AIG exectives Jessica Issacs, senior vice president, and Keith Duckett, vice president
When Martin Sullivan became CEO of American International Group Inc. (AIG) in March 2005, the $108 billion financial services giant lacked a broad diversity initiative. The company, which sells property and casualty insurance, life and retirement services products, has a diverse employee base by default because it employs 97,000 people in more than 130 countries and jurisdictions. But like most firms in its industry, the makeup of AIG’s employee population within the United States needed improvement. Sparked by a partnership with the Executive Leadership Council (ELC), Sullivan is leading AIG on a journey that he believes will help his company reap the business benefits of diversity now and in the future.
It was senior vice president Jessica Isaacs who initiated the company’s current push to partner with the ELC to strengthen its diversity efforts. Isaacs, who heads the field operations and global reinsurance, American International Underwriter (AIU) personal lines division, is a member of the ELC, the nation’s premiere organization of top-ranked Black executives. Although Sullivan had never heard of the ELC, he agreed to attend the organization’s annual CEOs Diversity Summit when Isaacs invited him last October. Isaacs says Sullivan’s openness to the invitation “was a little shocking at the time because he was a brand-new CEO and had a lot of things on his plate.”
Martin J. Sullivan
At the time, Sullivan and his top executives were busy navigating AIG through federal and state investigations that had revealed accounting discrepancies that compelled the insurance giant to restate its financials. Although he was in the midst of that crisis, Sullivan was not too busy to improve his understanding of diversity. He was crafting a new direction for the company.
“Having the opportunity to interact with other CEOs from companies that are household names was important,” says Sullivan of his experience discussing best practices and other aspects of diversity at last year’s summit. “My view was if these CEOs were making their time available to attend the ELC summit, it was worthy of my time—for me personally and for the benefit of the corporation.”
That introduction to the ELC became the catalyst for the development of AIG’s formal diversity program for its domestic operations. Since last October, the company has partnered with the ELC on various projects, including sponsoring this year’s 20th Anniversary Dinner with one of the largest donations in the organization’s history.
“The Executive Leadership Council’s 20th Anniversary Dinner is an important milestone for us,” says ELC president and CEO Carl Brooks. “AIG’s role as dinner sponsor with 13 other Fortune 500 companies who have joined AIG as the Leadership/Legacy 20 is making this anniversary year one that will go down in ELC history.”
The commitment of AIG and the other organizations is sending an important message. “We want to make sure [our diversity initiative] is communicated as a business proposition,” says Isaacs, who also chairs this year’s ELC dinner; 2,500 attendees are expected. “This isn’t about being the social thing or the right thing to do. We have customers who look like us and we need to make sure that we are representative of the customer base that we serve.”
Brooks says that AIG and the ELC have been “on a journey” over the past year that is transforming both entities. “The company has made some gains in making the business case for diversity globally,” says Brooks, “but they know they have much work to do here in the United States. But that’s the strength of Martin’s leadership. He is a warm, open person, unafraid to learn from CEO peers and diverse executives to achieve his goals. He is on a mission to make AIG an even stronger, more innovative competitor within his industry. And you know what? Because he’s willing to take risks and try something new, he will succeed.”
Taking Small Steps
Before it acquired First Sun America Corp. in 1998 and American General Insurance Co. in 2001, AIG primarily was a property casualty insurer in the United States, with most of its life insurance operations overseas. It was also relatively unknown in the United States, with a corporate culture that enjoyed operating globally with a low profile. Today AIG is one of the country’s top 10 life insurance companies and the business imperative of serving its customers is fueling its new efforts at diversity. By openly communicating its support of diversity by publicly supporting the ELC and increasing minority hiring, AIG hopes to position itself favorably among minority groups that are likely to become part of its customer base in the future.
Getting any corporation to fully represent the customer base it serves isn’t an easy process. Top executives at AIG are working together to implement several changes that they believe will move the company closer to its overall goals for diversity.
Here are the steps they are taking:
Change from the top down. AIG employees say Sullivan’s sincere communication and active engagement has made it clear that diversity is going to be integrated into the corporate business model. “With his ascendancy came the immediate message that we’re going to do more and it’s got to become a priority for us as a company,” says Win Neuger, AIG executive vice president and chief investment officer.
Sullivan meets regularly with an executive committee made up of the most senior members of the company, where diversity and other strategic initiatives are communicated to the people who can push it down within their respective organizations.
Partnerships to develop pipelines for diverse candidates. After attending the CEOs Diversity Summit, Sullivan had two main concerns, Isaacs says. These were “to make sure that we recruited the best talent and to make sure that we did more to develop and retain the existing talent.”
Axel Freudmann, AIG senior vice president of human resources, says that through employee involvement and as part of its recruitment efforts, AIG has relationships with many organizations, including Inroads, the Jackie Robinson Foundation, the Robert A. Toigo Foundation and the National Black MBA Association, which provide access to talented people of color for entry-level positions. Tap-ping into these organizations and reaching out to graduate schools and historically Black colleges and universities has helped AIG systematically hire more minority candidates for its undergrad training and MBA management training groups.
“If we have 100 trainees, we’d like 33 percent to be minorities,” Freudmann says. He commends the organizations he partners with for providing minority candidates with extra training and preparation, “so that when they walk through the door, they are prepared.” The better-prepared minority candidates are earning entry-level professional associate positions at a higher rate.
AIG’s partnership with the ELC also provides a pipeline for executive-level talent. When vacancies for top-tier executives arise, the ELC can suggest viable candidates for consideration and its sister organization, the NextGen Network, is made up of the best young Black talent capable of executive-level responsibility.
Development, promotion and retention. Freudmann says execution of diversity programs will be carried out mainly by “diversity councils” that will be made up of top-ranking executives at each of AIG’s major divisions. “Each council will be charged with making sure that hiring, development and training is taking place,” he says. These councils can also serve as sounding boards that field ideas and feedback from employees that can help management better understand the effectiveness of diversity efforts.
To keep the pipeline for midlevel managers supplied, AIG has created a new “executive associate group” where talented midcareer professionals are identified for leadership opportunities based on their contributions to the company. “Since Martin Sullivan has taken over, you’re seeing much more action,” says Michael Holt, AIG vice president of consultant relations, who works in the institutional sales division. “We have a number of minorities in senior roles, but up until last year we haven’t really had a lot of representation in the channels that are being developed for those senior roles,” he says.
Recommendations from Black executives like Isaacs and Holt will be referred to the diversity councils for consideration and, Freudmann says, young people coming into the company will be evaluated early on for executive potential.
A minority vendor program. AIG is revamping its procurement program under the supervision of Keith Duckett, vice president of administration. “We are going to have a formal program that is geared to ensure that [minority- and women-owned business enterprises] have a seat at the table when we’re procuring goods and services,” says Duckett. “We spent more than $100 million with minority vendors in 2005 without a formal supplier diversity program, so I’m convinced that once we nail that down and formalize the process, those numbers are going to increase significantly.”
Duckett has contracted with Dun & Bradstreet to create a database of diverse suppliers that are certified minority- or women-owned enterprises and have a track record of supplying quality goods and services. “What we have to do is roll the database out to the business units so that they know who the minority vendors are with respect to the goods and services they procure. The endorsement has already come from the top,” Duckett says.
High-ranking executives at AIG know that implementing their planned diversity initiatives will take time and perseverance. Boosting the company’s profile, getting employees to buy into changes and convincing minorities to join an organization that hasn’t seemed welcoming in the past are all obstacles on the road to AIG’s success. Getting past those obstacles is a part of the journey.
“When I think of success for diversity at AIG, it’s no longer a program,” says Isaacs. “It becomes the fabric of the company. And that’s when we finish the journey: when we have a company that’s all-inclusive. To me, that’s success.”
By Matthew Scott