I can't overly compliment Oliver Wyman for your work setting the stage and digging in deep on what you believed. It was clear you took the time to know who we were, and the passion you had was equivalent to the passion and commitment we had. We stayed focused, and we overachievedPete Hilger, CEO at Allied Solutions
- About this video
Allied Solutions was approaching an inflection point in 2019. While the Carmel, Indiana-based financial services firm, a subsidiary of Securian Financial, had long been successful, its after-tax earnings had remained in the $20 million range for several years. To move into a new phase of growth, with the help of Oliver Wyman, the company embarked on an ambitious initiative that year aimed at transforming its performance and boosting earnings.
The effort was led by Pete Hilger, an Air Force veteran and entrepreneur who moved up Allied’s management ranks before becoming CEO in 2016. Hilger knew it wouldn’t be a simple transformation to begin with, and it became far more complicated with the onset of the COVID-19 pandemic. He soon set about facilitating healthy debate among company leaders to reach a consensus and secure commitment to the massive project.
Hilger and Oliver Wyman’s strategies over the three-year engagement paid off, and Allied ended up far exceeding its lofty goals. By 2022, its revenue reached $456 million, with earnings after tax topping $104 million. But the results can’t be measured just in financial figures. It was a holistic transformation through which the company also managed to change its culture and cultivate a new generation of leaders that will help sustain its growth for years to come.
For more on how Allied Solutions overcame the odds to execute a successful performance transformation, watch the video with Pete Hilger and Oliver Wyman's Hector Nelson.
Allied was a company that, back in 1989, had 35 people. Now, I'm the CEO in 2016, and we had about 1,200 employees back then.
Allied was successful, but we were also growing up as an organization.
So, Pete, today we want to discuss Allied Solutions' performance transformation journey. But first, let's start from the beginning. Before you started your career in financial services, you were in the US Air Force, so thank you for your service in the Air Force.
And then, you spent about 30 years in corporate management going through all the different levels at Ally before you were CEO in 2016. Can you tell us how your experience through the Air Force and through working through the different roles in Allied has shaped how you are a leader today?
First of all, the military really developed skillsets and discipline, organization, and work ethics. I think that's the fundamental foundation of what I believe makes a successful leader. It also helped me be decisive. Decisive in leading because after the Air Force, I started another company with my brother that I ran for about two or three years.
And then, I became part of Allied Solutions, which back then was Eldredge Lender Services.
I recall when we first met, you were very clear to me that this was not about cost, right? This was about transforming the performance of Allied Solutions.
So, can you tell us a bit about that journey you went through in terms of transforming Allied?
Well, you have to remember when you and I first met, Allied was successful, but we were also growing up as an organization.
We were a company that was stuck in the last three or four years. So you're talking about 2017, 2018, 2019 at earnings, anywhere from $15 to $16 million to $23 to $24 million.
And in 2020, we established a budget. I think at that time, it was $23 or $24 million.
Our revenue at that time was probably $250 million or so. And this number you guys came up with was a $36 million bottom line improvement over this three-year journey we were getting ready to take. And it was pretty intimidating when you looked at it.
We said we could do it in the midst of COVID-19 in 2020, and I believe we made $54 million. Things have already been starting to churn. We've been starting to really change and really transform the company that early on, our commitment was to stay on schedule. I think at the end of that year, we ended up at $54 million of after-tax earnings and about $300 million, $320 million of revenue.
In 2021, we made $76 million and did about $375 million worth of revenue, and it continued. We were getting closer to the finish line, and we were going to be launching this great success at the beginning of 2023.
That three-year journey was coming to an end, and in 2022, we made $104 million and did $456 million. So, $104 million of earnings, $456 million of revenue.
Talking about that transformation. It wasn't purely about the success of the numbers, but it also transformed how the leadership team was behaving. You know, we had leadership action plans.
Can you talk a bit about the cultural aspects of that transformation?
Every time I have a meeting with one of my senior leaders, attached to that meeting is a leadership action plan, their LAB. And we talk about it, sometimes just for a few minutes. Sometimes, that's the whole meeting, especially if somebody fell off the wagon and went back to some of the old habits.
What it allowed us to do was have candid conversations and really change the culture of the organization. Changing wasn't just the financial scope of things. It was what we meant to the communities, what the value proposition was, the overall scorecard proposition we gave to our employees, and the big one was the culture.
What does our culture look like today and tomorrow versus what it looks like now? And that was instrumental in the change of the organization that continues to grow from that.
You're going to run into some days. And you and I, at times, probably wanted to strangle each other. I remember one meeting, you said, “Hey Pete, don't answer that.” It was actually a huge moment for our organization and our commitment because it allowed my team to realize that their CEO is vulnerable, but he's also willing to listen and be led because leaders just don't lead. You've got to be led at times too.
And then I think that's where you guys did a great job complementing our organization. And that one moment where you stepped in and said, “Stop and let these people talk,” was to me the moment that we changed our organization's culture.
Look what happened after that moment. My entire team got more engaged. I could miss a meeting, which was probably really healthy, and they became more and more engaged.
Can you share a bit about some of the things you're doing for Ally 2.0?
You know, it’s interesting you go through operational culture transformation, which we completed after the three-year journey. And you either really like the consultant you worked with or you don't want to do anything else with them.
And the best thing that reinforces the value of the partnership is re-engaging with that same company again. That's what we've done with Oliver Wyman. We've re-engaged in One Ally. It's launching right now as we speak. It's another great commitment.
We've brought up a whole slew of younger talent, and now we're going to ask them to do some of the heavier lifting. And if I told you that we were at $104 million last year, which was a record year, and there were a lot of reasons why we now are projecting that by 2030, we'll be a company that consistently makes $200 million a year of earnings after tax. So, net earnings and $1 billion of revenue.
It's because of where we came from during that first journey that it is not a task that seems unrealistic.
And the last question, recently Oliver Wyman published a survey and a hundred percent of all the CEOs had undertaken a large transformation over the last three years, but only 25% of them were truly successful. And you're in that 25%.
If you were going to give advice to somebody who was starting that journey in your position, what would you tell them?
Don't let the cost intimidate you. When you establish a goal, don't give up.
Be relentless because you're going to run into some bumps along the way. I can't overly compliment Oliver Wyman for your work setting the stage and digging in deep on what you believed. It was clear you took the time to know who we were, and the passion you had was equivalent to the passion and commitment we had. We stayed focused, and we overachieved.
So, thank you very much for your team's effort and help.
Thank you. Congratulations.
This transcript has been edited for clarity.