Aflac: All it's Quacked Up to Be
By Leo Jakobson
September 12, 2007
Founded in 1955 by brothers John, Paul and Bill Amos, the American Family Life Assurance Company of Columbus has grown into a $60 billion company that is part of the Fortune 500 by doing things the Aflac Way—which means providing customer service that meets the principles and commitment passed down from one generation of employees to the next.
By every indication, it is succeeding. Besides its financial growth, in March Fortune magazine named Aflac one of America's Most Admired Companies for the seventh consecutive year. The company also made Fortune's list of the 100 Best Companies to Work For in America for the ninth consecutive year.
"Corporations on the Fortune 500 can match our pay and benefits, but they can't match our corporate culture," says Sharon Douglas, Aflac's vice president and chief people officer in human resources, who notes the number of employees has more than tripled in the past decade. "Beyond having happy and motivated employees, our founders believed if we take care of our employees, they will take care of us."
On the corporate side of the business, the most visible expression of this philosophy is Employee Appreciation Week, which got its start in the company's early days as an employee fish-fry following the founders' annual fishing trip. Today, Douglas describes it as a "weeklong party for 4,500 people." Events at the celebration range from dinners, movies and concerts, to parties, prize drawings and trips to local amusement parks, as well as the very public distribution of length-of-service awards. "You have to experience it," she says. "Employee Appreciation Week has the excitement of a football game your team is winning."
The picture is more complex when it comes to motivating and rewarding the company's 69,000 independent agents, the majority of whom sell Aflac products exclusively. Although Aflac does sell life insurance, the vast majority of its business is supplemental insurance—policies that go beyond the basic life and health insurance to provide financial assistance in case of hospitalization, long- or short-term disability or while fighting illnesses, as well as dental, vision and accident policies. Its signature product is cancer insurance that helps patients pay non-medical expenses like rent and groceries. These policies are mainly sold to individuals through their employers, who offer them as voluntary payroll deductions.
"Salespeople by nature are competitive," says Lynn Fry, vice president of sales support & administration of Aflac, whose group administers sales contests and awards for the company's independent agents, district sales executives and regional sales executives. "We are strong proponents of the entrepreneurial spirit. The goals of our programs are to make the agents successful and help them grow their business."
While there are many incentive awards and contests available to the agents and their managers, two of the most prestigious are the annual convention trip, for which more than 1,000 agents qualify, and the annual Founders Award for Management Excellence (FAME award) for district and regional sales coordinators. There are also contests tied to company sponsorships like NASCAR, a variety of programs for new agents, and the President's Club, for which a total of just 161 agents and managers qualify.
"[Another] goal of all of our trips and awards is to build loyalty," says Fry. "In my view that is a measure of how appreciated people feel. We always publicize the winners—our quarterly magazine for the field force highlights winners, our associate Web site has lots of recognition pages, and [agents] can see where they rank nationally."Love the Duck
Employee Appreciation Week is the biggest and most visible component of Aflac's incentive programs for its corporate employees, says Douglas, who notes that her department begins planning in September for the seven-day-long, family-friendly event held during the first full week of May.
"It's a whole lot of fun and excitement," Douglas says. "People are winning money, vacation trips, plasma televisions, all kinds of gifts and souvenirs. All awards are by luck of the draw. There's a big barrel with all the employees' names in it. They haul it around to all of our campuses, and executives get on the intercom and draw names."
Along with the parties, special events and bring-your-family company outings, Employee Appreciation Week is such a big deal that the excitement spills over into the community, Douglas says, noting that between local press coverage and spending sprees at area merchants, all of Columbus sits up and takes notice. The sub-campuses in Omaha, Neb., and Albany, N.Y., replicate it on a smaller scale, and the far-flung offices with a few employees at least arrange a special night out for dinner and the theater. Some of the longer-serving employees from other offices are brought down to headquarters for the main night of celebrations.
The week is also at the heart of the company's length-of-service award program. Instead of mailing catalogs to choose from to employees who qualify for an award, the vendors who provide the diamond necklaces, rings and other merchandise come to Aflac's Columbus headquarters. Displaying all the merchandise that five-year, 10-year and longer-serving employees can choose from, the vendors allow employees to browse real merchandise. However, the awards don't actually arrive until Employee Appreciation Week, when the distribution is incorporated into the festivities.
"People who are tenured get special treatment" of other sorts, Douglas says. "They get to sit up front at the events, there is a special dinner at the country club" for some of the longest-serving. "The longer you have been here, the better the gifts and the better the dining experience," she adds.
Length of tenure especially plays into the way the company looks at the value it gets for the cost of the weeklong festivities—which is certainly harder to measure than the sales force's productivity-based incentive programs. "The ability to attract and retain employees is doubly important to a company like Aflac, situated in a small city like Columbus," Douglas says. "I told our CEO when I started that the measure of Employee Appreciation Week's success is employee sentiment; the measure is the employees' enjoyment of the events staged."
Based on what she and her staff see and hear, it is very successful by those measures, she adds. "The accolades from people last for weeks, and build loyalty to the company," Douglas says. She's not the only one who feels that way. In 2006, Fortune cited Employee Appreciation Week when listing Aflac on its 100 Best Companies to Work For in America list. (This year it was the company's child-care policies, including an on-site daycare facility for 540 kids—the largest in Georgia—with newly extended hours to accommodate second-shift workers.)
But Douglas isn't resting on her laurels. "This will give Aflac a leg up when the baby boomers retire," she says. "We will have to become more creative as Generation Xers replace them. They have a different set of buttons. When [boomers] started, it was all about loyalty. Then [the national trend of downsizing and offshoring] hit, and it became, 'What can you do for me?' "
One answer is to safeguard Aflac's corporate culture against the company's rapid growth. "We work hard at maintaining our unique corporate culture," Douglas says. "It is expected that you will take time off if a relative is ill, it is expected that if a coworker has a newborn you will go and visit."
Aflac has several other incentive and recognition programs for employees. One of the newest is the Aflac Way Honors, tied to the company's 15 basics of customer service. Anyone can nominate a colleague, although managers must approve and they set the award value, in points that can be redeemed for merchandise ranging from bicycles to electronic equipment.
The Spot Awards program allows managers who see an employee extending him- or herself beyond what is normal in helping a customer or colleague to give a variety of rewards, ranging from stock options to days off to up to $1,000 cash.
A pair of idea suggestion programs reward employees with recognition and cash. Aflac Bright Ideas covers smaller process-improvement and cost-efficiency suggestions, with awards up to $1,500 on a quarterly basis, while the Quality Circle deals with bigger ideas that save $100,000 or more. All winners share $10,000 and are recognized on stage by management during Employee Appreciation Week's awards dinner—as are the quarterly winners of the Bright Ideas program.
In July, Douglas says, she saw the long-term results of Aflac's penchant for handing out stock options. "I had a lady in my office who told me she was able to send her child to college because of those stock options," she recalls. "She was able to avoid $7,000 in loans, and the pride I saw that came out of her—you can't get that return-on- investment from looking at numbers." Get the Duck to Soar
Aside from commissions and cash incentive bonuses, Aflac's independent field sales agents and the district and regional sales coordinators are motivated by a variety of honors clubs and incentive programs.
There are a number of honors clubs for both associates and sales executives, aiming to increase production, average monthly producer growth and payroll account growth. The most sought-after and most exclusive of the honors clubs, according to Fry, is the President's Club, for which just the company's top 85 associates, 44 district sales coordinators, 25 regional sales coordinators and seven state coordinators qualify. That program award is an annual trip, most recently a five-day, four-night Mediterranean cruise departing from Monte Carlo.
For the field associates, the big one is the annual convention trip, for which 1,280 agents qualify. Held in locations like New York, Hawaii and, this year, Las Vegas, "It is a huge deal to qualify," says Fry, noting that a big splash was made in 2006 because "one agent … was making his 20th trip in a row."
Qualifying for the five-day trip, on which spouses are invited, is based on making sales numbers in a variety of categories, with new associates having different goals than veterans. District and regional sales executives can also qualify.
"They don't want to miss the trip because of the networking opportunities," Fry says. "At the award dinner, [the winners] have their picture taken with the chairman and CEO [of Aflac, Daniel Amos]. Having the leaders there is tremendous motivation. Both the chairman and the president worked in the field and can relate to the agents—they speak their language."
For the field sales force's coordinators, the Founders Award for Management Excellence, or FAME, is the major honors club. "It is based on growth in the organization," Fry says. While personal production and new accounts figure into it, the success of the sales associates under them—especially new recruits—are important in achieving FAME. "Winners receive a personalized award based on the number of times they have qualified," says Fry. Examples are a FAME medallion containing photos of Aflac's founding fathers or a watch to which a two-point diamond can be added each year a FAME award is won.
Another extremely important honors club is the Fireball Triple Crown, "which honors and recognizes new sales associates who hit the ground running," Fry says. The culmination of several other contests for recent recruits, it gives new associates who produce $75,000 in gross annualized premiums during their first 39 weeks a trip to Atlanta followed by a visit to the company headquarters in Columbus, where they meet one of the company founders, tour the facility and have an awards banquet hosted by the chairman and CEO. This is very prestigious, as the company views early success as a good indicator of future success. Beyond that, Fry says Aflac "finds recognition early on helps retention." (And coordinators who have new associates qualifying for the Fireball Triple Crown are on their way to making the FAME club.)
Then there are the straight incentive programs the company runs, supplementing literally thousands of contests at the state, district and regional levels. One current example is Aflac Lexus Hold 'Em, a riff on the popular poker game of Texas Hold 'Em. As the name suggests, this incentive contest uses merchandise awards to incentivize district sales coordinators to hit a variety of weekly goals, revolving around high recruiting, retention and production rates. Weekly winners receive a randomly selected playing card, and the district sales coordinator who can build the best poker hand with all of his cards wins a new Lexus IS sports sedan.
"These are short-term, weekly goals attainable for a large portion of the sales force," Fry says. "The goal is to keep the sales force motivated, engaged and focused."
Another sales incentive, held in the first quarter of 2007, was the Power of One Million Dollars contest. The bingo-themed contest, for all levels of coordinators, focused on average weekly production and securing new accounts and new recruits. It was cash-based, with a total payout of $1 million. In a statement made to analysts in May, Aflac Senior Vice President and Director of Sales Ronald Kirkland said, "This contest contributed to our strong first-quarter results."
Aflac also builds other company activities into incentive programs. For instance, in the past year, the company has been moving more and more deeply into NASCAR racing sponsorship, becoming the sanctioning body's exclusive supplemental insurance sponsor as well as partnering with Roush Fenway Racing to sponsor several Aflac Fords in various NASCAR racing series.
Along with consumer promotions—like the current Owner for a Day sweepstakes, which will bring one couple to Miami Speedway in November for NASCAR's Ford 400 race and provide behind-the-scenes access with Roush Fenway Racing—Fry says Aflac is building incentives around the sponsorship, "like trips to the races for being a top performer." In June, the company kicked off the Aflac Race to the Race, a third-quarter sales contest in which the top-producing associate, district coordinator and regional coordinator for eight regions will win a trip to the Kansas 400 race in Kansas City this September. There will be various sub-contests built around the sponsorship as well as drawings for race tickets.
"Leveraging a high-profile sponsorship like this generates a lot of excitement," Fry says. And while the return-on-investment is relatively easy to measure in programs like these, which are based on hitting specific numbers, Fry says that the positive feedback is the company's biggest return-on-investment. "We want to keep people for decades," she adds. "That's the biggest ROI, along with increasing sales numbers. Those are the two primary [measures]."Sidebar: Never Stop Learning
One of the non-monetary incentives Aflac Chief People Officer Sharon Douglas feels strongly about is the company's extensive training and continuing education program.
In 2006, Aflac spent nearly $7.4 million on its various training programs and requires all employees to undergo at least 90 hours of training a year. Programs run the gamut from customer service and sales training to career counseling and leadership development to job rotation and remedial skills training. It's a commitment that convinced Incentive's sister magazine, Training, to repeatedly include Aflac on its list of the Top 125 Companies.
"We are on that list for learning [programs] that help employees do their job, but also manage their finances, raise a strong-willed child, find an apartment or deal with the loss of a loved one," Douglas says. "We support not only their professional self, but their personal self as well. On company time." Aflac has partnered with a local community college so that call center training can get employees credit at a local school, she adds. The company has an aggressive tuition-reimbursement program, and it contributes toward the down payment of would-be first-time homeowners who take home-buyer classes.
While the company supports lifelong learning on a philosophical level, Douglas says, there's more to it than just creating a happier, more productive workforce. "Eleven years ago, we had 1,100 employees, now we are at 4,500 and growing fast," Douglas notes. "We bring people from all over the country, and they bring their last job's culture. We want to maintain our unique corporate culture." Indeed, New Employee Orientation is a three- to five-day affair that begins with an introduction to Aflac's history and values.Sidebar: Diversity Duck
If you look at the photography accompanying this article, you'll see that Sharon Douglas, Aflac's vice president and chief people officer in Human Resources, is an African-American woman in a senior executive position. At Aflac, neither of those facts makes her an anomaly.
In 2005, Essence magazine called Aflac one of the top three Fortune 1000 companies where African-American women are finding success. Working Mother, Black Enterprise, Hispanic, Hispanic Trends and Latina Style magazines have also repeatedly named Aflac to their lists of the best companies in terms of diversity. The numbers bear out these judgments: Nearly 70 percent of Aflac's employees are women, as are half of its managers (supervisor level on up), and minorities account for 40 percent of the workforce.
Among the ways the company walks the walk on minority hires is through its Diversity Development Grant program, according to Lynn Fry, the company's vice president of sales support & administration. "For agents who are growing their operations, we encourage diversity; [the grant] is an award of sorts," Fry says. "They have to apply and have their business plan evaluated."
The Diversity Development Grant Program gives Aflac a leg up in minority recruiting, as does the company's Minority Mentoring Program.Sidebar: Giving Back, Getting Back
Aflac's involvement in corporate philanthropy runs deep and wide, and centers around two basic areas: fighting pediatric cancer via the Aflac Cancer Center and Blood Disorders Service at Children's Healthcare of Atlanta, and involvement in local communities. And while the local community involvement is important, the hospital goes to the heart of what the company does.
One of Aflac's earliest and most successful products is its cancer policy, which provides money for expenses incurred beyond medical bills covered by the client's main insurance. "Our founders' father had cancer, and [the brothers] saw firsthand what it costs to take care of a cancer patient," says Lynn Fry, vice president of sales support & administration.
Employees can payroll-deduct for the Aflac Cancer Center, and the independent sales agents regularly put together contests to raise money for it as well, Fry says. Some agents have been successful enough to get rooms and other areas of the hospital named for them. Altogether Aflac, its employees and agents have raised more than $34 million for the Cancer Center.
In its hometown of Columbus, Ga., Aflac works with local groups like the Boys and Girls Clubs and Habitat for Humanity as well as United Way and Easter Seals.
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