two hours. That’s alright,” he jokes. “So no, I’m quite sure I did the right thing for the business, which is the most important thing, and it’s worked out fine for me.”

“And any time I do find myself saying ‘oh, I would have done it differently’, I…[remind myself] ‘hey, you stepped away’. I could still be there if I wanted to. But no, I stepped away and that’s a good thing. So you’ve got to let them get on with it. It’s their bat and their ball.”

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