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Business leaders across Flyover Country are having to make big decisions these days as they swing their companies back into something that feels like normal while emerging from the pandemic. And their favorite word is “hybrid,” as in mixing an in-person approach to conducting commerce with the virtual and remote method that was mandated for most of the duration of the coronavirus.
But John Schlifske is having none of that. The CEO of Northwestern Mutual is executing one very purebred solution for his employees – who are based in Wisconsin and in New York City -- and an opposite purebred approach for customers of the Milwaukee-based financial-services giant. Employees are mostly coming back to the office. Customer relationships are mostly staying virtual.
And Schlifske, who for 11 years has run America’s 90th-largest public company as ranked by Fortune magazine, is resolute and unapologetic about both. He believes the contrasting strategies for each constituency will give NM a competitive edge in an industry that is enjoying a robust post-pandemic surge.
As far as employees are concerned, Schlifske thinks getting almost all NM staffers back to work together physically is the only way to optimize the company’s successful culture – and the best way to take advantage of its considerable investments in bricks-and-mortar. These include the 32-story Tower and Commons that opened in downtown Milwaukee just a few years ago and holds about 2,400 people; an 84-acre complex in suburban Franklin, Wisconsin; and a building that houses about 300 employees in Brookfield Place in New York that NM picked up with its 2015 acquisition of LearnVest.
“Our goal is to get back to the work environment we had pre-Covid,” Schlifske told me. “Most of our people were on campus most of the time. We’re not going to have a permanent hybrid model. People will be able to come back, or work virtually.”
Schlifske said that he, personally, has been “trying this hybrid thing just to make sure I’m understanding it and am open-minded about it. I hate it. ‘What day do I go in, or not go in?’ I just think it’s not a good environment.”
Good To Be Back
NM began allowing employees back into the Tower and Commons in June. “It’s been very popular already,” Schlifske said. “It’s fun to be back on campus.” But more substantively, he explained three main reasons the company is trying to restock its physical workplaces rather than let everyone work at home in their pajamas.
“We have a very strong culture at Northwestern Mutual, and that’s a competitive advantage for us,” Schlifske said. “It revolves around our sense of duty to policy owners and always doing the right thing even if it’s not always in the unit’s best interests. It took us 160-some years to build up that culture, and if you’re in a virtual environment, it can dissipate literally in one generation, in about 15 to 20 years. To have that culture be sustained and maintained, we need to be on campus.”
Second, NM’s huge workforce is relatively contained, geographically. “We’re not some far-flung global company with employees in every state and nation,” Schlifske said. “We’re very concentrated. And that’s an advantage for us. If we weren’t on campus, we might as well be far-flung. It’s the notion of being together physically that we want to maintain and capitalize on. Good collaboration is good business at the end of the day.”
A third reason for Schlifske’s decision is that “we are a single-[profit-and-loss statement] company, and everyone has to work both vertically and horizontally for that to [succeed]. That’s difficult in a virtual or hybrid environment. It’s not the same. With everyone virtual, you just have to make do with it.
“With seven or eight people in a conference room and one or two virtual, it just doesn’t work as well. It’s clunky; you can’t talk. You have to take turns in a stilted way and you can’t have a free-flowing discussion. With everyone in person, you’re able to write on a whiteboard and read people’s facial expressions. All of that stuff goes out the window in a hybrid environment.”
As a result, Schlifske said, NM is “completely committed to having most of our people” physically on campus “most of the time.” That policy will allow, of course, for “flexible work arrangements, though that’s not new to our company.”
Schlifske said that “most employees are excited” to return to NM’s campuses. For one thing, the $450-million Tower and Commons that NM opened in 2017 represented a significant enhancement of their physical environment, with a new, 550-foot-high skyscraper and refurbishment of its adjacent old headquarters, fashioned around egalitarian arrangements and digital imperatives.
Great Places to Work
The outer walls are set aside for employees as meeting rooms and places for innovation and collaboration, rather than being devoted to people up the hierarchy. Exercise areas populate the interior of the building, and flexibility dominates the ergonomics, right down to floor vents at each station that allow the employee to make personal space warmer or cooler. And instead of being reserved for the board room or a restaurant, for example, the Tower’s top floor can be used by anyone in the company for a meeting that overlooks the Lake Michigan shoreline and the city.
NM has been taking a similar approach to making its facilities in New York and in Franklin beckon to returning workers.
“We know we need to make the workspace an attraction for people” after the pandemic, Schlifske said. “We can’t be forcing people to come to work. If the majority feel that way, we’ll have a problem. But if we have a campus where people want to come to work – to collaborate, to have lunch, to work out – we can win most people over. And that’s exactly what we’re going to do.”
By contrast, pandemic performance has dictated entirely the opposite decision on how NM advisors will handle relationships with their clients going forward: Customers have demonstrated a strong preference to continue to meet only virtually with company representatives after Covid, so Schlifske and his IT team are reimagining that part of NM’s business model for the long term.
“There’s something about it that clients like better,” Schlifske said. Virtual appointments “are at a set time. They don’t have to make coffee for [an advisor], or greet them, or meet them somewhere. They don’t have to leave their home or their office.”
This wasn’t a change that NM representatives necessarily welcomed, Schlifske said. The shutdowns from the pandemic “forced our salespeople to do it. I’m 62 years old, and I can imagine someone from my era, who’s always engaged with clients face to face, pooh-poohing the notion of having just a digital relationship with clients. But the situation forced them to adjust to that and learn, and most salespeople now love it.
A Virtual Upside
“It accelerated our digital transformation. From a change-management perspective, we had to do it and get used to it and build that muscle and get good at it. And once we did it, it wasn’t too bad.”
In the process, Schlifske said, Northwestern Mutual has been gaining some benefits as an organization. For one thing, the number of meeting cancellations by clients has plummeted in the all-virtual realm. “One of the crosses our reps hate to bear is meetings not held,” Schlifske said.
Also, the paradigm shift to an all-virtual playing field for client relationships has “opened up the marketplace” for NM advisors and salespeople physically located somewhere to garner business across the country rather than only locally.
“Our reps now talk about having a national practice, with some clients they get referred to who don’t live in the city where they operate,” Schlifske said. “They can deal with people across the country.” NM doesn’t have a geographic-franchise mentality that would prohibit its agents from probing the entire nation for business, he said.
At the same time, Schlifske said, the digitization of everything has underscored – rather than undermined – the importance for customers of having a personal, flesh-and-bones adviser like those at NM.
“I wouldn’t have bet on this before the pandemic, but it’s proven out that in digital relationships, people still want a trusted financial adviser,” he said. “The notion that individuals are going to do all this [investment] stuff themselves using just digital tools and not have an advisor – it’s been just the opposite. People have reached out to us.
“There’s human nature at work. People want someone to talk things through with them, and they don’t want to make big financial decisions without human input. They want expert advice; they want someone to talk them out of doing dumb things. So the beauty of the pandemic ended up being what I always believed: The best relationships are a mix of digital and human.”