The Global Change Program

Published Date: 02 Nov 2017

Allianz Global Corporate Specialty is a subsidiary of Allianz SE; a globally operating company registered in Munich, Germany. AGCS is embedded in a network of various legal entities in Europe, North and Latin America, Asia, Japan and Africa reflecting the global needs of corporate and specialty insurance clients. AGCS operates through a network of branch offices, virtual desks and local partners, internal and external to Allianz Group [1] .

As of 2013, AGCS employs 3400 staff from 60 nationalities, located in 27 countries (see Appendix 2.0 and 3.0). The complex matrix structure and international presence create a number of challenges to the business including legal issues, communication, confusion regarding reporting lines as well as obstacles in implementation of programs and projects on an international scale. The cultural aspect, especially the Germany- based headquarters play an important role in decision making process and in driving change at AGCS globally.

"AGCS is an ongoing journey" says the CEO, Axel Theis. The Allianz Global Corporate Specialty brand was established in 2006 by a merger of different Group Allianz companies, which previously under Allianz Global Risks and Allianz Marine and Aviation brands (see Appendix 3.0). The new global entity focuses on large corporate and industrial clients, in addition to specialty business lines such as Marine, Aviation and Energy.

The company has achieved significant growth since its formation, mainly by carve-outs of local entities across many countries (see Appendix 3.0). This process has not yet been finalised and many areas of conflict still exist. The newly implemented organisational matrix is also a source for many issues. In AGCS, the matrix structure team members have double reporting lines: one to the functional head (e.g. Head of Underwriting) and one to regional head (CEO of local market e.g. Italy). This complex set up creates tension, depending on the centre of pressure for performance coming either from local area or function. In order to lead consistent change initiatives, both sides locally and functionally have to be aligned and support the transformation effort. They also have to free up time of employees as required by aligned program work. This situation often results in back-logs as the day-to-day responsibilities suffer while resources are being occupied with change project tasks. In addition, the pressure for change is felt mainly at the Board level, hence employees are often apprehensive to leave their daily tasks and engage in as they feel "on top" work in supporting transformation projects.

Further, the uncertainty regarding reporting lines, has impact on team performance, creates reputational risk and not only does it not support already achieved changes but often leads to reversal whilst regional and functional heads have conflicting agendas. Working and thinking in "silos" is a phenomenon that AGCS is currently trying to combat.

Additionally, the company is expanding into new emerging markets, which stretches out the resources even further and is source for new tensions.

Those few selected examples from the research company show that many simultaneous change initiatives, occurring in different international scenarios, designed for short period and quick wins, can create resistance and that is often counter productive. At the moment, AGCS does not have a dedicated change department and Global Change Program is seen by many as pure system and IT-driven transformation. The responsibility for implementation of Global Change Program lies momentarily within the Program Management Organisation (see Appendix 6.0), however there is no wide-ranging change model beyond existing project management cycle (PMLC) and its governance. As the GCP progress gained Board attention and the stabilisation of the program has been set as a company’s strategic target for 2013, the tactical importance for dedicated Change Implementation Department has been recognised. This division will take the over-arching responsibility to lead change within OBT, but also having a mandate to "translate" and communicate ongoing and planned changes to the entire organisation.

3.1 Global Change Program

"The Global Change Program affects us all – everyone at Allianz Global Corporate and Specialty. In fact, it goes beyond that: it changes the way we do our business, so it affects clients and brokers as well. But despite this, I am not convinced that we all understand what it is, why we are doing it or how it will help us". – said previous Chief Operating Officer of AGCS, Robert Tartaglia, in one of the interviews for the internal company briefing pack in March 2012 [2] . At this point the Global Change Program was in the 6th year running. This statement shows that wide-ranging communication plan shall be an integral part of each change initiative in order not only to keep the momentum, achieve common understanding but also address concerns that employees might have throughout the process. Change should be treated as an ongoing learning and emotional process along the mood curve. The customized change model will reflect the magnitude of correct and targeted communication.

"What we are creating with this Program is the equivalent of a new central nervous system for AGCS (…). Once in place, the Program will create consistent processes and systems which will link from client-side input to shareholder-side output, giving us a joined up global approach to all our core activities" – Robert Tartaglia continued.

When AGCS was established in 2006, each local branch used different systems and processes – some had multiple systems within the same office – which made it impossible to manage the business effectively on a global basis. It became more apparent when the company entered new international markets. Having different legacy systems in diverse countries created numerous reconciliation problems for Profit and Loss statements, regulatory and financial reporting. Reconciliation of financial results from different international entities exposed AGCS to potential legal and reputational risks. The fast international expansion of AGCS and increasing IT-Landscape complexity created a need for a GCP to steer, manage and accompany the rapid changes within and outside the company.

The GCP describes a group of interrelated programs and projects which when combined will improve client service, product quality, reduce inefficiencies and most importantly increase transparency on a global scale. One of the program’s main deliverables is the creation of standardised process map to mitigate difficulties of managing multiple systems and processes between regional offices and the Headquarters.

AGCS´ business model is based on adopting a consistent set of processes and operations across all of AGCS’ business functions – which means the requirement of consistent systems linked up in a shared business infrastructure. By doing so, AGCS will be able to produce management and financial information far more accurately and faster on a globally consistent basis. Further goal is to reduce wastage, duplication and costs and, essentially deliver more responsive global service to clients and brokers [3] .

To create this new stable environment, the first phase of the Global Change Program has been to initiate five foundation projects constituting front-, middle- and back office applications (see Appendix 7.0). These form the platform for the next phase of further projects that support key business functions. The management of all these projects is coordinated by OBT and led by the board-level Global Program Steering Group (GPSG).

During the lifecycle of the GCP, the initial scope has been changed several times, some projects have been put on hold and some new have been added to the portfolio while the unexpected findings kept unfolding. Needless to say that the initially for three to five years planned program has now extended its scope and budget creating frustration within the business and attracting Board’s attention. Despite problems, the GCP has delivered and contributed to implementation of standardised processes and system globally. The consistent support of a dedicated Change Implementation Department and adherence to built-for-purpose change model will play a crucial role in stabilisation and finalisation of the program.