Lisa Rab's article on Progressive was typical misinformed hyperbole normally found within the pages of Scene.
Lisa begins by discussing how employees were let go, alluding that their salaries were instead spent on naming rights for Progressive Field. She failed to mention that this amount is paid from an advertising budget and not an operating budget. While accurate that naming rights are in the "ballpark" of $50 million, she also failed to mention this cost is only about $3.5 million annually – a small drop compared to competitors’ budgets. Also lost was the fact that competitor's GEICO's $500 million advertising budget (nearly five times that of Progressive)
is being backed by billionaire tycoon Warren Buffet's seemingly bottomless
checkbook…
Job loss is always saddening. While this situation is heartbreaking, it is unfortunately normal in the business cycle and will inevitably occur at other companies as the economy worsens. The only bright side is that most employees were awarded a significant severance package and many were even offered different positions within the company. Though disappointed that anyone
would ever lose a job they love, I do respect that Progressive made these moves in an effort to continue growth with hopes that even more jobs will be created in the future. As evidenced by Chris Lantzy's story in the article, many of those separated employees are now being considered for new positions within the company.
Brian Sullivan was quoted as saying Progressive is not growing. Profit margins have dropped, as is normal in the cyclical nature of the insurance industry. However, growth is being experienced in the number of policies in force (a statistic on the number of customers). Progressive is positioning itself for the inevitable upswing in the insurance industry, similar to moves made around 2000. It also accepts there were mistakes made during their monumental growth – evidenced by its brand reconsolidation, correcting its brand separation error discussed in the article.
I am finally confused that one manager would even state "Peter (B. Lewis) would have found some way to stimulate the business." I am quite certain that Mr. Lewis would offer any ideas that he has to current CEO Glenn Renwick. Seeing how he is still chairman of the board and primary shareholder of Progressive stock, I am sure his ideas are voiced and received loud and clear.
On to the good: Progressive still treats its employees fairly. As stated in the article, on-site facilities include fitness centers, dry cleaning, DVD rentals, health centers, cafeterias, and inspiring artwork. Employees still receive profit-sharing bonuses even in this downturn. Progressive historically has preferred to promote from within and "grow its own" (due to
Mr. Lewis? wink, wink). Admittedly, this may have contributed to their current ills, but this has also been very fair to longtime employees. Many received opportunities unavailable within other companies.
As Clevelanders, it seems we always smack ourselves in the face and then wonder why we receive zero national respect. It is overlooked that a Cleveland company (Progressive) is partnering with a Cleveland organization (Indians) in order to gain respect and growth for themselves and this area.
As much as Rab's article was an attack on Progressive senior leadership, I would hope all Progressive employees would feel disrespected. It is easy to blame those at the top, but all those "hard workers" should introspectively question how they've assisted in the growth of the company, including the accompanying protection of jobs and profit. I am.
Christopher Ickes
Progressive employee and Proud Cleveland Supporter
Read more comments on "Empire Regressed" by clicking here.
Yes, there was a severance package. What you conveniently fail to mention is that the package was REDUCED for the vast majority of employees in June, 2007 while the package for the "higher-ups" - that you obviously admire so much - was INCREASED. I distinctly remember Glenn and "Trisher" in the 'Springs telling a room of us not to worry; the change in severance was just to "be more according to the market." Yeah...just a coincidence.
Sorry to burst your bubble but deceit and duplicity aren't in accordance with any "Golden Rule" I've ever heard of. You know, the "Golden Rule" that's part of the vaunted "Core Values" you're so proud of. Neither is herding veteran employees like cattle and sending them home forever, with some half-baked explanation and then quaintly referring to it as a "correction." Nor is it treating someone like the guy in this article.
No, Lisa's article is not hyperbole. It's the sad truth.
Posted at: March 20, 2008 10:41 PM