http://www.mysanantonio.com/news/met...a.297e28b.html
For better or worse, Davis shook USAA up
Web Posted: 12/16/2007 12:12 AM CST
Travis E. Poling and Greg Jefferson
Express-News
In the seven years that Robert G. Davis ran USAA, the area around his executive office suite was off limits. Workers had to give it a wide berth. More recently, the doors could be accessed only with a key card.
On Tuesday, after Davis' sudden retirement, newly named CEO Josue Robles opened the doors to the suite and left them open.
To some, it was a sign that what they described as "a culture of fear" fostered under Davis finally was over.
But Davis, 61, who spoke about his departure for the first time Saturday, described the 22,000-employee company as having a culture of performance and not everybody fit in. "We had to change the whole culture of the company," Davis said.
When he came to USAA in 1996, it still was very much a civil service environment. "Nobody was challenged in performance and creativity," he said.
Those who thrived under the low-demand, decades-old business model were aghast at the changes Davis made.
"They hated it, hated me and couldn't get away fast enough from it," Davis said. "If I had worried about myself and my reputation, we wouldn't have gotten anything done."
Some longtime employees of the San Antonio-based company, having outlasted layoffs and firings over the past seven years, say Davis was turning the private company into a financial services and insurance powerhouse.
But many still yearned for the leadership of the late Brig. Gen. Robert McDermott, who served in executive positions from 1968 until his retirement as chairman in 1993. He was widely known for the way he treated his workers and his contributions to the community.
McDermott "always said we really need to take care of our people and they'll take care of our mission," said one former executive, who spoke on condition of anonymity.
Davis had a much different leadership style. Several former executives and employees said that while the benefits at USAA remained great under Davis, the emphasis on selling more and more services to USAA's 6 million members became intense. Davis, they said, often berated them publicly in monthly employee meetings.
Davis also made it clear to employees that he was staying through 2010 and that nobody should think they could outlast him, current and former USAA insiders said.
"Tuesday was probably the best day at USAA in five years," the former executive said.
When Davis' retirement was announced, various online message boards began buzzing over the news, many espousing theories on why he left so suddenly, chief among them that he was having disagreements with the board of directors.
Employees described the mood as jubilant Tuesday and some reported cheers erupting from rows of cubicles and employees exchanging high-fives.
The announcement that Robles, a 62-year-old retired Army major general and 13-year executive of USAA, would become CEO was met with equal excitement.
On Saturday, Davis denied he was having any problems with the USAA board. He said the decision to leave was his and that he and the board of directors still saw eye to eye on the direction the company needed to take. He praised the board as "very strong."
"Basically, I've had my whole life scheduled for me," Davis said from his Shavano Park home after spending some time at his Hill Country ranch earlier in the week. "I think it's a good time to take a break and see what it's like not to be on a schedule."
Reinventing USAA to be compe ive took its toll, he said.
In 2000, the U.S. economy came crashing down from a long bull-market run and the investments made by insurance and financial companies to provide profits when the market is good could no longer be counted on.
"I knew we had to make our money the old-fashioned way — through operations," Davis said.
In seven years, he said, he shrunk the amount of money it took to run the company from 40 percent to 24 percent, a factor that made USAA products compe ively priced.
Some cost savings came through layoffs in 2000 and 2001 and other forms of downsizing in the years since. Before then, USAA took pride in not laying people off. But some inside the company say the harsh changes were necessary.
"Bob Davis was the right leader for USAA at the right time," said Wendi Strong, USAA spokeswoman and a senior executive brought on board by Davis. "He brought rigor and fiscal discipline."
Strong said some people, mostly those who didn't like the demands of "a performance-based culture where results matter," have been a vocal — if anonymous — minority.
Employees identified by name on USAA's internal message boards weighed in by the hundreds with praise for Davis' leadership and public speaking. Some chided those who wanted the so-called "good old days" to return.
Strong said Davis was the first to open monthly and quarterly meetings to all employees. He also made performance bonuses companywide instead of just for executives. Workers have received 12 percent or more of their annual income as a bonus in February.
An employee meeting Jan. 29 will lay out just how good a year it was for USAA in 2007, she said, and will show how large the bonuses will be from Davis' last year at the company.
Strong said the bottom line numbers have been good every year under Davis, despite five of the past seven years going into the books as the worst catastrophic insurance loss years in USAA history.
But some of those same employees lauding Davis internally also expressed dismay that Davis never addressed the employees and let them bid him farewell.
The sudden nature of his departure with only a single quote in a company statement Tuesday has raised eyebrows, especially because Davis publicly told employees he had no intention of leaving.
The new chairman of the board of directors didn't return a phone call earlier in the week to discuss the board's role in the decision.
Davis said Saturday that once he decided to leave, the board and management preferred to do it quickly because it is so close to the end of the year. "It was better to change and not dwell on it," he said. "It was just time to go."
Not so visible
Some community leaders interviewed about his departure seemed to agree that it was time for Davis to step down. While Davis was known for his intense focus on USAA's business, he didn't fit the mold of his predecessors or of what most San Antonio civic leaders expect from the heads of major companies.
County Judge Nelson Wolff, who worked closely with McDermott nearly two decades ago when Wolff was mayor, said he rarely crossed paths with Davis during his tenure at USAA.
That was a letdown after McDermott's extensive civic involvement — and to a lesser extent, that of Robert Herres, his successor. Wolff credited McDermott with helping broker an Alamodome deal that he says kept the Spurs in San Antonio.
"A corporate CEO can choose to have a major impact in the community, and McDermott, probably more than anybody else, did that," Wolff said. "Obviously, Davis decided not to do that. He did contribute some, but it was very minimal."
Wolff shrugged off the suggestion that Davis spent his time strengthening USAA during a turbulent period in the financial services industry.
"Certainly AT&T is in a compe ive industry, but, still, Ed Whitacre found time to help out in the community," he said of the recently retired chairman and CEO of San Antonio-based AT&T Inc.
Mayor Phil Hardberger recalled Davis' reluctance to lead fundraising efforts for victims of Hurricane Katrina in 2005.
When Hardberger first asked Davis to head the fundraising drive, Davis' answer was no.
"But he called back the next morning, and said, 'If you still want me to do it, I'll do it,'" Hardberger recalled.
Hardberger said his performance as head of the effort — lining up commitments and dispensing aid — was impressive.
Under Davis' watch, USAA also contributed $250,000 to help pay for the redevelopment of Main Plaza, one of Hardberger's signature projects.
Nevertheless, Hardberger said: "He does not have a good bedside manner. He can be brusque."
Certainly, Davis did not fit the community powerbroker mold, but Strong said he made "a quiet, but significant commitment to San Antonio." She described his leadership of the weekly meeting of Katrina relief groups in San Antonio and recalled the many Saturdays that Davis boxed up food at the San Antonio Food Bank. "He was absolutely anti-photo op," she said.
USAA employees are known for their generosity, ranking as the top San Antonio company for donations to United Way, raising $5.9 million this year. Davis headed the campaign citywide last year, and he and wife were among the top individual donors, according to the United Way of San Antonio and Bexar County.
Still, his management style, while it got results at USAA, left some cold as far back as the 1980s.
As Wolff described it, his first exposure to Davis in the early 1980s wasn't promising. The county judge said he served as a director of the now defunct Alamo National Bank when the board hired Davis as president, and that his curt management style soon created turmoil within the bank.
"That was very difficult, the way he treated people," Wolff said. "A lot of people left."
Ed Lette, president of Austin-based Business Bank of Texas, likewise came away with a bad early impression of Davis.
In 1980, Lette said he served as chief financial officer of M Bank in Brownsville, and Davis oversaw commercial lending as an executive vice president.
"He and I never got along," Lette said. "He wouldn't listen to anyone's advice."
When it came time to craft the bank's annual budget, he said, Davis' projections for commercial loan activity were unbelievably high.
Lette urged Davis to scale back his forecast, he said, to no avail. The following year, "we didn't grow the loan area at all," Lette said. "In fact, it shrank."
But many have praised Davis' financial savvy, saying he made bold moves in his positions as head of the USAA Capital Corp., president of USAA and later CEO, a position he assumed in 2000. He added chairman to his list of les in 2002.
"He is one of the brightest, most organized business executives that I've had the pleasure to work with," said Ed Kelly, who retired from the company two years ago as president of USAA Real Estate.
USAA doubled its assets to $125 billion and doubled its net worth to $14 billion while Davis ran the company.
Some wonder, however, at what cost to the company and its workers. Another former employee, who asked not to be named, said that at first the idea of having six to seven USAA insurance and financial products and services in every member household was not unreasonably aggressive. But in recent years the pressure for USAA workers to sell even more products with every contact with a member became unbearable for some.
Even a few members of the company — primarily military, retired military and their family members — felt like they were always being sold something.
Davis defends the aggressive tactics. He said changing the company to get the right products and services to members and educating them about everything offered was one of the most difficult parts of the job.
"We have to be more advisers than order takers," he said.
Although there were no formal goodbyes or parties celebrating his departure, Davis passed on this farewell to USAA employees through the San Antonio Express-News:
"I've absolutely enjoyed working with all of them and I know they have the USAA members at heart. I encourage them to be innovative and creative."
Reply With Quote
