The troubles that UnumProvident and Tom Watjen have had to confront over the last six years are well-documented:
A difficult merger, unexpected financial losses, steep stock drops, allegations of an unwillingness to pay valid disability claims, newspaper and television stories on lawsuits, attorneys general demanding documents.
These are not the challenges that executives dream about as they climb the corporate ladder.
But Watjen, UnumProvident's president and chief executive officer, said the disability insurer's difficulties have made the company stronger. The experience, he said, has led to big changes in business strategies and eliminated "arrogance" from the corporate culture.
In an interview while he was in Portland for an employee recognition event, Watjen said:
All the bad news fostered more of a team approach inside the corporation, including among the 3,100 employees in Portland. The troubles and UnumProvident's response unified a work force that didn't exactly embrace the 1999 merger between Unum and Provident insurance companies - and the clash in corporate cultures that came with it.
UnumProvident no longer chases all the big accounts for its group disability policies, even though they bring in the most revenue. Instead, the company picks and chooses customers that promise better profitability.
The rebuilding process of recent years, which included the sale of some business units and restructuring of debt, is complete. The corporation is focused now on building a culture of continuous improvement within its remaining business units.
It's unusual to think of a large employer that leads its industry in market share as having to rebuild, Watjen said. But that's the charge he received two years ago when he was picked to replace ousted president and CEO J. Harold Chandler.
Watjen said UnumProvident's main problem before he took over in 2003 was that it "got off track financially." The company "became a little too enamored of growth," he said, and looked more at increasing the number of clients covered by disability policies rather than whether the policies themselves were money-makers.
UnumProvident also has raised its rates, taking a hit on the sales side to ensure that the bottom line is stronger.
Meanwhile, the complaints about claims handling brought a multistate investigation, and that, in turn, produced a laundry list of corrections. California recently reached a settlement on its complaints with UnumProvident, following the completion of a review of business practices ratified by 47 other states.
Watjen is proud of having turned things around without mass layoffs, saying that's what happens when companies allow themselves to become bloated. Business leaders, he said, must look continually at how many people they need to be effective.
In Portland, the employee count has been fairly stable for the past few years, though some jobs have been shifted during Watjen's tenure. There also have been occasional cuts, like those affecting a dozen computer technicians in Portland.
Watjen said a small piece of computer work was shifted overseas because new college graduates no longer are trained to handle a few older systems that UnumProvident maintains along with its newer ones.
This does not signal that the company might send its call-center jobs overseas, as many other companies have. The work, he said, would be difficult to accomplish with foreign operators.
Overall, Watjen said, he's impressed with the quality of workers in Maine and thinks there might be some opportunities for job growth here.
Evidence that UnumProvident has finally gotten its house in order includes the stock price, which dipped as low as $6 a share in early 2003. It's now trading at around $22 a share and is near the top end of its 52-week range.
"When you fall from grace, it takes a while to work yourself back," Watjen said of the stock price, noting that he understands the company has had to show results to win back the trust of investors.
Vanessa Wilson, a stock analyst with Deutsche Bank Alex Brown, said Watjen has completed most of the key tasks he faced when he took the top job at UnumProvident.
"If you think about a to-do list, other than executing and running the company, at this point I don't think there's some big looming item to do," she said.
Wilson also said that simply saying the stock has rebounded understates the performance, with UnumProvident stock price up 22 percent this year, compared with 16 percent for other insurance companies and 4 percent for the Standard & Poor's index.
Watjen said he expected the stock to do well eventually, but it "took a while to convince everyone that this was the right strategy."
He said the company has been cleansed of the "arrogance" brought about by market dominance.
"In claims, it may have been one of the areas where the corporate arrogance came through," he said, so UnumProvident is stressing customer service and a more humble approach with customers.
The arrogance, Watjen said, was fostered by corporate officials. "It was very much a top-down, `don't really care what the employees think' attitude," he said.
Watjen insists that mindset is now gone. He'd like to see UnumProvident start appearing on those "best places to work" lists.
"That's a stretch goal for us, but it's one we're trying to achieve," he said.
Staff Writer Edward D. Murphy can be contacted at 791-6465 or at:
emurphy@pressherald.com
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