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October 18, 2011

At the end of September Allstate announced that they were changing their commission structure and thinning their ranks (Wall Street Journal, September 27, 2011). This after years of what seemed like a goal of having more locations than Subway.

I could have told you this was coming. During a project for a client looking to buy an independent insurance agency (if you know of an independent agency looking for a buyer or working partner let me know) I have talked to a lot of Allstate agents looking to get out. It was the same old story; volume too low, costs too high and a company restriction on selling (the agency) to other Allstate agents (the latter policy since changed).

Over saturation is not just an Allstate phenomenon and not a good business strategy. It’s much better to hire the best, train them well and let them be successful. Putting people, no matter how talented, in a position to fail makes no sense.

People work for small businesses because there is a much better chance they’ll be treated like a person, not a number. People work for large companies for perceived stability (don’t think of Washington Mutual or Kodak), better pay and benefits. There are trade-offs to both and for some people the corporate situation drives them to own (buy) their own business and be in control. What many Allstate agents thought they were getting.

Businesses often forget about the culture, and ultimately, they suffer for it because you can’t deliver good service from unhappy employees. Tony Hsieh

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