State Farm has been a darn good company to work for. If you worked in the insurance industry it was well known that State Farm had the most dedicated and properly trained employees, the tenure was unmatched in the industry and this was leveraged into decades of outstanding company performance. The philosophy was the strength came from the people who worked there, it was the force that separated us from the competition.
Every company has to manage expenses, nothing new there. The combined ratio for most of my 30+ year career was under 100. The company business model has never been to target the price conscious customers, but focused on a better customer experience. We utilize agents to convey that promise to our customers.
State Farm started to leave the business model that got them to the $96 billion financial powerhouse they are today. Slowly the key pieces that defined the State Farm customer experience began to disappear. This was largely due to senior leaders bringing in outside consulting companies which focused on handling claims in a "factory" like environment. This is fine for a certain percentage of minor claims however they applied the same processes and philosophies to the more complex claims as well. Gone was independent thinking in favor of consistency, even when it did not make sense.
When the company migrated to the "new model", which was also timed upon president Rust's departure, things completely went off the rails. They introduced the "EOM" philosophy and process became the driving forces for handling claims. They completely dismissed the technical and analytical side of the business, emphasis was now on daily team huddles covering mostly pointless metrics. Promotions were no longer based on performance, claim skills and knowledge but how much you supported the EOM process. The claim handling talent was getting watered down at an alarming rate. Senior leaders became hell bent on designing a system to measure performance in what is largely a cerebral job. Claim skills degraded as performance conversations revolved around how long someone took on a call and how many tasks they handled in a day, not whether they did them right. What was once a career job where your learned skills and performance allowed you to rise through the ranks was largely replaced with untrained, low paid call center workers. As the more skilled workers retired or left they were not replaced, instead the remaining workers were asked to do more. Staffing models were incorrectly calculated and as a result workloads skyrocketed. Overtime became a business plan, at nearly every meeting the mantra was do more with less. Workers could not keep up with the pace, so they found short cuts which resulted in mistakes and overpaid claims. Poor customer service became commonplace, but as long as you "clicked off" a lot of tasks and answered a certain number of calls you were good!
It's no secret, the quality of work is the worst ever, mistakes are costing the company millions, workers are disgruntled and the best ones are leaving to our competitors. Mid-level managers knew there were problems but if they voiced concern or criticized the new model their careers were in jeopardy. Just look at how many high level managers have bailed out of the company long before their retirement date, it's very telling.
As for results, the combined ratio has skyrocketed. Loss of policies are the highest in company history, indemnity and expense is out of control. Some say if this was a stock company the CEO would have been sent packing long ago.
Now there are sweeping office closures, more long term talent is being kicked to the curb in favor of less expensive unskilled workers. Turnover in the hubs is staggering as they have created a job very few motivated and educated people will seek out. The company seems lost, we hear of turmoil in the boardroom, hundreds of leaders are exiting, the talent pool is draining.....something has to change quickly or State Farm will be a case study for upper level university management courses on where did such a powerful company go wrong.
Wake up State Farm.