State Farm’s Ed Rust Elected U.S. Chamber Chairman
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State Farm® Mutual ranks 43rd on the Fortune 500 list and has some 66,000 employees and 18,000 agents throughout the United States and Canada. But to Ed Rust, company chairman and CEO, State Farm is simply carrying on a tradition, with its corporate headquarters just three blocks from where he spent his early childhood in Bloomington, Illinois.
When Rust was named CEO of the company in 1985, he took over a position held by his father and before that his grandfather. But Rust was never intentionally groomed for the job. As an undergraduate and business school student, “State Farm never really crossed my mind as a career,” he says. Rust didn’t seriously contemplate a career at the company until his final year in law school. He had offers in hand from both law and accounting firms, but he decided to give State Farm a try. He took a trainee position in its Dallas office.
Rust credits many mentors who shared their experiences and insights with him. He places his dad at the top of the list. “Dad and I had a unique relationship,” he says. “We were best friends and shared a deep passion for building things. Early on, it was building out a growing Quarter Horse operation and all the work that entails. Later, it shifted to growing the State Farm organization.”
Midwestern Values and a Farmer’s Work Ethic
The Rusts moved their home and growing horse operation from the edge of Bloomington to the countryside. “It was nothing but cornfields, and we had a lot of work to do. It instilled in me a deep appreciation for hard physical labor. The added space not only gave us room for more horses, but it enabled us to put together a fairly complete tool and die shop, along with woodworking and blacksmithing.”
Rust has never really given up farm life. He and his wife, Sally, live on what remains the old place as the city has grown around them. They have also maintained a 320-acre corn and soybean operation not far from their home. “I cherish the time I have to work around the place. It’s an escape from the pressures of the office and a chance for some reflective time,” Rust says.
The values and work ethic that Rust developed on the farm shaped his business philosophy and management style at State Farm. “Our slogan, ‘Like a good neighbor …’ reflects Midwestern values,” he says. “Ethics and integrity are critical in this business, any business.”
Vince Trosino, former president, chief operating officer, and vice chairman of State Farm, notes, “As Ed’s father used to say, ‘There are no degrees of integrity; you either have it or you don’t.’ Ed has it.”
While remaining steadfast in its values, State Farm has, under Rust, successfully adapted to a changing marketplace. “Tools for computing and modeling are much more sophisticated than before, and that plays a critical role in driving growth and innovation,” Rust explains. He says that one of his proudest accomplishments as CEO is the “continuous contemporization of the organization in terms of how we approach the marketplace and treat our customers, grow our enterprise, and position it for growth and success in the years ahead.”
Says Harold “Terry” McGraw, chairman, president, and CEO of McGraw-Hill Companies, “Ed Rust is a visionary business leader who is celebrated in America and around the world for his unshakable integrity, incisive judgment, hard work, and unfailing courtesy.”
Trosino credits Rust for building an inclusive corporate culture. “Ed has a participatory leadership style. He listens to his staff and leadership councils and gives them latitude.”
Rust, whose father served as Chamber chairman in the 1970s, has a long history of advocacy and service to the Chamber and other business advocacy organizations. In 2005, the Chamber board presented him with the Dennis Sheehan Award. This award recognizes a person or an organization that exemplifies outstanding leadership and commitment to the American business community through service to the Chamber.
Rust is a member of the Business Roundtable, of which he was co-chair for seven years, and is past chairman of the American Enterprise Institute, The Financial Services Roundtable, the National Alliance of Business, and the Insurance Institute for Highway Safety. In addition, he sits on a number of nonprofit and corporate boards.
A Crusader for Education Reform
As Chamber chairman, Rust will continue his passionate pursuit of education reform. On the quality of education in America today, he says, “What was good enough for me 30 or 40 years ago is not good enough today because of truly global economic competitive forces. Kids today are not competing for a future job against a crosstown rival. They are competing with kids in China, Brazil, Indiana, Texas, Wisconsin, or wherever.”
Rust cites firsthand evidence of eroding skill sets of younger generations. “State Farm administers a preemployment battery of tests to assess a job applicant—things like computation and comprehension,” he says. “I saw too many young people lacking the fundamental skills so critical in today’s world of lifelong learning. It was time to get involved.”
The business community’s efforts to strengthen STEM (science, technology, engineering, and Mathematics) education are getting a lot of attention, according to Rust, but the early years in education are critical to success in these fields. “We’re not enabling kids to ramp up and prepare to excel in STEM. If core literacy and critical thinking skills aren’t developed by the fifth, sixth, or seventh grade, how can students succeed in STEM?”
Establishing a rigorous, common core standard beginning in pre–K and providing teachers and administrators with the tools to do a better job are essential to improved learning, Rust says. He is also a firm believer in continuous learning. “Today, the end of a 40-year career is so dramatically different than the beginning of one. How do you keep up? How do you maintain that lifelong learning, remaining relevant to the world today—not what it was yesterday? This is a story that business leaders play a critical role in telling.”
Rust is nationally recognized for education reform advocacy. He serves on the boards of America’s Promise Alliance and the James B. Hunt, Jr. Institute for Educational Leadership and Policy. He is former chairman of the Business-Higher Education Forum and Business Roundtable’s Education Initiative. He served on the National (Glenn) Commission on Mathematics and Science Teaching for the 21st Century and on the No Child Left Behind Commission.
“Ed Rust has been a consistent and vigorous voice for educational excellence,” says Secretary of Education Arne Duncan. “He understands that we have to educate our way to a better economy, and that means we have to provide opportunities for all Americans to succeed. I look forward to working with Ed and the U.S. Chamber of Commerce to sustain momentum for education reform.”
Rust’s passion for better education has spread throughout State Farm. Many of its employees have backgrounds in education, and the company gives each employee one workday per year to volunteer at a local school.
Knowledge of Issues Runs Deep
As Chamber chairman, Rust will advocate on a number of public policy issues. Regarding the stalemate over long-term infrastructure investment, he says, “We need to highlight the difference between what investment would be nice versus what is critical. The whole process has become politicized. That’s problematic. Fundamental cost-benefit analysis can help ensure that tax dollars are being spent wisely. For instance, the Chamber and business have an important voice in expressing which highway maintenance and expansion projects are critical to jobs and opportunity.”
On government regulation, Rust argues that Congress, not wishing to get into the “nitty-gritty” of lawmaking, has ceded too much authority to rulemaking agencies. He recommends that all regulations have dates by which they either sunset or are subject to rigorous review in order to assess their continued relevancy and effectiveness.
“Ed has a unique ability to operate at the intersection of policy and business,” says Chamber President and CEO Tom Donohue. “He understands how each impacts the other, and government and business leaders listen to him. The fact that he’s been the CEO of a Fortune 500 company for more than 25 years speaks volumes about his leadership skills, the respect he’s earned from his peers, and his ability to continually innovate and adapt.”
Rust says that businesses which ignore the public policy debate have no right to complain about bad policies. “Government has a major impact on your business, markets, and credit availability. Being involved in your local, state, and national chambers, among other organizations, helps keep you aware of the impact or potential impact, and it gives you a voice in the process.”