EF summer 08.indd - National Association of Professional Allstate ...

ationary period. Once the transition
has been completed to full agent status,
an agent contract is executed and State
Farm and the agent begin their lifelong
partnership.
State Farm agents must maintain
reasonable office hours, be open on days
when regional customs dictate customers’
expectations, and provide customer service
consistent with a professional operation.
That’s it! There are no production quotas,
Expected Results, or any other kind of
sales volume that must be achieved.
Newer State Farm agents have a tiered
compensation package that offers higher
commission percentages for cross sales,
life insurance production, and higher
auto production numbers. For the new
agents, as is the case for older State Farm
agents, there are no production quotas,
Expected Results, or any other kind of
sales volume that must be achieved in
order to keep from being fired.
Area Managers are a State Farm
agent’s link to their corporate world.
Area Managers interface with agents
concerning product training, customer
complaints, agent concerns, and corporate
communications concerning market
conditions. Agents may be provided with
peer sales statistics, but they are never
given an “Annual Review” with a contract
terminating outcome.
Allstate’s Version
In a market dominated by independent
agents and competitors, such as
State Farm and Nationwide, utilizing
true independent contractor agents,
Allstate prefers using an agreement
that, when combined with its 300 page
“Supplement,” more closely resembles an
employee agreement. This agreement is
chock-full of employee-like controls and
is administered in the field by layers of
management. The company’s management
is reminiscent, albeit on a smaller
scale, of a “multilevel marketing” or
“pyramid” style structure. This top-down
structure has been entrenched at Allstate
for decades. The management program
has seen few major changes over the
years, even after the mass conversion
in 2000 when employee agents were
fired and then re-hired as independent
contractors. The most apparent change
to the agency force was that, instead
of their managers being called MSMs
(Market Sales Managers), they would
now be called MBCs (Market Business
Consultants). Otherwise, there was little
change and managers, for the most part,
still acted with a sense of superiority and
treated agents like employees. With this
management style deeply engrained in
the Allstate culture, there can be little
hope that it will change anytime soon.
Why is the company adhering to old
school management techniques which
have their roots in 1950s The reason
for this will be revealed later, but first
we need to look at what makes Allstate’s
agent program tick.
The key element to the success of this
type of management style is control. By
exerting a series of pressure points, emanating
from the top, Allstate management
can control its agents’ efforts and
shift its focus to accomplish corporate
versus agent driven goals.
The Regional Vice President position
is arguably the most influential position
within the company. Answerable to only
a few above, an RVP controls a litany of
managers including, in descending order,
the assistant VP, Regional Distribution
Leaders, Territory Distribution Leaders,
Market Distribution Leaders and Inside
Distribution Leaders. This pyramidstyle
hierarchy ensures a “reverse funnel”
effect in which everything flows downhill.
Lower ranking managers report to
their immediate superiors who, in turn,
report to their superiors until the buck
stops at the RVP level. The RVP then
reports to Home Office. At the bottom
of this “food chain” are the agents, who
bear the brunt of plans and strategies
hatched at the top of the funnel.
Back before the year 2000, when the
company acknowledged that it had employee
agents, the management pyramid,
as described above, compensated agency
managers based upon the performance
of the agents under their immediate control.
But this performance-based compensation
did not stop at the MSM level.
This performance-based compensation
flowed upstream all the way to the RVP
level, with each level taking a little piece
of the agents’ hard work. Some would
equate this to an “upline” in a multi-level
marketing organization. By reversing
the view to that of the RVP, it’s easy to
see how that position can enforce a reward/punishment
system for those managers
he controls in his “downline” and
then ultimately to the agent. And while
management titles have changed, the
positions and the basic processes remain
virtually unchanged.
The way it works is that Home Office
establishes a broad set of goals and guidelines
for regions to follow. For the most
part, the regions have significant control
over how they achieve their results as
long as they stay within company guidelines.
Obviously, RVPs with higher aspirations
will toe the company line more
so than those who cherish more regional
autonomy. Say, for example, that an RVP
is looking to increase his financial service
Summer 2008 Exclusivefocus — 27