GEICO Culture: Nicely’s approach to the Four Functions of Management

In the mid-1930s, at the height of the Great Depression, there weren’t many people with the foresight and courage to start up a new company. Yet the husband and wife team of Leo and Lillian Goodwin were up to the challenge. Confident that he could create a successful auto insurance business by marketing directly to carefully targeted customer groups, Leo Goodwin hammered out a business plan during his early career in Texas. In 1936, he put that plan into action, establishing the Government Employees Insurance Company–the company known and loved today as GEICO.

Few people realize that GEICO was initially targeted to federal employees and certain categories of enlisted military officers. From the 1960’s to the early 90’s GEICO had other CEO’s in place but it was not until 1993 that the company began to change as a whole. In 1993, Olza “Tony” Nicely was named GEICO’s new chairman, president and CEO, and worked to expand the customer base through a new four-company strategy. Along with it came an increased advertising budget which propelled GEICO toward much higher national visibility.

In all successful corporations planning is essential. Planning is the first and most important step in the process of successfully managing a corporation. Planning activities determine an organization’s objectives and establish appropriate strategies for achieving them. The organizing, controlling, and leading functions of management are all derived from planning. All members of management in any organization must plan. Through plans managers are able to communicate their expectations and strategic plans to achieve corporate mission.

Tony Nicely, GEICO’s CEO understands the importance of planning. Nicely is very involved in the planning process and stays abreast of the corporate business stance as well as how each functional department plans to achieve corporate goals. Nicely meets with top management to develop plans for the upcoming year. The decisions and plans made by top level management are communicated to mid-level management in the form of business level plans. Mid-level management is responsible for creating functional level plans where.

The use of this systematic approach to planning ensures that each level of the hierarchy within an organization understands the corporate mission and their role in achieving it. GEICO’s planning is centered around its 7 operating principles: * Respect: Respect, support and provide opportunity for all associates. * Service: Be fanatics for outstanding customer service. * Low-Cost: Be the low-cost provider. * Integrity: Operate with uncompromising integrity. * Discipline: Maintain a disciplined balance sheet. Profitable Growth: Make an underwriting profit while achieving optimum growth. * Invest: Invest for total return. Organizing The second function of management is organization. We need to organize everything we need in order to achieve our goal. We need to find people who will work on that project and we need to gather resources which we need to reach our goal. Once we organize everything we can move to the third function of four functions of management. Creates a structure of task and authority relationships that supports attainment of organizational goals.

Organizing is the process of structuring both human and physical resources to accomplish organizational objectives. Thus, organizing involves dividing tasks into jobs, delegating authority, determing the appropriate bases for departmentalizing hoibsm and deciding the optimum numbers of jobs in each department. Leading The third function is directing or leading. We need to lead people to use the resources we prepared in the second function. Leading is probably the hardest function of all four.

We need to know our people in order to lead them correctly Controlling The last function is controlling. This one is as any other of the four functions of management very important. We first must explain what controlling actually is. This is not just controlling over workers as one might think, this is also the controlling of your programs and your goal achievement at the end. This last function enables us to improve our skills and process in future by correcting errors that happened during this cycle.