Part of running a major business involves periodically examining what’s working and what can get better (Hogg, 2010). As everyone knows, just as every other company needs to work to remain relevant, we have to keep up with our primary competitors including Allstate, Farmers, Geico and Progressive. We need to do work better to perform processes uniformly across the state and the only way to do so is go from four regional offices in California, to one regional office.
We first will need to create a transition committee that will have supervisors from each offices, section and division managers as well communication with other zones that have gone through similar transitional change. With this transition, we will also need to take into consideration how much this will cost the company and also how much will be saved as a result in the conclusion of the process. Which office will be the first to close, which will come second which will close last and finally which will remain open?
There will also need to be a plan for the increase of work load when we close the offices and how we will keep the work load down and manageable by adding specialty teams that focus on certain areas of the work instead of handling it all. Additionally, we will also need to review how this will affect the potential impacted communities, and how we will handle the internal and external communication plans. When creating a transitional committee we need to select the right members for this committee.
We understand that some may not be making the move but their assistants will be beneficial to everyone. Within this committee we need to select who will handle what roles each person will be in charge of. We will have groups in charge of different areas. Such as people count, communication, timelines, training and expenses. For the people count, this group will be in charge of finding out how many people will be moving and how many will be leaving. With this information they ill be required to determine the amount of new associates that need to be hired and how many hiring waves. The group that will handle communication will be the ones who will communicate to associates the time line of transition as well as information on the specialty teams that will be formed. This group of individuals will be required to travel to all offices to a job fair for associates so that they can see how their department is changing and what the new roles will look like.
It will give them an opportunity to find out if they would be interested in a certain specialty team. For the training group, their job is to determine how many trainers will be needed and if temporary trainers will need to be pulled to help train new associates as well as set up refresher courses for existing associates. The expense committee will not only be covering the transition expenses, but also travel expenses and hiring expenses. Why is it necessary to transition from 4 regional offices to one?
First, with the recent move of our payment plan department and our Life/Health department to other states all four regional offices now have less than 60 percent occupancy. One of our offices is even at 40 percent and the building itself needs some costly upgrades to minimally keep it as a viable work location. Another reason why we need to close these offices is due to the fact that each office seems to do work their own way in lieu of processing work items in the same manner as intended and designed by the corporate office.
By combining everything into one singular location, we can ensure that processing consistency is achieved while also aiming to treat every policyholder in the state exactly the same way with consistent high quality service. Doing so would enable our Zone to achieve and retain the Remarkable expectations set forth by policyholders. Another reason why it would be highly beneficial to transition from 4 regional offices to 1 is the day to day expense.
The current cost per average month to simply cover electrical utility expenses is one hundred thousand dollars in a single office with gas expenses around fifteen thousand and forty thousand in public water fees. Since we are not a company regulated by stakeholders but a company literally managed by our policyholders also referred to as a mutual company, it is our policyholders who are paying for all the utilities on 4 offices that are not being used at full capacity. In transitioning to a single office we will be saving our policyholders an estimated 5. 6 million ollars annually which can be reinvested into the organization by way of rate reductions and directly benefit customers. We need to determine which office will remain open. Since a separate entity of the company manages facilities and all are owned the decision really comes down to a few details. Which facility can house a majority of the associates, can new talent be recruited in that community to sustain the growth, which facility is the most energy efficient, which facility needs the least amount of necessary upgrades, and where would a majority of our associates be willing to relocate to?
This decision was relatively simple as the Central California office location was the newest facility and the only that was not a single level structure, is in a growing city that has an established university and the ability to add much more housing that will be required. An added benefit is that water expenses are minimized as the grounds are all hydrated with reclaimed well water. As a result of that decision the next decision is determining which office to close first. We will first close our West Lake and Costa Mesa offices as each is very costly to keep open and sit on prime freeway real-estate.
When any transition involving associates is being planned, one must realize that there are numerous impacts both positive and negative. While the realization is there that we will lose very loyal, experienced, tenured associates we must also realize that we will also shed a significant expense. Employee compensation is our largest investment in the organization. With the loss of those associates and backfill with newer associates there will naturally be a savings component in conjunctions with that realization and change.
Newer associates will have a lower base salary, fewer vacation benefits resulting in increased days producing at the office, and potentially an improved work ethic as they are very happy, not for a new job but the potential for a new career. Combined occupancy of the southern office locations were at a total of 70 percent capacity. For those associates there will be a few options. We will offer early retirement packages for those who are at retirement age.
We will offer a relocation package to all employees who are willing to relocate and we will provide them with a weekend tour of the new facility and community to assist them with their decision. This package also includes a bonus if they were able to sale their house prior to the move. If not, State Farm will buy their house and sell it for them. The last office that will close will be our Northern California office. That will not happen for at least 3 years after the first two offices close in an effort to minimize work flow disruption and well as mitigate the loss of tenured employee capital.
With the closing of the two offices, we will need to learn the number of employees that will be part of the transition and how many employees that will take the early retirement package and how many will quit State Farm all together. We will need to determine the work flow as well as how many new associates that need to be hired in the final location. Also being incorporated into the transition process is a new workflow distribution system along with a new specialized team concept approach to facilitate with training new associates to make each job responsibility less than what it currently is.
Different associates are strong in certain areas and weaker in others so the thought is to capitalize on each of the strengths. The teams that we need to create should be the following. For example in our Auto Department, they will be going to the following. New business application issuance team consisting of both underwriters and assistants, added car application issuance teams, three processing/production teams, one rating/accounting team, three call center teams finally one training team and one quality review/improvement team.
Our Personal Lines Fire team will be doing something very similar as well as our Business Lines Department. Our claims department will also go into smaller specialized teams. With these specialty teams in place it will help with the work flow as well as ensure that the work gets processed correctly an efficiently. Additionally, since our current underwriting assistant training program last a surprising three years due to the complexity of the job. With the specialty teams that will be in place the training will not need to be as long as the focus of each role will evolve to its new state.
The new training program will last up to 15 to 18 months to get fully proficient with continuing development to refine complex skill sets in their respective specialty areas. The first year training will be focused on the basics and once the trainers get a feel for what the trainees strengths are after that year, the next 8 months will be focused on their area of specialization. By doing this, we will provide better and more accurate service to our policyholders and more time will be spent doing the work. When we get to the point of communicating to our employees we will be earing different remarks from them such as why us, why not the other office, what am I going to do and so on and so on. They’ll need information to make decisions about their and their family’s future (Van Camp, 2012). When we determine when we are going to tell them employees there are five key concepts that we need to remember when we are communicating to all employees. The news we will be providing will be life changing for numerous amount of people and we will need to be prepared to handle a large amount of questions and backlash and personal feelings.
What we need to do and focus on is providing regular, weekly e-mail blasts from leadership describing the changing events. Let employees know when major decisions are expected to be made; for example, communicate when benefit and personnel information will be released. Encourage dialogue between managers and their teams. If needed, have leadership step in and directly communicate with employees through town hall-style meetings and discussions. Create a channel for two-way open communication. For example, create a virtual suggestion box or a forum for discussion between employees and leadership.
Posts can remain anonymous for employees at every level through the organization. If there is no information available or something has yet to be decided, let employees know that, but don’t keep them guessing. Employees who have to wonder about their futures are not engages in their jobs, and productivity and loyalty will be affected (Van Camp, 2012). When we go to the public with this information we will need to provide our plans in writing so that the media does not misconstrue any of our information.
We do not want false information being provided and pushed out to the public. We already know that we are changing the lives of our employees but we will also be changing the communities. We also need to be prepared for questions such as what will this do to smaller area’s that depend on the business from State Farm associates, impact to the local housing market and loss of existing talent. For associates not wanting to continue with the company we will assist them with their resumes and interviewing skills in an effort to minimize their personal impacts of the transition.
There will be numerous classes to assist with resumes and interviews as well as letter of recommendation from their supervisor to help them get another job. Finally we will have our operations managers from each office deliver the message of the closing of the offices. No one looks forward to addressing an angry audience, but you do have one major factor working in your favor: People definitely care about your message. As with an apprehensive audience, treat their emotions with respect and avoid humor. Prepare thoroughly so you can provide complete information in a calm, rational manner.
Consider using the indirect approach to build support for your message while addressing points of concern along the way. Remain calm and don’t engage in emotional exchanges with the audience (Bovee & Thill, 2012, p. 477). Our operations managers would be the perfect candidates that will be able to deliver this message so that they will be able to hear the compassion in their voice and to understand that this is not an easy move on anyone. We want to remain ahead of our competitors. We want to ensure that we are not one of those companies that will start having massive layoffs due to the decline of the business.
State Farm has been around for 90 years and we want to be around for even more. By having a transitional committee, we will be able to affectively shut down 3 offices and move the work load and employees to one. We will be able to have specialized teams within all of the departments. We will drastically reduce cost which will allow our policyholders to have more rate decreases on their auto and homeowners policies. We will show compassion when delivering speaking to our associates and to the media. Last but not least we will keep everyone in the loop through emails and meetings with management so no one is left in the dark.