Pru could lose 200 managers in shuffle

A reorganization at Prudential Insurance Co. of America could convince about a third of the company’s managers, who oversee about 7,500 agents, to look for greener pastures.

Pru’s major competitors – among them Metropolitan Life Insurance Co. and John Hancock Financial Services Inc. – are using the move to engage in a recruiting frenzy that could pluck up to 200 managers, according to sources.

The managers are weighing their options in the face of plans to reduce their ranks by 400 positions over the next four to six weeks.

Some 180 managers will be offered hybrid management-agent roles as field supervisors. The other 220 will be offered jobs as agents working on commission and will no longer receive overrides on staff sales.

For its part, Pru seems unconcerned about an exodus.

The group of 220 or so that is being “asked to return to personal production,” as the company puts it, is where the most fallout is expected. A Prudential spokeswoman, Lorrita Warner, says it is too early to know how many managers will leave.

“As we speak, people are reviewing their options,” she says.

changing status a factor

Representatives of the Newark, N.J.-based financial services conglomerate say Prudential has spent the past few months “streamlining” its field-sales structure, “and the latest piece is the sales manager.”

Industry analysts say Prudential’s move to thin the ranks of midlevel management is in sync with its preparing for the demutualization of the company late next year.

Kevin Frawley, Prudential’s chief administrative officer for retail distribution, says the new sales structure will ultimately look more like the broker-dealer side of Pru’s business, where there is no midlevel management and where managers don’t earn a commission from sales generated by its agents or brokers.

The current stage of Prudential’s sales reorganization can be traced to 1998, when the company announced plans to make a transition from a mutual insurance company to a publicly held company.

Two years ago, Prudential employed 900 sales managers working out of 270 “parent offices” around the country. The number of sales managers was cut to 650 last year, and the company reduced the number of parent offices to 80.

Patrick Finnegan, an analyst with Moody’s Investors Service in New York, thinks the changes are just what the doctor ordered.

“They are improving productivity by weeding out the layers of management that add costs, and they are raising the productivity standards,” he says. “Prudential agents are just now coming up to the industry average in productivity.”