Chief Executive Officer, NFP Corp. (an Aon company)
doug hammond NFP
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About Doug Hammond
Doug Hammond, chairman and CEO of NFP, spoke at the 2023 CED Distinguished Leadership Awards about Michael Dowling, president and CEO of Northwell Health. Hammond described Dowling’s leadership as a “relentless drive to better the circumstances of other people” and praised Northwell’s care for patients regardless of their background, saying that a person who appeared to be unhoused received the same level of care as he did in the emergency room. Hammond also noted that Northwell operates on a tight margin and that Dowling directs remaining funds toward behavioral health, veterans care, and mobile clinics. In a 2022 interview with NYU School of Professional Studies, Hammond discussed crisis management during the pandemic, saying he prioritized understanding the impact on customers and reducing discretionary spending. He stated that leaders should be straightforward with employees about return-to-work plans and that being too absolute in expectations can be a misstep. Hammond also said that as NFP grows, maintaining employee engagement becomes a greater challenge, and he makes an effort to sit with unfamiliar employees at functions to encourage conversation. In a 2017 interview, Hammond described NFP’s acquisition strategy as focused on cultural fit and employee engagement, noting that pushing too hard on margins can diminish organic growth. He recounted taking NFP public in 2003 at $23 per share, seeing the stock fall from $58 to $0.81 during the 2007–2008 downturn, and then taking the company private in 2013 to focus on long-term investment.
Transcript (18 segments)
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Operator0:20
You have reached Peppercom's conferencing center. Please enter your call's three-digit extension.
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Matt0:31
Coming with a chief executive. How are you doing? Oh hi, Pat, how are you? Maps Anita's on the line from Peppercom. How's everything?
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Pat0:38
Doing pretty well, Matt. Thanks for setting everything up today.
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Matt0:41
Appreciate it. My pleasure.
Now we also have Karolina Sonya, who is the director of public relations at NFP, and I think – I think Doug may have joined. Doug, are you online? Yeah, thanks. Oh hi, great. Well, thank you so much everybody for joining, really appreciate it. So I want to kick things off with a round of introductions, and then I can hand it off to Patrick. So Patrick, you have Doug Hammond on the line. He is the chairman and CEO of NFP. And Doug, you have Patrick Gorman, managing editor of Chief Executive. He's looking forward to speaking with you. So with that, Patrick, all handed over to you. Great.
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Patrick Gorman1:24
Thank you, Matt. And Doug, thanks for taking the time to speak with me today. I really appreciate it. Yeah, no problem. Great. And I guess we can start things off with a – you know, I was just getting a little bit of background on your time with NFP. I know that you've been with the company since 1999. I was just curious, you know, how the biggest ways in which you've seen the company evolve over that time. I know you've held a number of roles and sort of had a chance to examine the business from a lot of different sides. What are some of the biggest ways in which you've kind of seen the company and the industry evolved over that time?
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Doug Hammond2:04
I started as a private equity M&A attorney working for a large private equity fund that started the company. The company evolved from a concept to a very rigid business model, and in the early stages it was hyper-transactionally focused. The model was about acquiring scale in the insurance intermediary space and leaving the acquired businesses almost completely alone – just aggregating revenue and volumes. The founding sponsor's view was to sell that scale at an increased value. The big transformation came post-financial crisis when a new CEO – me – came in with a different vision. We had acquired many fantastic assets with great people and strategic niches, but they weren't complementing one another. So the view was to take 250 independent operating subsidiaries under different brands and create a single vision, pull the company together to approach markets, clients, and employees more effectively. That was a wholesale shift in the business model from what it was founded on.
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Patrick Gorman4:29
I see. And in chatting with Matt before the call, you'd also mentioned providing less focus on short-term quarterly performance and more on a long-term vision for success. It's critically important at NFP. I was wondering why you think that's such a critical recipe for success and how you instill that value in your organization and make it a reality.
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Doug Hammond4:59
Looking at our history: we started in 1999 from scratch, took the company public at $23 a share in 2003, then it rose to $60 by 2007, but fell to 81 cents during the financial crisis. I took over as COO at that low point, and we eventually took the company private at $25 in 2013 and recently recapped at $85. In the public company days, everything was quarter-to-quarter with pressure from hurt shareholders – growth investors and value investors pulling in different directions. We pushed capital into buybacks and dividends instead of long-term investment. When we took the company private two months after I became CEO, we could focus on a long-term vision. It was like a muscle car chained to a boulder – once we broke the chains, the company took off. We made short-term P&L sacrifices to invest in technology transformation, brand consolidation, building KPIs for every employee, and recruiting top leadership. That paid massive dividends long-term and created a people-first culture. Our private equity partner, Madison Dearborn, kept most of their chips in for seven or eight years, taking a truly long-term view – very different from what you typically read in the press.
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Patrick Gorman10:53
Certainly. And for such a large go-private transaction with Madison Dearborn, tell me a little about that process and what you learned. Was it about finding the right partner who understood your long-term vision? Did vetting take a long time?
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Doug Hammond11:28
Yes, it was a process. After the financial crisis, many PE suitors looked at the company, but we didn't sell because the value wasn't sufficient for public shareholders. When I became CEO, I had a view of which firms I wanted to partner with. My first choice was Madison Dearborn – I had dealt with them as general counsel and found them professional, dignified, good listeners who understood our long-term goals. The board ran a process with about 15 funds. Madison Dearborn stayed at their initial value through diligence, stood by their word, and developed trust. We chose them because of shared values – integrity, honesty, transparency. When you're undertaking a wholesale transformation, you need partners who have your back for the long term.
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Patrick Gorman15:08
Certainly. A lot of our readers are CEOs building through acquisitions, as NFP did early on. In your experience, what were the keys to negotiating those deals and identifying the right acquisitions? Is it about financial sense and cultural fit?
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Doug Hammond15:44
We talk about being people-first – you can't put clients first unless your people are first. In a human capital business, engagement and professional development are key. When we look at acquisitions, we focus on strategic fit, long-term economic performance, and how they complement us. But the deal-killer is usually incompatibility in values and culture. After the financial crisis, we sold off 70 businesses between 2009 and 2011 – many were good performers but didn't fit the one-NFP vision. We needed an aligned value structure. So cultural fit is paramount.
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Patrick Gorman22:53
Certainly. And Doug, my last question. We're talking about an engaged workforce – I know it's critical to NFP's mission. What keys do you keep in mind as CEO to ensure workforce engagement at all levels?
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Doug Hammond23:18
As we grow, the risk of disengagement increases. CEOs can be consistent with messaging, but it has to happen at every level. I focus on three things from Patrick Lencioni's book "The Three Signs of a Miserable Job": anonymity, irrelevance, and lack of measurement. We fight anonymity by engaging employees personally – asking about their lives, knowing their kids, helping with career goals. We fight irrelevance by ensuring every employee understands how their role contributes. We celebrate unsung heroes. And we provide clear measurement so people understand how they're evaluated. I also recommend Stanley McChrystal's "Team of Teams" for adaptive management and David Brooks' "The Road to Character," which talks about moving from building your resume to building what people will remember you for. As leaders, we need to develop others and create value for them. This creates a giving environment that drives growth and value.
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Patrick Gorman30:36
Makes a lot of sense. I want to thank you for taking all this time. I really appreciate your insights, and I know our readers will love hearing from you. If I need anything clarified, I'll reach out to you and your team. Again, thanks for your time.
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Matt30:48
Matt, thanks so much for setting this up. I appreciate it. Oh my pleasure. Thank you both, really appreciate it.
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Doug Hammond30:53
Hey, no problem. Have a great day.