Bob O’Connell, 60, the president, CEO and chairman of MassMutual, the 84th largest business enterprise in the United States and the biggest in the commonwealth of Massachusetts, launched a plan a year ago that offers education-linked life insurance to the working poor, free of charge. If an insured parent dies during the 10-year term of the policy, a $50,000 death benefit will be applied exclusively toward the educational expenses of the parent’s eligible children.
His company hopes to issue a total of 20,000 policies before the end of 2007 under the LifeBridge program. So far, 1,000 applications have been accepted.
O’Connell said that during his childhood he absorbed his family’s “almost fanatical appreciation of the value of education.”
His four grandparents were immigrants from County Cork. Both grandfathers worked on the New York City subway system. His mother worked most of her life for RH Macy department store in the Bronx, while his father was a trucking dispatcher, and a steward. “I grew up in a strong union family,” said O’Connell, who was himself once a union member.
“There aren’t too many Fortune 500 CEO’s who were members of the meat-cutters’ union,” he added, laughing.
His Parkchester childhood was Irish-oriented, he said, with big family dinners and gatherings for the holidays. He came to understand that his parents, aunts and uncles believed in learning for learning sake.
“None of them had ever gone to college, and yet it was an unspoken assumption everyone of my generation was going to go to college,” he said.
So, after St. Helena’s High School, he went on to Fordham. He later got an M.A. in European economic history from the University of Pennsylvania and for a time was a history professor at Fairfield University in Connecticut.
Then, decades later, when he got to MassMutual, finding himself in charge of a large corporate contributions budget, he narrowed its focus on education. And in September 2002, he announced the LifeBridge Free Life Insurance program.
Before he went to Massachusetts, in January 1999, he had spent 28 years in the insurance industry in New York City, first with New York Life Insurance Company and then with American International Group, Inc.
O’Connell’s had no grand plan to become a corporate leader. “I know there are plenty of people who set that as a goal early in their career; that was not the case with me,” he said.
His ascent was in some ways atypical. He was a generalist who worked in several areas: advertising, public relations, administrations, operations, marketing and others. He got a lot of good training, particularly with AIG, he said, and had a lot of luck. He came to MassMutual’s attention when, for the first time in its 150 years, it was looking outside the company for a CEO.
The O’Connell approach to business was one with which MassMutual could identify.
“I believe very strongly in a philosophy of wide diversification, marketing a wide variety of different products and selling through a variety of selling distribution systems — primarily to insulate a company from the dangers that come from overconcentrations of risk in any one product area or any one distribution channel,” O’Connell said. “We like to be able to say here at MassMutual that we blend the word ‘cautious’ with the word ‘bold.’
“As you might expect for a 150-year-old company, we have an enormous amount of respect for conservative traditions, values, doing things in a very cautious manner.”
Though the company is careful with other people’s money, it boasts that it’s innovative, with respect to product portfolio, technology and service.
Giving back
And now with Lifebridge, the company can claim to be innovative in its philanthropic endeavors too.
The idea came out of a general conversation O’Connell had with the company’s actuary about the difficulty of providing insurance to the working poor.
“I said finally, ‘Well why don’t we just give it to them?’ ” he recalled. “It was one of those insights that in retrospect seems elegantly simple and you wonder why no one else has ever thought of it, but the fact is I’m been around for a long time and never occurred to me before.”
The poorest segment of the working population have to worry about putting food on the table, about paying the rent, and about whether they’ll be employed the next month, O’Connell said.
“The one thing they shouldn’t, perhaps, have to worry about is having insurance, if they should suddenly or unexpectedly pass away,” he added.
To get to the target population, MassMutual is working through community organizations, outreach programs, religious groups and youth clubs, as well as prominent organizations like the Urban League and Habitat for Humanity.
“Most responsible CEOs have the view that it’s important for corporate America to give back to its communities,” he said. “It’s important to realize that if the community does not prosper, then we are not going to prosper.
“I don’t think companies do, or should, get involved in these programs to get publicity in order to generate news. We don’t advertise it [LifeBridge]; we don’t promote it a great deal.”
The MassMutual boss said that most big, medium and small companies are involved in philanthropy. Good works, he said, should not be linked in any way to image problems corporate America have had in recent times.
“They should be doing it because it’s the right thing to do,” O’Connell said. “And I’m not sure that it should be used as a way of apologizing for something that corporate America may have done poorly.
“There’s no question that some of the business community have behaved very badly and inappropriately and some have behaved illegally and they should be dealt with and punished harshly,” he said.
As for the question of salaries and personal income, highlighted recently by the New York Stock Exchange/Richard Grasso affair, O’Connell doesn’t believe it rates as an issue.
“I think the media are far too preoccupied with that aspect of it and, in all honesty, they frequently distort the facts in order to make a point that may not be accurate,” he said. “There’s a bias against anyone making more money than anyone else.”
One prominent critic of corporate salaries has been Paul Krugman, a Princeton professor and New York Times columnist who in an article in that paper’s Sunday magazine a year ago argued that the majority middle class of post-war America was fast disappearing, as wealth became concentrated in increasingly fewer hands. The explosion of CEO incomes was one indication of that. Using figures from Fortune magazine (and translated into today’s values), he wrote that in the last 30 years the “real annual compensation of the top 100 CEO’s went from $1.3 million — 39 times the pay of the average worker — to $37.5 million, more than 1,000 times the pay of ordinary workers.”
O’Connell believes that high incomes are justified, but only if linked to performance.
“I think it’s inexcusable when companies perform poorly, when customers are served poorly and the top executives are paid more than they were before,” he said. “The key is they have to be paid the right reason, to be paid for accomplishing something, not for failing.”
So far the report card for O’Connell has been good in Massachusetts, with his company thriving in a difficult economy.
Public speaking
The transplanted New Yorker returned again to his roots, attributing this success at least partly to family and teachers, including the Dominican nuns who taught him in elementary school.
“They began teaching me — teaching may be too mild a word — requiring me is better, to get up in front of classes and write speeches and engage in debate from the time I was 10 or 11 years old,” O’Connell said. “It was a very painful experience at the time, but it has been enormously positive influence on my ability to influence people and events as I became an adult. I developed an ability early on to speak fairly articulately to large groups of people, frequently in town meeting types of settings.”
O’Connell believes that the academic study and teaching of history has been important for him too.
“You can’t study history without getting a deep understanding of the fact there are always multiple sides to every issue and without appreciating how difficult it is to understand precisely what happened in any one historical event,” he said. “You bring a very healthy intellectual skepticism to your approach to most problems.”
Nowadays, O’Connell, who’s married and has a son and daughter, said he does a lot of “serious, intense reading” for his job. This leaves time only for escapist spy novels, as well as tennis and golf, for relaxation.
He also has an interest in politics. In January 2001, he was named to the Bush-Cheney transition team advisory committee for the U.S. Treasury Department. More recently, he was on the transition team of Massachusetts Gov. Mitt Romney.
“Mitt and I remain very close friends,” O’Connell said. “He’s a fabulous governor. He’s had a very positive impact on the state, even in the very short period of time he’s been here. I think, assuming he can be a key player in resolving many of the financial problems that Massachusetts has, he will be a very credible presidential candidate in the future.”
Would O’Connell consider an ambassadorship at some point or a role in government if approached? “Right now, I’ve got a pretty important job,” he said. “My time is best spent and probably most usefully spent by helping to make MassMutual an even bigger and better company than it is.”