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My organization is the Redwoods Group, which is a specialized insurance provider. The company states its core purpose is to serve others, and its focus is to keep kids safe. They note that solutions to many problems are "often inconvenient for those used to doing things a particular way" and that Redwoods "engages in uncomfortable conversations with people who are not ready to face these issues: public officials, educators, philanthropists, social service and business leaders" (Redwoods Group 2013 Report). The company's main business is that of an insurance company, and as a risk consultant. In these roles, Redwoods insures YMCAs, camps and community groups. Providing insurance to these bodies, Redwoods is not strictly focused on profit-taking, but rather providing the insurance at a level that finances Redwoods but otherwise the lack of profit-taking allows it to undercut other insurance companies in competing for non-profit insurance business. The company wrote $48 million in premiums in 2013, earning $12.1 million in revenue and from that a net profit of $138, 000 (Redwoods Group 2013 Annual Report).
Triple Bottom Line
The triple bottom line concept takes into account how the organization performs on three categories of measure -- profit, planet and people. The profits have been noted above -- Redwoods turns a modest profit from its enterprise, $138,000 last year. This represents a net margin of 1.13%. The previous year the net margin was slightly higher at 2.67%, and the company also earned slightly more revenue the prior year as well and wrote more premiums, so 2013 was a down year. The industry average for net margin in insurance is 10.39% (MSN Moneycentral, 2014). The company's track record of profitability, however minimal, earns it a net positive.
The B Corporation is a watchdog group that certifies companies according to triple bottom line scores, more or less. The B Corporation gave Redwoods Group a 7 on the environment, versus a median score of 9 (B Corporation, 2014). Redwoods has a strong altruistic streak, but that is focused on the human dimension, not the environment. Its footprint is probably low and environmental impact is taken into consideration, but the company is focused elsewhere. The best the company can say for itself is that over 50% of its facilities are located near public transit, which pretty much means that it is in a city. On "planet," Redwoods is a net negative. While its core activity is not destructive, it still makes a negative contribution when it has employees who drive to work -- it's in North Carolina so most will -- and does not attempt to minimize this with telecommuting. Without any other effort to make a positive environmental contribution, Redwoods receives a net negative grade based on the fact that their business is small enough that even their small footprint is more than necessary -- a large competitor could handle this business with a lower marginal increase in footprint. This is too bad -- Redwoods does well in other areas but seems to have very little environmental consciousness with regards to taking less out of the world that it puts in. It creates nothing of ecological value and that is what hurts it here.
The B Corporation (2014) ranks Redwoods high on workers (36 versus mean of 22) and but low on community (17 versus median of 32). Thus, Redwoods scores well for people. Employees are reimbursed for continuing education, and are paid a living wage. The latter is pretty much mandatory for any company in the insurance industry. Over 80% of health premiums are covered and it offers 6+ weeks of maternity leave. In essence, Redwoods gets a lot of credit from B Corporation for doing things that every insurance company in the developed world outside of the United States does. In the U.S., maternity leave and some health care is special. The B Corporation credits it for having over 50% women -- mathematically that's not hard -- but also that over 75% of employees take time off for community service. Redwoods provides a wide range of safety resources, including contributions to child sexual abuse prevention, employee safety, aquatics safety, and other things related to the company's risk consulting business. Thus, it makes a genuine contribution to the betterment of the community, putting its knowledge of risk management to good use. It is quite reasonable to argue that Redwoods has a net positive contribution to the communities it serves. The insurance services it provides could just as easily be provided by others, but Redwoods does it at a lower price to the customer, freeing up their cash flow for other things. Furthermore, Redwoods' efforts to lower risk in the community should generally be considered to be positive and appear to be more than similar companies would do.
Overall, the minimal net positive of the profit is not enough to offset the environmental net negative, but the net people positive is. On the strength of its commitment to bettering the community, the triple bottom line for Redwoods Groups is positive.
4 Cs Stakeholder Analysis
The four Cs are customers, competitors, company and community (Nager 2014). While theoretically Redwoods can provide insurance services and risk consulting for a wide range of customers, in particular risk consulting, in practice the company mainly markets to non-profit entities. Community organizations are the main target market for the company's insurance services, and it has built up a niche in understanding the needs of these customers and finding ways to meet their needs at a lower cost than conventional insurance companies can (Redwoods Group.com, 2014).
One customer is the YMCA of Grand Rapids. This is a case study presented in the 2013 Redwoods Group Annual Report. As with most customers, the basic need is liability insurance. These organizations have limited funding normally, in the case of the GR YMCA raised through memberships and donations. Redwoods, for example, became a donor when it donated funds to help supply a "veggie van" in order to improve the access to fresh fruits and vegetables in underprivileged neighborhoods. So in addition to purchasing insurance, the GR YMCA also worked with Redwoods on an initiative to help fight childhood obesity. This is the sort of relationship that Redwoods often likes to build with its good clients. YMCAs are a major target group for the Redwoods Group, along with similar organizations that run community centers and services. These are typically small, diffuse organizations, none of whom makes up much of the total customer base for Redwoods.
The competitors for these insurance services are other insurance companies. Many other insurance companies offer similar services aimed at this target market, but do so with an eye to earning higher profits than Redwoods is interested in earning. For Redwoods, it is more important to provide the insurance at a marginal profit than it is to earn large profits (Redwoods Group.com, 2014). There are a number of indirect competitors as well. These agencies can opt for no insurance, or less insurance, as a means of freeing up some of their operating capital for other spending. That other spending could be just about anything, but might even be the services they provide. That said, insurance of some form tends to be mandatory in order to prevent bankrupting the non-profit in the even that something happens.
One of the major insurance companies that provides insurance for non-profits is USLI, the United States Liability Insurance Group. This competitor is larger than the Redwoods Group, and is part of Berkshire Hathaway, which also owns Geico and has $183 billion in sales (MSN Moneycentral, 2014). The non-profit segment of USLI is a miniscule part of that total, but the fact that USLI is underwritten by such a large company makes it a formidable competitor. USLI has a program whereby it seeks to provide a variety of non-profit insurance in a single package, leveraging its capabilities as an underwriter with a number of different specialties. USLI offers individual liability packages as well, but does not offer insurance for the employees of these organizations; rather USLI would refer them to another company under the Berkshire Hathaway umbrella. USLI is therefore a formidable competitor, but with a stronger profit motive and not nearly the same sense of ethics that Redwoods Group has.
The company has its own interests as well, and Redwoods divides these into the profits earned for the owners and the benefits for the employees. Employees are granted a living wage and high levels of benefits relative to other firms in the U.S. They employees are therefore fairly well looked-after. The company is also profitable. The profits are not much, but they are enough, with the owners working for the company and drawing a salary. There is over $2 million in owner's equity on the balance sheet (Redwoods Group 2013 Annual Report). The main internal stakeholders are therefore the employees, the owners and the managers.
The employees are generally considered to be the most important group. The company needs to strike a balance between offering…[continue]
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