Allianz Life – The Sad Decline of a Great Insurance Company

As one who was deeply involved in the building of Allianz Life of North America, I am especially saddened to witness the precipitous decline in the performance of the company and the conscious destruction of its entrepreneurial culture.

The latest blow came with an announcement in the Minneapolis StarTribune (August 4, 2008) that the company will eliminate some 200 more jobs. This is on top of several other downsizing and outsourcing actions.

Less than three years ago Allianz Life was a flourishing, vibrant and profitable company with a unique culture that challenged, motivated, recognized and rewarded employees who worked to make themselves and the company better.

Today Allianz Life is a mere shadow of its former self and may be wounded beyond repair. Production has steadily fallen while employee morale is defined by frustration, fear, lack of candid communication and uncertainty about the future.

Barely a week goes by without someone from the company calling me to seek advice as to how they could leave the company for a better opportunity. Top field producers have fled the company and those remaining, fearful of poor service or rejections of business are gun-shy about submitting business. Most Field Marketing Organizations, the backbone of company production, are now producing less business with Allianz Life while directing increased volumes to other competing companies. Few if any new production sources are being recruited by the company.

How can a company, once so successful, fall so far so fast? The answer is simple: A full-blown bureaucratic management system has been substituted for an entrepreneurial culture. Bureaucratic managers have infiltrated the company bringing with them the calcifying taint of the bureaucratic culture.

The corrupting influence of bureaucracy can easily be seen in the recent announcement of employee layoffs. Typical of a bureaucratic company, instead of the company leader having the integrity and courage to personally make the announcement, the company trots out a third-string bureaucrat to speak for the company and take the heat.

And is it the bureaucracy’s fault for these layoffs? Never! With bureaucrats, someone else or some thing else is at fault, never them. The excuse in this case was that, “We, like many companies, are being impacted by the economic slowdown and an acute downturn in financial services.”

Huh? What the company failed to point out is that Allianz Life has been in an “acute downturn” for several years now but the economy was bubbling along at record highs (the Dow, for example hit 14,000 in October 2007). The company also didn’t mention that employment in the insurance industry as a whole has actually increased this year.

It’s obvious, then, the problems with Allianz Life cannot be passed off to others, but must come to roost at the feet of an ineffective, destructive bureaucratic management group. And in this regard, Allianz Life, unfortunately, serves as a wonderful case study for comparing the differences between a bureaucratic and entrepreneurial culture.

Bureaucracy vs. Entrepreneurism

Bureaucracy is the great killer of businesses large and small. And bureaucracy is killing Allianz Life. Let me explain.

All businesses are confronted with a continual cascade of problems and opportunities. But the manner in which these problems and opportunities are confronted by bureaucrats and entrepreneurs is very different and can easily mean the difference between success and failure.

When business problems arise the entrepreneur is proactive and the bureaucrat is reactive. If one studies the actions of Allianz Life leaders during the past few years you will find only reaction, not proactive responses.

Companies with entrepreneurial leadership and cultures have a clear vision and focus on where they are going and what they are to be. Bureaucratic leaders focus only on short-term actions (along with preserving their jobs and perks) with no thought of perspective. Accordingly, as sales at Allianz Life began to decline the bureaucratic leaders failed to take the time (or did not have the ability) to analyze the root issues at play. Instead, the company instituted stop-gap solutions such as increased commissions, “fire sales” and larger bonuses. And the bureaucrats were confounded as to why sales continued to decline.

In a bureaucratic culture the primary objective of the leader is to maintain the status quo, at almost any price. Bureaucratic leaders fear and flee from change. Entrepreneurial leaders are just the opposite. They are never satisfied with or trusting of the status quo. They seek to build on it by being better.

At Allianz Life the bureaucratic leaders allowed the success and future of the company to become dependent on a single product, even though that product had come under legal, regulatory and media attack. As the attacks on the product continued (justified or not) rather than developing viable alternatives or new markets, the bureaucratic leaders of Allianz Life reacted by applying Band-aids (a complicated bureaucratic review of sales) in order to perpetuate the status-quo. The bureaucratic leaders of Allianz Life (as would all bureaucrats) did not have the perspective to recognize that any company dependent on one product for its success or even survival is exposed to significant risk. An entrepreneurial leader or culture would never allow that to happen.

Entrepreneurial leaders live in the present but conceptually browse the future searching for new markets and opportunities to grow the company and secure the future. Bureaucratic leaders see emerging markets and opportunities as too risky, too expensive and too long term in nature. The Allianz Life bureaucratic leaders had the opportunity to enter the burgeoning retirement market but they blew it. A combination of fear over who would get the credit for success in the market coupled with typical political chicanery caused them to miss the window of opportunity and become more reliant than ever on the shaky status quo.

Leaders in a bureaucratic culture believe the employee’s future is dependent upon the company. In an entrepreneurial culture the leaders believe the company’s future is dependent upon its employees. Not surprisingly, then, bureaucratic leaders destroy the trust and respect that had been built up between the company and employees. Allianz took a culture built on parallel interests and substituted a culture of mistrust, conflict and divergent interests.

Yes, I know the bureaucratic leaders of Allianz Life will argue they maintain open communication with employees, but as bureaucrats they do not understand the difference between talking to someone and communicating with that person. “Show and tell” is a tool of a bureaucracy, not an entrepreneurial culture.

In fact is an amazing testament to the quality, integrity, talent and commitment of the employees still at Allianz Life that have been forced to work under this bureaucratic regime. Without their intense loyalty to the company, Allianz might have tumbled even farther from grace.

After all, bureaucratic leaders seek to surround themselves with those who are not a threat or challenge to their ideas or authority. Weak leaders surround themselves with weak people. The entrepreneurial leader seeks those who are better than they are and those willing to challenge. The bureaucratic leader is threatened by potential while the entrepreneurial leader stimulates potential.

I don’t need to go into the specifics of management at Allianz Life, but those privy to this company’s corporate culture know that at Allianz Life (and the holding company Allianz Life of America) the bureaucratic leaders have surrounded themselves with weak, incompetent “yes-men” who will not challenge the leader.

Many of the talented employees and managers still at Allianz Life have, I know, become trapped in the environment by family responsibilities and salaries not easily available from other companies. They recognize and are frustrated by the problems but feel powerless to take action. But make no mistake: an unhappy and frustrated work force is but another reason for the decline of Allianz Life.

It may be that I am being too harsh on the Allianz Life leaders. They are after all only bureaucrats doing what bureaucrats do. Even if they wanted to do something different they are, in fact, only “water boys” for the bureaucrats above them. They received their jobs because there were not perceived as a threat to those they report to. The real blame for the travails at Allianz Life might be better placed at the feet of the bureaucratic leaders at the holding company Allianz of America and those in Munich, Germany at Allianz SE. (It should be of note and a clear message to employees that as Allianz Life is faltering and hundreds of people are losing their jobs, the president of Allianz of America still peacefully drives to work each day in his Rolls-Royce.)

So what is the future for Allianz Life?

The good news is that Allianz SE the ultimate parent of Allianz Life has so much money that the company can continue to spiral downward or muddle along for years with no threat of running out of money and going out of business. This sort a reminds one of the Freddie Mac and Fannie Mae situation where incompetent bureaucratic management can lose billions of dollars with no fear of failure since the Federal Government will step in to prop them up.

But, something will be done. The logical solution would be for the leaders in Munich to replace the leaders of Allianz of America (fortunately, the worst of the bureaucratic culprits was fired last year) and Allianz Life with entrepreneurial leadership. However, this is a remote possibility as bureaucrats are always uncomfortable with those who act in entrepreneurial ways.

Allianz SE could make the decision to unwind the inefficient bureaucratic concept of “shared services” that was implemented between the North American companies owned by Allianz SE. Such action could be interpreted as a prelude to selling Allianz Life. Of course, the question remains, who would want to buy it in its current state? Besides, bureaucrats have a difficult time selling what they own. The bureaucrat fears that being forced to sell an asset is an acknowledgement of failure and they don’t want to look bad. Bureaucrats also fear that if they sell a company and the purchaser turns it into a success, then the bureaucrat will be criticized for selling it at too low a price.

A look at the history of Allianz SE would suggest that eventually they may buy another company into which could be merged both Allianz Life and Fireman’s Fund (another company owned by Allianz SE). This approach (which has been used before) would bury the problems of Allianz Life within the newly-acquired company so that they would not have to be fully acknowledged.

The unfortunate part of this story is the impact on some truly wonderful and talented people who work at Allianz Life. I know many of them. I honor their loyalty and hard work.

But because of the incompetence, duplicity, insecurity and super-sized egos of the bureaucratic leaders under whom they must cower, they will continue to be pawns in a bureaucratic treadmill to nowhere and remain fearful of their future as they see friends and colleagues being outsourced and laid off, wondering, “Will I be next?”

58 responses to “Allianz Life – The Sad Decline of a Great Insurance Company

  1. This place was great at one time. I am still astonished that the Mark and Gabby stood in front of all Managers a couple of years ago stating what a tremendous year the company was having. Then, ironically, 3 weeks later the sky was falling and it was time to let the layoffs begin. The company has gone downhill ever sine. The arrogance is amazing, the leadership is a complete joke. It will take a massive change at the top of Allianz Life and Fireman’s Fund to turn this ship around. Simply amazing.

  2. glad2havehadtheopportunity

    I was there fort 11yr before i was laid off 2 yrs ago. I am glad to have had the opportunity to work at LUSA and AllianzLife in the early yrs. However, as i continue my search for the perfect place to work, nothing compares to those good old days

  3. Pingback: Allianz Life - The Sad Decline of a Great Insurance Company

  4. I am also a former LifeUSAer and then Allianz. I left 5 years ago. I too look for LifeUSA in every job I take, every interview I have that is my crowning glory. I think there is a homesickness many of us have. Could someone plan a reunion???

  5. Former 5th floor, Building A

    As a former contract employee who worked with the IT department in 2008, I was witness to a colossal waste of money on an almost daily basis while literally hundreds of employees lost their jobs in the last half of 2008 due to budget cutbacks caused by mismanagement and hubris.

    One example is the cell phones that were perfectly good, but managers and executives would want to trade up to the latest models while the perfectly good models, most of which were no more than 4-6 months old, would be relegated to a plastic bin in the IT stockroom to never be used again.

    This is just a small example in the grand scheme of the company’s finances, but this wasteful, superficial “one-upmanship” when it came to technology and IT-related equipment was a microcosm of the way the company was being run and how management inflated their importance and role in the company.

    During my time there I noted several ways the company could have saved hundreds, even thousands of dollars and been a more responsible company in today’s more socially and globally responsible business climate that looks to place emphasis on “reuse, renew, recycle” and cutting the fat to keep talent. So, not only is the company suffering from bad business practices in dealing with sales, customers, and other issues mentioned in previous posts, but it is also spending money like it’s being printed in the basement and wasting resources that will cost us all in the long run.

  6. goodbyeallianz

    Any comments here on the variable annuity company, “ALFS” ? Does anyone know of a blog on the VA portion within Allianz Life?

  7. LEN CONNELL

    I used to work as a producing agent for Allianz….I was terminated by them in 2009….after finding many problems with their equity indexed annuity line…They ruined my career…cost me hundreds of thousands of dollars…and forced me to leave the industry….Have any agents counter sued them in a class action suit? Any recourse…please advise…thx….lc.

  8. Bob, You called me around
    Aug./Sept. 1998 for your LIFE USA marketing meeting and although I did not sign on to market FIA for you, I most appreciated you and all that I could see you had accomplished. I did 10 years of FIA with ING then went to Allianz for product and for the 5/6 yrs. I sold FIA’s for them I experienced all that I just read in your article “Allianz Life – The sad decline of a great insurance company”. I formed my own negative opinion without reading about it elsewhere, then it occurred to me to look you up and I find you have the same opinion. Since 1998, I have mentioned your name many times as to how impressed I was with you and the Allianz during your time. Top notch understanding of all who worked with you. Currently I’m doing my usual 4 million per year of FIA with American Equity. A company that appreciates the agent and the customer. As you well know, Allianz has the money and the product but top management is challenged with the agent and customer. Too bad…

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