Alfred Oberlander, manager of the Rockaway district office of the Metropolitan Life Insurance Company, had noticed two things. Outstanding agencies grew faster than average or poor ones. And new agents did better in outstanding agencies, whatever their sales aptitude.
So in 1961 he built an outstanding agency inside his own. His six best agents went to his best assistant manager. An equal number of average producers went to an average assistant manager. The remaining low producers went to the least able. He asked the top unit to produce two-thirds of the premium volume the entire agency had achieved the year before.
The office soon called the top unit the super-staff. “Their production efforts over the first 12 weeks far surpassed our most optimistic expectations,” Oberlander wrote. Overall agency performance, by his account, rose 40%. When he sorted agents the same way again in 1962, it rose about another 25 to 30%.
The bottom unit did what bottom units are expected to do. Its productivity fell, and more agents left. Oberlander insisted he had never signaled low expectations to them. But when one agent resigned and he said he was sorry to see her go, she answered: “No you’re not; you’re glad.” According to J. Sterling Livingston, who wrote the story up for the Harvard Business Review in 1969, the agents in that unit took the assignment itself as a request for their resignation.
The middle unit did not do what it was expected to do. Its assistant manager refused to accept that she was less capable than the super-staff’s manager, or that her agents had less ability than the stars. She told them they had more potential than the super-staff and lacked only years of experience, and she challenged them to outperform it. Each year, by Livingston’s account, her unit increased its productivity by a higher percentage than the super-staff did, though it never matched their dollar volume.
Others tried to copy the scheme. One of the company’s agency managers set up superior, average and low units while telling Oberlander, “All my assistant managers and agents are either average or incompetent.” The experiment failed. Another agency manager copied the structure, and nothing improved. When Oberlander looked into it, the assistant manager of her top unit did not know his boss considered him the best, and his agents doubted she saw any difference between them.
The same three boxes on an organization chart had come with a 40% gain in Rockaway, and with nothing in the offices that copied them.