SilverStone Group

An Interview with John P. Nelson, Chairman and CEO of SilverStone Group
By Sam Gibbens and Ryan Carlson, Creighton University MBA students

Providing superior customer service in the risk management field can be tricky business. It takes a wide variety of talented people and leadership that is versatile enough to oversee it. It takes a certain set of values and beliefs instilled by a humble Midwestern upbringing. The second generation of the Nelson family definitely has these values and abilities. John Nelson grew up in Council Bluffs, Iowa watching his father grow Nelson Insurance from the ground up. He spent four years as a naval officer overseeing the daily functions of up to 400 sailors, and spent time at Harvard Business School before returning home to the Heartland to join his father in the insurance business. Now SilverStone Group is an industry leader in resource management providing insurance and risk management services to over 3,000 clients ranging from large businesses to private clients.

John Nelson has been an ethical leader in the Omaha community for several decades. He has won numerous awards including the United Way Citizen of the Year in 2002, and an induction into the Omaha Business Hall of Fame.

According to wwww.silverstonegroup.com, “John describes SilverStone Group as a Collegial Company that Foster inquiry and open, honest communication on all matters.” Mr. Nelson was generous to open the doors to his company and sit down with us to have an open discussion about ethics and how they shape his organization.

What do you like most about your work?

This is a sales organization, but we sell a technical product that has an intellectual component. On a daily basis, we are thinking through some complex risk management issues or tax issues for clients with regard to their estates or investment questions. So we are an overall risk manager for our clients, and that cuts across a very broad area, including human relations consulting, human capital consulting and property and casualty protection.

It’s a very stimulating business. And it has the added dimension of the endorphins you get when you solve a problem.

How do you establish the culture where you want people to provide a service rather than the main focus being profit? Are you selective about who you hire? Do you have on the job training?

All of the above. We’ve had courses in ethics, but that’s not where you develop ethical behavior. First of all, you have to be careful on who you select to be employed. We go through a pretty rigorous process where we don’t just have one person interview the candidate.We do psychological testing. We have people across the company visit with the person. It takes weeks. If they are married, see the spouse. That gives you a flavor of the person’s life, their family attitude, if they have a family. Nevertheless, it's not easy and you sometimes make mistakes.

Very generally, when you think of “ethics” what does it mean to you?

I don’t think you necessarily think about the word “ethics.” What you do need to understand in business is that ethical behavior in the long run is profitable. That’s not a reason to be ethical, but the consequence of being unethical is that, ultimately, it comes home to roost and wrecks the business. You have to be very careful to always act ethically and not take the easy road in different situations, even when it can be very costly to the company. One of the real conundrums is that it is necessary to make a profit in business, or you will go out of business. The difficulty is if you develop a culture where the thing you want to do is make money, you will never make money. You have to develop a culture that centers itself around providing service or a value to the client. If you provide that service in a unique and extensive way, the greater likelihood you have of becoming successful financially.

I think what blew the country up ethically was all this emphasis on profits at some large institutions, such as many of the investment banks— the quick buck. It’s almost ridiculous to have an ethical statement or ethical training saying we are going to behave ethically, and then put salesmen in a place of desperation when they are not making their sales goals. This places them in a position where they can easily compromise their ethics. Instead we should sit down and coach them and provide solutions.

You stated earlier that you started out in Council Bluffs with your father; have you always done business in the Omaha area?

Yes.

What moral values typify the Omaha business community?

We have accounts all over the country, and we get involved in litigation all over the country for our clients. This (Omaha) would be as high an ethical environment, in my opinion, that you will find anywhere. People are valued in this community based on their contribution to the community and not by their wealth accumulation. I’d even say there that ostentatious wealth is not a common or respected thing here. It happens, but the ethical tone is affected by (and I wouldn’t say he brought it to the community, but he certainly exemplifies it) Warren Buffett. He doesn’t lead an extravagant lifestyle, and I think that sets the tone for the people who also have money.

So, do you think ethics is something you are brought up with or something that is instilled in you by your parents by your generation, rather than something you can learn in a classroom?

I think classrooms are useful, but I think it’s a cultural thing. You can get it in your family, but you can also pick it up from the people you are associated with in a firm. If you are a dishonest person, and your wiring is wrong, I don’t know that you can get fixed. Hopefully, you start out with some semblance of knowing right from wrong. Frankly, I think that’s in most peoples’ wiring. It may be there because it’s advantageous. I’m not sure why it’s in there, but I think it’s in their head, whether you want to think God put in there or you want to think it’s just a survival thing. It’s in there. People know when they are doing something wrong.

I think what education can do is alert you to the fact that today some of the ways you can get in trouble are pretty sophisticated. The easiest thing to do is to follow a behavior pattern because everyone else is doing it. You have got to really think through situations where you can make a lot of money and be sure that you are getting it for fair and honorable exchange.

Can you give us an ethical situation in your business that was relatively easy for you to handle? Who was involved, where did it take place, and how did you resolve it?

Occasionally, we run into a client who will try to cheat the insurance company by over-inflating a bill. They have a deductible and they try to inflate the claim in order to be able to pick up the deductible. When you see that, you can’t just correct it. You have to get rid of the client. And that’s hard. Or you have to go above the representative of the client and go to the president of the company and say,

“Do you realize this is going on?” Those kinds of situations come up. Fortunately in Omaha, those situations don’t come up too often.

Have you ever had an employee who is telling the client to inflate a claim?

I haven’t in that specific scenario, but I’ve had dishonest employees. I haven’t had very many, but I’ve had some. I had one that was stealing significant amounts of money. Our people uncovered it, and I went to the county prosecutor and got an arrest warrant and had him arrested. These things are never simple. This guy’s wife came in and said, “I don’t want my children’s father labeled a criminal. I can’t pay you back, but please don’t do this.” So being softhearted (laughs), I let it go. But you have to make those kinds of judgments. Could we really do any good by pursuing it? Those are hard decisions.

The ethical culture at your organization in regards to training. Is training something that is required?

It is in most of the licensure issues in respect to the insurance industry and investments. There are classes that people are required to take every year in order to maintain their licensures. We have people that can teach those courses, just for convenience. My feeling is, and people may disagree with me, ethics are darned hard to teach. I think you have to come to the table with some sense of right and wrong.

Did you have a mentor that taught you a lot about ethics?

Sure, my father. When I was first in the business, and it got big enough, with ten to 15 salespeople, I had a sales meeting. My dad never had sales meetings. In any event, I had all the sales charts and I was going around the table talking about different issues. I had my dad come to the meeting and he got up and left about 3⁄4 of the way through the meeting. Later, I asked him what he thought, and he said, “I’m not coming to any more.” I asked what he meant, and he said, “That was a bad meeting. All you talked about in that meeting was how much better one person did than the other. Focus on the client and how to provide additional value.” That taught me a lot about the pressures we as managers put on salespeople and how we can drive them to do things they wouldn’t normally do.

In conclusion, what advice can you offer the next generation of business leaders?

The problems business leaders encounter today will not change in the future. Regulations will always be changing and I think future generations will have increasing pressures to succeed. There will always be tough decisions to be made. What you need to understand is that sometimes the right decision is not always the most profitable in the short-run. The key to building a successful business is gaining credibility. The best way to acquire credibility is to always act ethically in a way that promotes all the stakeholders’ interests.