We consider the work done by Human Resources to be a key factor in successful implementation of our strategy, and the investment we make in our employees reflects this. Our talent management, performance management and individual agreements on targets as well as variable salary components are all geared towards promoting a culture of leadership and performance in the Allianz Group, and are closely linked to our strategic requirements.
To a greater extent than in the past we support an international outlook, together with closer networking of local units with headquarters. Our legal transformation into a European company underlines this approach. We actively promote multicultural teams of experts to engage in cross-border team efforts or in virtual collaboration, such as projects involving product development or sales. Our strategic initiatives – Customer Focus, Operating Efficiency, Innovation and the realization of our new operating model – are projects that have major significance for our business. They represent the transformation of the Allianz Group into a financial services provider operating across the globe. A company that understands how to satisfy customer needs and achieve optimum cooperation across borders and sectors, and which is able to deal with the changes in each market rapidly and innovatively.
The aim is for our entire organization to reach a common understanding on attitudes that are important for realizing our strategic objectives. Human Resources has initiated numerous supportive measures and processes to enable our committed employees to play a key role in promoting change at the Allianz Group and to derive maximum benefit for themselves and their career from this transformation. This essentially involves developing a new culture of leadership and performance, as well as investing in opportunities for staff development.
Performance management (leadership and performance culture)
The most important aspect here is for our managers to act as role models for this performance culture; they must promote it and be the driving force behind change. Our leadership values provide the framework, and are mandatory worldwide. Our managers, more than 5,000 of them, are surveyed each year about the extent to which these values have been implemented and how effective they are in the work of the local managers. The fact that the response rate was 84% in the 2006 survey, on a par with the high level of previous years, is considered by us as confirmation that these leadership values are important to our management and that discussion of this topic remains lively.
To support our management in implementing our leadership values we have drawn up mandatory communication guidelines intended to give momentum to this process of transformation. These underline the high degree of importance accorded to communication in change-related projects and set out the role played by the management in applying them. The guidelines also state that in change management, all significant interest groups (“stakeholders”) and risk aspects must be taken into account.
The culture of dialogue embodied by these communication standards is one actively pursued by members of the Allianz SE Board of Management. Regular employee forums in the Group companies and “+One Forums”, at which the heads of the subsidiary in a region discuss strategic issues with the Allianz Chairman and other Board members, assist in making more visible the changes that have already been made, and highlight areas where change is still needed.
In order to establish whether our employees receive adequate support from the organization when implementing strategic initiatives, we regularly conduct employee surveys in the subsidiaries. The responses indicate to what extent our workforce is motivated when putting our strategy into action and what the general mood is; they also provide management with indicators of what areas have deficiencies that still need to be addressed in order to improve the way this strategy is implemented.
The success of our strategy and successful change management depend crucially on the actual, verifiable satisfaction of our customers. The standard by which we measure this throughout the Group is the willingness of customers to recommend us. Bottom-up Net Promoter Score is the standardized method by which we regularly and systematically measure how satisfied a customer has been with our service after some significant interaction (such as complaint, policy management or loss adjustment). Customers are contacted by phone and asked to report on their experience with Allianz and its staff in that specific situation. The replies convey to the employee in question and, as a summary of the responses, to Allianz overall, what remains to be done to promote customer satisfaction and loyalty even more and to increase their willingness to recommend us to others.
The results of our surveys as well as other important HR parameters are included in a “Human Resource Scorecard”, which we have developed in 2006 as a standard to be applied worldwide. It is a work tool for local management teams and provides support in realizing our strategy, since it reveals the extent to which the change process in a given company has progressed, while highlighting any remaining need for action. The Human Resource Scorecard will be introduced into the local units in 2007.
In 2006, we launched our Operational Excellence (OPEX) Black Belt Program with the aim of providing even better support for our change processes. This program trains managers and experts as certified change managers (Change Agents) using the OPEX method. They are deployed on-site at their own units, where they manage major projects aimed particularly at improving customer orientation and process efficiency. Our longer-term objective is for 1% of the workforce to pass through this program. In 2006, OPEX was used to initiate 32 projects in 11 Group companies. OPEX is based on the Six Sigma method, well-known from quality management in the manufacturing sector. We have adapted it to the requirements of an international financial services provider.
Talent management
Another tool for promoting a performance culture is the program offered by the Allianz Group Management Institute (AMI Group). The task of AMI is to communicate the Allianz Group’s strategy to our management worldwide. AMI also has the task of developing our top managers and candidates for senior positions. This group of individuals is familiarized with the latest developments, prepared for more advanced management responsibilities, and maintains a management dialog with the top level of management in the Holding company or in Allianz Group subsidiaries. Allianz SE Board members are closely integrated into the AMI program – as project patrons, as speakers and as sponsors involved in the details of program design. In the year under review, AMI organized programs in which 615 managers and executives participated.
AMI sessions often produce important imput to solving the challenges currently being faced by the Allianz Group. Our executive high-potentials participating in the Allianz Excellence Program deal with strategic projects for resolving business policy issues within international teams, and then present their results and proposals to the Board of Management. The strategic initiatives Sustainability, Customer Focus and Innovation are examples of their output.
Promotion of talent along specific business lines and optimum deployment of human resources are essential elements of our new operating model and for the cross-border and cross-sector cooperation of our staff, and the fact that the demographic age-shift taking place in society will in future place limits on HR resources. To achieve even better results in this area we have introduced a new talent assessment and development concept. This will be standardized across the Group, and lays down the skills that a candidate for one of our key positions must possess. The system stores information about the knowledge, experience and development potential held by our junior managers and provides the internal and external benchmarks required for this purpose. This platform enables us to identify systematically who can be considered as a candidate for a senior position, and in particular indicates the specific skills a candidate possesses that will further strengthen our strategic initiatives and allow him or her to prove themselves in different areas of business and markets. The concept is already being used in succession planning conducted at Holding Board level. In 2007, it will be gradually introduced to the local units and its application broadened.
With a view to positioning ourselves even better in the external labor markets, we have launched a standard worldwide eRecruiting solution: a particularly userfriendly internet portal for applicants. This makes faster decision-making possible and intensifies communication with the candidates, which in turn promotes the success and efficiency of HR work. eRecruiting can also be used to earmark applicants for positions that have not yet been announced. A precursor tool is currently used by 13 Group companies and has already resulted in about 2,000 appointments in 2006 alone; in addition, about 45,000 interested candidates have newly registered in the talent pool. A further 23 Allianz Group companies will work with this eRecruiting solution over the next few years.
We promote cooperation between employees of different cultural origins and those of different ages, levels of experience and abilities. We believe diversity is the ideal way to boost our capacity for innovation and find viable solutions to varied and constantly changing markets. Our Diversity Guidelines define the specific framework for successful, non-discriminatory cooperation, both internally and with persons outside the company. The international character of the Holding company is increasing with the conversion of Allianz AG into a European company, and this favors its involvement in cross-border projects and initiatives. We are using this development to promote talent. At the start of 2007 employees from 40 countries were working at the SE Holding, and more than 20% of the Holding workforce are not German by origin.
We support the international mobility of our staff and managers. Cross-border placements play a major role, especially in our strategic initiatives. A recently launched staff exchange program enables managers and experts from all over the world to work together on teams involving these strategic projects for between six months and two years. As a result, international expertise flows directly into these projects. When their employees return to the parent companies that placed them, these companies benefit from their new knowledge and additional experience.
Our Group companies also maintain relations with a large number of educational establishments around the globe in order to interest talented individuals from a wide range of origins in working for our company. Our continuing education and trainee programs are open to anyone who has the ability and skills to be successful in our firm.
Investment in staff
We have a substantial need for well-trained staff and this need will continue to increase. On the one hand this is a result of the fundamental process of change taking place within the Allianz Group, which will continue for some years. All the projects and strategic initiatives connected with this process require a considerable deployment of highly qualified and motivated staff. On the other hand there is increasingly intense competition to acquire qualified employees due to low and constantly declining birth rates in our key markets. We are meeting this competition head-on and are investing substantial resources on recruitment and on continuing to educate and equip our employees. We make a great effort to support our staff with processes, work tools and IT for HR work so they can meet the increasing expectations of customers and shareholders.
Our remuneration systems are geared towards offering both managers and staff incentives for implementing the Allianz Group’s business strategy in a targeted and efficient manner, and to contribute to our performance culture. We determine the variable components of salary by agreeing individual targets and then monitoring whether these have been met. In recent years we have steadily expanded the proportion of variable salary components on all levels and, within the scope of the options available under local legislation, have also adjusted these components to reflect conditions in individual business areas and at specific levels of responsibility. We believe that by doing so we will achieve significantly better focus of all business units on joint objectives and on the objectives of the individual employee. Where the opportunity arises and it is considered good economic sense, the variable component of remuneration will be further extended.
As an additional incentive to contribute to the Allianz Group’s performance, an employee stock purchase offer was again launched in 2006. This gave 124,000 employees in 22 countries the opportunity to acquire Allianz SE shares on preferential terms. The average investment volume per participating employee rose by 11% to € 3,053 (2005: € 2,753).
Senior management again participated in the Group Equity Incentive Program, made up of virtual shares and options. The potential yield depends on the development of the Allianz SE share price. The calculation takes into account the Economic Value Added (or “EVA®”) of the Allianz Group and the EVA® of the Group company in question, as well as fulfillment of objectives in relation to the risk capital applied. The Group Equity Incentive Program meets all requirements and recommendations of the German Corporate Governance Code. More detailed information on stock-based remuneration and on the Board of Management’s remuneration is provided in chapter Corporate Governance and Remuneration Report.
Total payments made by the Group to its employees worldwide amounted to € 10.2 billion (2005: 9.6 billion) in 2006. Of this amount, € 3.0 billion alone or 29% was performance-related. Social security contributions, pensions and other additional employee benefits mounted to € 2.7 billion (2005: 2.5 billion).
Employees by country
Country
2006
2005
Germany
76,154
72,195
France
17,096
17,246
United States
10,691
10,840
United Kingdom
9,945
27,661
Italy
7,661
7,706
Australia
3,474
3,673
Hungary
3,159
2,839
Spain
3,139
2,762
Austria
3,106
3,024
Switzerland
2,874
2,823
Slovakia
2,564
2,645
Brazil
2,334
2,345
Romania
2,061
1,749
Netherlands
1,988
1,851
South Korea
1,749
1,711
Belgium
1,633
1,563
Other
16,877
14,992
Total
166,505
177,625
Employee representation in a Societas Europaea (SE)
We have been an SE (see page Legal Structure: Conversion into Allianz SE Completed) since 13 October 2006. At the same time the companies involved, RAS and Allianz AG, reached an agreement with employees on how they will participate under the new circumstances. This agreement basically regulates corporate codetermination in the Supervisory Board of Allianz SE as well as the composition and area of responsibility of the future European Staff Council. The Supervisory Board of Allianz SE consists of twelve members, giving equal representation to the shareholders and to employees. For the first time the employee representatives come from different European countries: four from Germany and one each from France and the UK. In the first pan-European SE Staff Council, 37 members from 24 countries represent the interests of employees.
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