MADISON, Wis. - It's difficult to imagine that someone as mild- mannered as Michael B. Kitchen could be intimidating.

Nevertheless, some employees of CUNA Mutual Group have felt a chill since the man from Toronto took the company's reins this spring. Not for anything he has done - most people consider him a nice guy - so much as the inevitable reforms he represents.

Mr. Kitchen, 50, has shot down some of the more drastic rumors, but changes are coming for the largest provider of insurance products for credit unions.

"We need to be more streamlined, cost efficient, and responsive, as does virtually any other financial services organization in the country," he said.

Next month, teams of CUNA Mutual management and employees will submit reports on achieving goals and making changes. More such reports will be coming in the future.

When pressed for details about what's coming, Mr. Kitchen smiles and says it's premature to comment. But, in a nutshell, he plans on trimming and training staff, focusing the company on the basics of its business, and working on improving relationships with credit unions.

Mr. Kitchen sees big growth potential for the revamped CUNA Mutual. For example, he is seeking to double revenues to $4 billion, hit a profit of at least 15% return on equity after taxes, and double the company's total surplus to $1 billion in five years.

Rumors of imminent cuts in CUNA Mutual's staff of 4,800 have circulated throughout the company's palatial headquarters here since Mr. Kitchen's arrival. Indeed, the company already has stopped filling some vacant positions.

This apparently led to rumors that 200 people would be laid off. Mr. Kitchen flat-out denied such plans in a May 22 internal newsletter.

A more recent - and sources said a more reliable - rumor is that 20 of the company's middle managers will be axed.

Mr. Kitchen wouldn't say how many cuts would be made, or where they would hit, but suggested they were less sweeping than feared.

"There may be minor reductions, but I don't see anything significant," he said. "I'm not expecting a major change in staff levels."

The company also is aggressively looking for ways to cut costs. For example, it has put a moratorium on all new orders for furniture, equipment, and personal computers as it reviews to see if needs can be met from current stock. Food and beverages will no longer be served at board meetings, and staff will recycle "packing peanuts" they receive to CUNA Mutual's shipping department.

Many of the cost-cutting suggestions have come from staff, a policy that Mr. Kitchen said is key to his management philosophy.

"My job is to challenge other people to solve problems," he said. Perhaps as a sign of that reaching out, Mr. Kitchen ordered a wall surrounding the senior management offices torn down shortly after he stepped in.

Mr. Kitchen hopes to help employees increase business by focusing on training and education.

He believes, for instance, that not everyone in the organization understands credit insurance, the company's bread-and-butter business. Also, he plans to increase training of employees for the Plan America program, the financial management and brokerage business CUNA Mutual runs with the Century Companies of America, an affiliated company.

Education in these two areas is important because they are where Mr. Kitchen sees a great deal of growth potential for CUNA Mutual.

"I want to concentrate on things we're doing now and not get into new things until we're doing things we do really well," he said.

Credit insurance is going to be Mr. Kitchen's biggest focus. CUNA Mutual holds the credit life policies of 20% of credit union members. Mr. Kitchen wants to drive that figure to 40% by 1999.

Although credit insurance has gotten a reputation as a rip-off in recent years, the Consumer Federation of America has praised CUNA Mutual's product, an endorsement the company plans to capitalize on.

"We have to get the story out about the quality of the product," he said. "It's a good consumer value, and it reduces the credit union's risk."

One way CUNA Mutual is seeking to increase its credit insurance penetration is to attach the product to loans credit unions generate through indirect lending.

To achieve its ambitious goals, CUNA Mutual must have credit unions in its corner. Some industry officials have charged that the insurer is unresponsive to their needs. This hit home in 1993, when a few credit unions began defecting to USF&G Corp. for their fidelity bond coverage.

In response, CUNA Mutual held a series of meetings with credit unions across the country to find how its bond could be improved.

Citizens Equity Federal Credit Union, Peoria, Ill., is one of CUNA Mutual's biggest policy holders and its chief executive, John Siefken, occasionally is one of the loudest critics.

"They sometimes believe we're a captive group," Mr. Siefken said. "That's not the case."

Mr. Siefken is critical of the fact that none of CUNA Mutual's top managers ever worked in a credit union, and that few of them meet with industry officials and seek their input.

Mr. Kitchen, who said he faced and addressed similar complaints from credit unions while at the CUMIS Group of Canada, is aware of the gripes and wants to address them.

"As an organization, our only business is serving credit unions and the members of credit unions," he said. "We're not perfect, but we're striving to be better at what we do. Our focus is consistent with what credit unions are trying to do. We're the only organization like that."

How well Mr. Kitchen meets his goals remains to be seen, but he has charmed one of the company's detractors - at least for now.

"I think Mike Kitchen can do it," Mr. Siefken said.

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