Scientology Lies

Veteran agents are trying to unionize. They claim the insurance company's business strategy reflects certain teachings of Church of Scientology founder L. Ron Hubbard that stress higher sales at any cost. The company says some agents are simply unhappy with Allstate's new-found emphasis on competition and service.

by Rene Stutzman

Mike Harrell of Kissimmee, an agent for Allstate Insurance Co. and a union organizer, holds up a red, three-ring binder.

Inside, illustrated with crude, child-like cartoons, are some of the teachings of L. Ron Hubbard, author of the best seller Dianetics and founder of the Church of Scientology, considered by some critics to be a cult.

The business philosophies collected in that binder - some preaching success at any cost - were the foundation of management-training seminars used by Allstate for four years, company officials have acknowledged.

Using those materials was a mistake, company spokesman Al Orendorff said, and Allstate banned them three years ago.

"There is absolutely no link between Allstate and the Church of Scientology," he said.

But the materials have become the center of a national dispute.

And nowhere has there been more controversy than in Central Florida, where veteran agents have filed discrimination complaints and begun to organize a union.

Allstate, the nation's No. 2 property and casualty insurance carrier with 46,255 employees, currently is union-free.

The company characterizes the Hubbard teachings as a "nonissue" that union supporters are using to turn agents against the company.

The real story, they say, is that the company is undergoing basic changes, becoming more competitive and service-oriented, trends that require agents to work harder and do new tasks.

Some agents, they say, are fighting the changes.

Since Jan. 17, Harrell, an 18-year company veteran, and others have crisscrossed the state, trying to convince agents they need to be represented by the United Food and Commercial Workers International Union.

At each rally, Harrell pulls out that red notebook, with Hubbard's teachings, and reads the most inflammatory passages.

They are in a section that instructs managers to reward employees whose sales, or "statistics," are on the rise and to hound and fire those with declining ones.

"Don't get reasonable about down statistics," the manual says.

"Reasonableness is the great enemy of running an organization." If an employee's sales are down, "Look for an early replacement," the manual advises.

What if an employee ringing up higher sales is using unethical sales tactics? Ignore it, the manual says. "Never even discipline someone with an up statistic. Never accept an ethics report on one - just stamp it, 'Sorry, Up Statistic' and send it back."

Orendorff, the company spokesman, said it was that section that prompted the company to ban the materials.

"That's not how we manage. That's not how we do business," he said.

Pressure for more sales

Originally, Allstate agents worked in Sears, Roebuck and Co. stores or offices paid for by the company, and they sold predominantly property and auto policies. Back then, agents with more than three years on the job faced little sales pressure from managers.

Then in 1984, the company began moving its agents into neighborhoods. It also began shifting office expenses, such as clerical salaries, rent and office equipment, onto agents. Those items now range from as low as $25,000 per year for a one-agent office to more than $100,000, Harrell said.

At both State Farm Mutual Automobile Insurance Co. and Nationwide Mutual Insurance Co., two similarly structured companies, agents pay all of their office expenses.

Allstate's managers have begun to press agents to make more sales.

Gerard McDermott, Allstate's vice president for the Florida Atlantic region, which includes Orlando, said agents are under more pressure than ever before to sell policies.

Much of that pressure is the result of a new, high-priority initiative to sell life insurance, the company's most profitable line. It has caused a deep rift between managers and some veteran agents.

Some agents who have built their careers on property and casualty business say their contracts do not require them to write life policies.

Managers sharply disagree. "Our agents are required to sell ... every line, and we expect them to sell," said George Giles, corporate director of human resources.

Allstate is not the only insurance company focusing more attention on the bottom line, said Jeffrey Cohen, an insurance industry analyst with S.G. Warburg & Co., a New York brokerage.

And Allstate has not been the most aggressive in pushing for more sales and tighter cost controls, he said.

Allstate prohibits employees, under the threat of firing, from talking to reporters, but some veteran Central Florida agents say they're frightened by the changes within the company.

After long careers that have produced millions of dollars in sales, they say they fear Allstate will dump them should their sales slip and replace them with younger, cheaper agents. A union, they say, would protect them.

Job security, Harrell said, is the No. 1 issue for agents attending organizing meetings.

Giles said, "We don't believe that a union can do anything for our employees that they can't do for themselves."

About 20 percent of the nation's 125,000 insurance agents are represented by the union, national union spokesman Greg Denier said. Among them are agents with the Prudential Insurance Company of America, John Hancock Mutual Life Insurance Co. and Metropolitan Life Insurance Co.

Agents 'threatened'

The potential for losing their jobs became clear to 16 Orlando-area agents on Oct. 31. One of the 16 goes to each union organizing meeting and tells the tale.

Here, according to more than one participant, is what happened:

Sixteen or 17 veteran agents - the versions vary slightly - were ordered to a special company meeting in Casselberry by Territory Agency Manager Daryl Starke.

The agents involved were mostly in their mid-40s to mid-50s, with tenures ranging from five to 30 years. Cumulatively, they had sold tens of millions of dollars worth of insurance for the company, but those sales were in property and casualty insurance - not in life insurance, a top company priority.

The agents were ushered into a small room. Starke barred them from asking questions. He told them they had done a poor job of selling life insurance and that, if that did not change, they faced disciplinary action and possible termination.

The agents say it was a meeting unlike any other in their memories. Allstate had never before called in and threatened a group of agents, participants said.

"I'd never been so humiliated and degraded ... Basically, I thought I was going to be fired right on the spot," one agent said.

Starke, who had taken the Hubbard-based seminar in South Florida before 1991, also would not be interviewed. Allstate officials, though, did not dispute the agents' version of events.

McDermott, Starke's supervisor, said the agents, along with all other Allstate agents in Central Florida, had known for 10 months that they needed to sell more life insurance. He said the ones called into the meeting had made little to no effort.

The agents were given 90 days to write six life policies or be placed on probation and face possible termination. To meet that deadline, some agents sold policies to family members. One loaned money to relatives and wrote three policies during a family gathering on Christmas Day.

Ultimately, McDermott issued a reprieve. No agents were disciplined, but "a handful" failed to make the goal, McDermott said.

Complaints filed

The incident provoked a strong reaction.

Two of those 16 agents, Hal Knowles and Marcos Sayago, filed religious-discrimination complaints against the company with the Florida Commission on Human Relations, which forwarded them to its federal counterpart, the Equal Employment Opportunity Commission.

The complaints allege that because the agents are Christian - not Scientologists - they were targeted for harsh treatment.

The complaints are pending before both agencies, which keep such complaints confidential until agency employees complete their investigations.

Knowles and Sayago, who also charged Allstate with age and disability discrimination, would not be interviewed, citing the company's ban on talking to reporters.

At least two other agents in that Oct. 31 meeting are pursuing age- and disability-discrimination complaints against the company with the same agencies.

Giles, Allstate's director of human resources, said the company does not believe it discriminated against any of those agents.

Said McDermott, "In absolutely no way does the meeting that Daryl conducted have anything to do with Scientology."

Not all agents are convinced that the company is rid of Hubbard's ideas. A few apparently think the company is in close alliance with the Church of Scientology, said Leslie Chapman-Henderson, Allstate's spokesman in Florida.

Other agents think the company has adopted - perhaps subconsciously - Hubbard's harsh teachings. "It's still there. You just can't see it," said John Softye, an agent in Long Island, N.Y.

Said one veteran agent in Central Florida, "It's so contrary to the company I've worked for for a lot of years ... My company would never do something like this before."

Consultant hired in '80s

How did Hubbard's teachings get inside the company? A small group of Allstate agents in California in 1988 wanted advice on how better to manage their offices, according to Gary Ott, an agent in California and one of the first to take part in the seminars.

One agent suggested a consultant, Don Pearson of International Executive Technology Inc. of Sacramento, Calif. The agents hired him, liked him, and because of referrals, other agency managers hired him too.

The praise reached Allstate's corporate office. Sales managers there listened to Pearson's presentation and hired him to run seminars from headquarters.

The manager who made that decision was then-Assistant Vice President Jeff Kaufman, now regional vice president in Kansas City, Mo.

Kaufman said recently that the offending materials, which contain dozens of references and footnotes citing Hubbard, were in handouts that he did not screen.

"Everything we heard, looked at was good about this consultant. We didn't know about the Scientology connection," he said.

Kaufman said he did not know that International Executive Technology is a licensed agent of the World Institute of Scientology Enterprises International, which sells rights to Hubbard's writings.

Allstate officials say because of incomplete record-keeping, they are not sure how many managers were put through the training.

Pearson is no longer with International Executive Technology.

He could not be reached for comment. President Ron Walker said that the Allstate seminars, which he also taught, had nothing to do with Scientology or religion.

He said Hubbard wrote articles and books on a number of subjects, including business administration, and the seminars stuck to business practices. He characterized the seminars as a success for Allstate. So did Kaufman.

Hubbard, a science-fiction author, founded the church in 1954.

World Book Encyclopedia describes it as a combination of Eastern religion, modern psychoanalysis and philosophy. It teaches that people are immortal, but because of negative experiences in previous lives, they are blocked from achieving their full potential.

To clear those blockages, followers go through auditing sessions with "E-meters," something like lie detectors.

Critics charge the church is a cult, taking advantage of emotionally vulnerable followers and draining them of money by charging hundreds of dollars for auditing sessions and other services.

Seeking safety in union

Some Allstate agents had been discussing the possibility of a union before that Oct. 31 meeting, Harrell said.

Less than three months later, they were circulating signature cards, the first step toward a union vote.

The union hopes to represent all 1,100 Allstate agents in Florida. To do that, it must persuade one-third of them - 370 - to sign cards requesting a union election.

Beth Shulman, vice president of the union's professional division, said in the next two weeks the union expects to receive signature cards from about one-third of the eligible voters in some areas of the state.

That would be enough to call an election just in those areas, something the union might do should its statewide effort fail, Shulman said.

Shulman would not identify the areas where the union is strongest. Supporters indicate Central Florida is one.

Giles described union supporters as a small group of dissident employees.

Joining one is something few local agents thought they would ever do.

"You have to understand: We're all straight commission. If we don't sell anything, we don't make anything. . . . We're salesmen.

We're not union men," said one Central Florida agent who has joined the union campaign.

"Allstate is a good insurance company," Harrell said. "I personally believe it can be made better if it concentrates on partnership with its agents."

The problem, Giles said, is that "many (agents) don't like change."