State Farm IT Changes Will Include Employee Buyouts | WGLT

State Farm IT Changes Will Include Employee Buyouts

Oct 3, 2017

State Farm’s plans to realign its IT operations include a voluntary buyout for some employees.

New details were released Tuesday on the Bloomington-based insurer’s plan to realign its IT functions. Most operations will be located in Bloomington, with additional employees continuing in State Farm’s hub cities of Atlanta, Dallas, and Phoenix, a State Farm spokesperson said in a statement.

“Job reductions will begin by offering a severance payment to certain employees who voluntarily elect to leave the company. We are uncertain how many employees will take this offer,” State Farm said.

GLT first reported on the IT alignment last month. State Farm reiterated its statement that the overall Bloomington-Normal workforce would continue to fluctuate around 15,000 employees. The company has 70,000 employees across the U.S.

Through a spokesperson, State Farm says it’s making the IT changes to “enable us to provide more sophisticated online and mobile solutions to customers in our fast-paced, hyper-connected world.”

“You are likely hearing many numbers or percentages, but it’s important to understand these numbers include employees located in various locations across the country and/or percentages based on areas within our IT function,” State Farm said in a statement called a “fact sheet” released to the media.

After the voluntary buyouts, are involuntary separations possible?

"(We) are uncertain how many will accept that offer so we can’t speculate on future decisions," said State Farm spokesperson Missy Dundov.

In May, State Farm announced plans to close 11 facilities across the U.S. over the next four years, displacing 4,200 employees. The insurer planned to move that work to the Bloomington headquarters and the hubs in Atlanta, Dallas, and Phoenix.

During remarks last October in Bloomington-Normal, State Farm CEO Michael Tipsord unpacked the philosophy of the company's new hub system. It attempts to address skilled labor shortages in smaller cities that had served as regional headquarters by concentrating jobs in large metro areas (Dallas, Atlanta, and Phoenix) where State Farm already had a sizable presence. Roughly speaking, Tipsord said State Farm has and will have 15,000 workers in Bloomington-Normal, and about 10,000 a piece in Phoenix, Dallas, and Atlanta.

"The corporate headquarters of State Farm Mutual Automobile Insurance Company will remain in Bloomington-Normal," Tipsord said at the time.

State Farm’s net income dropped to just $400 million in 2016 from $6.2 billion the year before, according to its annual financial report. Its underwriting loss from auto insurance alone jumped to $7 billion, up from $4.4 billion in 2015. Buoyed by its investments, State Farm’s net worth still rose to $87.6 billion in 2016.

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