A new leadership team for the 'new Aon'
Aon yesterday announced the executive team that will lead the enlarged company following the completion of the pending acquisition of Willis Towers Watson.
The company’s messaging was characteristically sharp and centered on two key points:
The new leadership team brings to bear the “best of both” companies from a talent perspective
The leadership team will be defined by a “one-company mentality”
“Best of both” language is pro forma for a combination like this involving two people businesses, and I think we need to keep sight of the reality that Aon is buying Willis here.
And that this is a case of a stronger/better-run business buying a weaker/less well-run business – just look at the 800 bps margin gap.
Nevertheless, Aon has made a statement here about finding standout talent within Willis and putting it into some of the most important positions in the business, as well as providing it with one third of total executive committee roles.
Prominent examples include Julie Gebauer, who had been the likeliest internal successor to John Haley had Willis remained independent. Gebauer not only becomes head of a merged “super-solution line” that brings together all of health, benefits, human capital and consulting business – she also becomes head of strategy for the group.
Anne Pullum – previously head of Western Europe at Willis – takes the critical brief of running innovation, which is essentially the centrepiece of CEO Greg Case’s stated mission.
North America, the biggest region by revenue, will be led by Alexis Faber, who gets a major promotion having previously been Willis’ COO for corporate risk and broking.
James Kent, the Willis Re CEO, is another marked out for an important role. The executive will become deputy CEO of the much larger combined reinsurance business, and gets a seat on the group operating committee which he lacked at Willis, despite having the top reinsurance role.
This is only the start of the test around whether “best of both” is a catchy mantra or an organising ethos, but these are positive early proof points for Willis staff nervous of the future.
The next tests will be around the make-up of the executive committees of these leaders in their own businesses, and doubtless Willis staff will be looking for “best of both” to be pushed deep down the organisation.
They will also be looking for longevity. There have been other instances in the industry like XL-Catlin where the post-deal leadership team looked like a broad coalition of talents, but where much of the Catlin talent quickly exited.
The point here is that establishing the accepted reality of a “best of both” approach on talent takes time. Aon has had a good start but nothing more.
I have three other key takeaways from yesterday’s press release, and the internal company announcement that Inside P&C’s news team obtained.
First, the company previewed some of the messaging that it will use as it tries to win over staff to the combination, and create a cohesive team going forward.
There are a lot of pieces that Aon needs to get right if it is to land this most ambitious of deals. These include clearing the necessary regulatory approvals; engineering the ~95,000-person firm well with the right balance of solution lines, regions and functions; (over-)delivering on target synergies; and getting its positioning right for clients, many of them new to the organisation.
But potentially more important than any of these is staff buy-in and culture.
This transaction is going to radically change the working lives of staff and Case and the broader leadership team need to win the battle for hearts and minds within the company. There will be a steep challenge in persuading many of Willis' broking staff, some of whom defined their identity against those of Aon and MMC, to commit post-deal.
With Aon staff the challenges will be different – and include the reality that "two-into-one" doesn’t go for leadership positions and scope for them to feel that their enterprise is being diluted through addition of ~45,000 staff from a weaker firm.
If Case & Co fail to win the battle for hearts and minds, their staff will be vulnerable to approaches from competitors and engagement will fall.
As they try to achieve this, they will clearly use the idea of a "one-company" mindset as a sort of North Star – something that will define the approach and be demanded of those placed into leadership roles.
Case and Haley, all-staff note: "It became clear that a fundamental driver of our future success will be leaders who fully embrace the aspiration of creating a one-firm mindset. This is the key to blending the best of both organizations and unlocking the true potential of the planned combination for the benefit of all our stakeholders".
There is little surprise in this approach, coming from the leadership team that brought us "Aon United" – a catchall for a range of initiatives that includes work to unify the firm, break down siloes and create group-wide co-operation to improve client delivery.
A key test for success will be whether or not Aon can banish internal talk of legacy companies, and thinking about staff in terms of their antecedent businesses.
Management will also stress that they are creating a "new Aon", one that will be new and feel different for its existing staff, as well as for the joiners from Willis – i.e. there will be no absorbing the Willis employees into a status quo Aon.
Alongside the talk of a "one-company" mentality and a "new Aon", management will push to unify the team by reference to a sense of mission based around client service and an innovation agenda which is supposed to address the waning relevance of the industry.
This becomes the kind of creation story for the combination: that what Aon wants to do for its clients could not be achieved by the firm alone, so it needed to acquire Willis to create the "new Aon" – a professional services firm with a bigger talent base, broader capabilities, and an increased ability to invest to deliver new solutions.
The degree to which this resonates with staff and the extent to which they choose to look past what many in the market see as a scale/synergies deal will be another key determinant of success – and right now that remains an open question.
Second, this is a watershed day for the industry in terms of representation of female leaders and may suggest faster progress can be made in the sector.
The industry’s issues with gender imbalance have been widely chronicled and frequently decried.
And, as much as the industry has been working to increase female representation in senior roles, there has been a view in some quarters that the task would take many years for dramatic progress to be seen given the need for a cohort of senior female leaders to move up step-by-step through firms.
But yesterday, Aon – the largest broking firm in the world and a major player in broader professional services – indicated its top team of 24 would contain 11 women. It is further understood that over half of Case's direct reports will be women – again certainly a first for one of the industry's leading players.
Aon has long been a very vocal advocate for diversity in its workforce, and it seems to have used the Willis transaction as a catalyst for a major leap forward on gender for its leadership team, with five of the eight Willis execs joining the top team women.
Making the move will place pressure on the rest of the industry to accelerate diversity drives.
Third, Aon has given significant representation to Willis talent, but it has not necessarily made the obvious choices and much of the Willis operating committee is not on this list.
In a potentially related development to the point around diversity, Aon reached down below the Willis operating committee for a number of the members of the key leadership team.
Concomitantly, there is relatively low representation on this group from existing Willis operating committee, with a string of big names missing from the announcement.
These include Carl Hess, a long-time Haley senior lieutenant who most recently ran the investment, risk and reinsurance at Willis (2019 revenues $1.6bn). It also includes another key segment head, Gene Wickes, who led benefits delivery and administration (2019 revenues $1.0bn).
The two key geography leaders for Willis also don’t make it onto the list. The first, Joe Gunn was head of Americas for Willis, with North American revenues for 2019 disclosed as $4.5bn. The second is Nicolas Aubert who headed Great Britain, which had 2019 revenues of $1.9bn.
Other missing members include the CFO Michael Burwell; general counsel Matthew Furman; chief administrative officer and HR head Anne Donovan Bodnar – and, of course, Haley himself who moves to a chairman role.
Those who did make the Aon executive leadership team include Julie Gebauer, Adam Garrard and Anne Pullum.