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Bob MacDonald Skewers Allianz Life of North Amnerica

Insurance industry maverick Bob MacDonald, former CEO of Allianz Life of North America, surprised industry observers today with a stinging rebuke of the corporation he once headed.

Writing in his popular blog, www.bobmaconbusiness.com, MacDonald decried what he calls, the "precipitous decline in the performance of the company and the conscious destruction of its entrepreneurial culture."

What set MacDonald's criticism in motion was the recent announcement that Allianz Life will be laying off another 200 employees. MacDonald noted this comes on the heels of another, similar-sized downsizing two years ago. And MacDonald, some say rightfully, is irate.

MacDonald was the founder of LifeUSA, which in 1999 he sold to Allianz SE for half a billion dollars. His LifeUSA was merged with Allianz Life North America and MacDonald, in a rare corporate move, became the chairman of the surviving company. His interest and pain at watching the company slide, is hardly surprising.

According to MacDonald, "When I retired as chairman, Allianz 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. Now," accuses MacDonald, "Allianz Life is a mere shadow of its former self and may be wounded beyond repair."

The layoffs, according to MacDonald, are the just desserts of poor management and shrinking revenues. And the reason for the precipitous decline, he charges, 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."

Bureaucracy, of course, is a pet peeve for MacDonald. He's written two popular business books on the subject (Cheat To Win: The Honest Way to Break All the Dishonest Rules of Business, Paradon Publishing, 2005; and Beat The System: 11 Secrets to Creating an Entreprenurial Culture in a Bureaucratic World, John Wiley & Sons, 2007).

"The corrupting influence of bureaucracy, said MacDonald, "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 inform the workers and take the resulting heat."

He further charges that the Allianz bureaucrats neatly tried to sidestep the cause of the downturn, finding fault with everyone and every thing else but themselves. "The excuse in this case," says MacDonald, "was that, 'We, like many companies, are being impacted by the economic slowdown and an acute downturn in financial services."

MacDonald claims that Allianz failed to point out it's been in an "acute downturn" for several years even though the economy has, until very recently, been bubbling along at record highs. He points out that while Allianz was laying off workers in 2006, the economy was steadily soaring to record high levels (the Dow, for example hit 14,000 in October 2007). Nor did the company mention that recent studies show that employment in the insurance industry as a whole has actually increased this year.

"The problems with Allianz Life cannot be passed off to others," blogged MacDonald, "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."

MacDonald believes Allianz of North America can be turned around if the parent company in Munich, Germany replaces management with entrepreneurial leaders. He views this solution as remote, however, saying it's more likely the company will continue to spiral down until Allianz SE acquires another company and merges Allianz Life into it. This approach, which MacDonald says Allianz 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. "That's how bureaucracies work."

About www.bobmacdonald.com:

Bob MacDonald's blog regularly draws thousands of visitors with his often irreverent opinions and useful tips and strategies in blogs and podcasts to help entrepreneurs, business managers and leaders in the insurance industry see the wisdom of his contrarian view.

In one recent blog he berated NBC's Dateline and Minnesota Attorney General Lori Swanson for their attack on the annuities industry, calling the report "Deceptive and dishonest." He dished out more of the same when the Securities & Exchange Commission proposed reclassifying annuity products as investments. "If industry leaders and insurance company executives don't show a little more gumption, backbone, creativity, innovation and leadership than they have a history of doing," blogged MacDonald in a scathing review, "then the worst of all results could happen."

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