Employee Innovator: USAA

Happy employees mean happy customers–a lesson learned from USAA’s generous perks and receptive atmosphere.

USAA’s 13,000 customer-service agents give new meaning to the phrase “frontline employees.” As the direct link between the financial-services firm and its customers–all of whom are members of the military and their families–USAA’s reps are on the financial firing lines of families challenged by war or overseas deployment.


To make sure its employees are able to focus on the trials of their members, USAA, which started as the United Services Automobile Association and now offers insurance, mutual funds, and banking services to its 5 million members, serves up an army of employee-friendly perks. Last year, all employees, from execs to reps, saw bonuses nearing 22% of their pay; that’s on top of generous 401(k) matches and a company-funded pension. Employees receive full tuition reimbursement, free financial advice, and extras such as on-site child care and massages.

But what may be the biggest perk of all is something David Travers, a senior vice president in USAA’s property and casualty insurance business, calls “psychic income.” Part of that comes from being treated as professionals in a job commonly known as corporate America’s lowest rung. Divided into tight-knit subject-expert teams of 10 to 20 people, USAA’s service reps, who make up an incredible 60% of the company’s employees, are encouraged to suggest changes that will benefit customers–such as one service rep’s proposal to offer insurance premium billing timed to the military’s biweekly paychecks–and are given the freedom to make decisions that are truly in the customers’ best interest. “[We have] a dedication to keeping the decision making at the lowest level of the company,” says Travers of USAA’s approach to answering customer calls. Employees aren’t scripted, and the calls aren’t timed. “There’s a very real recognition at USAA that the company is the relationship that our frontline employees have with our members,” he says.

If that sounds like so many empty promises, it’s not. In a recent study by Forrester Research, USAA received the top rating from customers, a full 81% of whom said they believed the company does what’s best for them rather than for the bottom line. (Giants like JP Morgan Chase and Citibank fared worst, with just over 20% of customers believing their needs were met first.) Forrester’s research says that for financial-services firms, at least, future purchasing intent–and therefore, higher revenue–is most closely tied to this sense of customer advocacy. That seems to be the case at USAA: 2004 annual revenues rose 6% to $11.3 billion. (As a member-owned company, USAA distributes excess profits back to its members. In 2004, total distributions were nearly $525 million.)

“At the end of the day, we’re all kind of wired the same way,” says USAA’s David Travers. “We like to go home knowing that we did something worthy.”

And what of the rest of that psychic-income perk? That comes from the pride of serving USAA’s military members. The company takes every opportunity to remind employees what USAA’s customers’ lives are like–from movies produced for all-hands meetings to execs who are military veterans retelling their experiences during training. “At the end of the day, we’re all kind of wired the same way,” says Travers, who started as a USAA service rep 25 years ago. “We like to go home knowing that we did something worthy, that we contributed in some way that was measurable and meaningful. It’s just a little more visible when you work at USAA.”

See the full 2005 Customers First Awards.