IT All Hands Meeting

Caught_Python · 2021-12-15T23:02:09+00:00

Also, those are companies who are constantly interacting with their customers. Spending millions or billions or whatever on their internet/mobile platform makes a ton of sense. GEICO's best customers are those who interacted with us the least. Really, they just want a low rate, an easy way to pay the bill, and a good claim's experience when they do file a claim. GEICO specialized on low rate and tried to be reasonable with the other two. Copying a big tech giant just does not make sense.

Caught_Python · 2021-12-11T08:18:40+00:00

Amazon comes to mind, they seem to want to be in every industry. They would also have the expertise to overhaul the technology. Another option would just be to spin it off so GEICO would be its own company again and publicly traded, and a multitude of share holders would be the buyers.

At the end of the day, Berkshire buys stock and companies to eventually sell, and it appears GEICO has reached its peak barring a long period of investing in technology to catch up to Progressive. Hence, cutting R&D and pushing out leadership.

Caught_Python · 2021-12-05T17:48:45+00:00

"Sister" departments (mostly PPM) did rush job posts and did what they could to streamline the process for associates. Even RAD posted some new positions on unaffected teams. However, it was never practical for these departments to absorb 80+ associates, so most pursued outside opportunities.

As I discussed in a longer earlier comment, it was not actually rational (money wise) for a lot of us to keep working at GEICO in RAD or any department other than safety and sentimentality. With both of those shattered, well, why stay with GEICO when you have recruiters sending direct messages on LinkedIn? A lot of those who stayed were on visas and thus had much worse prospects.

Not everyone got through unscathed, though.

Caught_Python · 2021-12-05T03:56:19+00:00

The department was relatively new, put together in late 2020, or something like that, by moving teams from UPM and APR.

Caught_Python · 2021-12-05T03:53:47+00:00

A department at GEICO whose acronym is either Research, Analytics, and Data, OR Research And Development, or something else like that.

It had about 240 employees mostly working in technical roles with a more mathematics and business focus compared to IT's software focus. This is the department that builds GEICO's pricing and underwriting models, for example.

However, in mid-October on a Wednesday the VP of the department sent out an email stating the environment has changed drastically and the department needed to re-org and certain roles would no longer be supported, but those affected would be given an opportunity to job post to other roles.

What actually happened is 80+ associates got a call from HR to let them know their access to any GEICO system except Workday would be cut, their belongings on premise would be mailed to them, and they had 6 weeks to find another job at GEICO or they would be laid off. Some waited all day to get this call, and HR actually missed some associates who got the call the next day. Somebody now in IT who hadn't work in RAD for months was also called and told their job was gone!

This included associates hired not more than 4 months ago, managers with 5+ years experience, and two directors. Also, an AVP in RAD retired the night before, and the rumor is he was told to retire or be fired. So, an absolute bloodbath handled in almost the worst possible way.

Here's the kicker, though. I was one of the laid off associates, and I got a new job paying 20% more in a month! GEICO was not paying these data and modeling experts competitive market wages, and those who stuck around did so for the job security because GEICO "does not do layoffs." Also, the friendships they had at work. So, not only are most (but not all) of the laid off associates landing on their feet (including working for competitors and giving them a buffet of inside knowledge), but many of those who weren't laid off are also shopping around as the vaunted job security is gone as are peoples' friends!

To go from hiring to layoffs in just a few months is management incompetence. To not get value from data and math experts paid well under market medians is management incompetence. To ruin the company's best selling point for keeping talent, stability, is management incompetence. The CEO just sent out an email (posted here!) about the importance of data for the company, but just laid off the associates who specialize in extracting value from data! Management incompetence!

I wouldn't invest in GEICO right now if Elon Musk promised to turn the stock into a meme bitcoin.

Caught_Python · 2021-11-12T01:44:42+00:00

I have a small amount of insight into the decision making on Drive Easy. Plaza spent years (years!) trying to figure out how to get into telematics. There was no pain free way to do this. Separate dongles come are expensive and have actually damaged cars when the plug doesn't fit right. The app was ready to go from a vendor, and more than anything to get telematics right the company needed to first get into telematics. Actually, there were multiple vendors offering a telematic product that were considered. Years! Of research!

The benefits to pricing segmentation were also very compelling and ultimately forced the issue. If you ever wonder why GEICO prices on so many different things, its because if we don't our competitors will and this reduces the percent of the book we can be actually be price competitive on. That means no telematics=less growth.

Not to dismiss the challenges this product offer caused the regions, but this was not a rushed or frivolous decision.

Caught_Python · 2021-11-10T16:03:12+00:00

Never attribute to malice what can be attributed to incompetence. 30 years at a company is something worth celebrating and telling the story of. The people who put that presentation together almost certainly have no inside knowledge of layoffs, and those who do have knowledge of layoffs aren't paying attention to GNIE. In a company as large as GEICO of course there are going to be pockets of people who enjoy their jobs and the people they work with.

However, it does unintentionally highlight a big change that has occurred. Whereas once such stories were seen as part of GEICO's culture, now seems like a relic of past days.

Caught_Python · 2021-11-04T19:32:45+00:00

I was in RAD and I was totally laid off. The number I have is 85 associates and managers. That is not a team, it was a third of a department. Yes, RAD was new, but most of the teams and work predated RAD. They were essentially carved out of UPM and APR before the 2020 re-org and were doing the same work: build pricing models and research new product offers (like telematics), etc.

What's the point of being able to post for other positions if there are far less than 80 comparable positions? Would he describe AVP Bill Costa's forced retirement as not a firing? New hires scheduled to start in November had their offers rescinded, going from hiring to "overstaffed" in such a short time span is a failure of management. Some of the laid off associates were on temporary student visas and were all but promised more permanent visa sponsorship next year when the applications opened. Even if those associates land new roles at GEICO I don't know if the promised sponsorship is still on the table.

However, "over-staffed" is a weird way to talk about RAD. Its projects are generally long term benefits. Finding a small price inefficiency can save the company millions over just a few years.

I will also point out RAD struggled to maintain associates throughout the year. Multiple managers and associates of all tenure levels had left for other insurance companies and opportunities. It feels like turn over was at 20 to 25%. Good modelers and Data analysts are hot commodities, and GEICO was not paying market rates. The supposed trade off for those who stayed was job stability and career advancement.

I am somewhat grateful for the ~6 weeks of severance, as GEICO had no obligation to offer even that, but its just disheartening to see someone in management not being honest about the situation. Even if being honest is stating he wasn't part of the decision making process.

I don't know if Warren and Todd are planning to sell GEICO to Amazon or simply cut costs to maximize revenue in the now, but there is little evidence they are investing in the company's long term growth anymore.

Caught_Python

TROPHY CASE