USAA - Postwar Growth
Postwar Growth
In 1948, USAA opened its first office outside San Antonio, in New York City. This step was taken in order to qualify the company to write insurance policies for people who lived in New York. Even further afield, USAA opened an office in Frankfurt, Germany, to serve members of the American occupation forces in Europe.
During the late 1940s, USAA's business grew rapidly, aided by the Cold War and compulsory ROTC programs on the campuses of land-grant colleges. The company's revenues doubled between 1948 and 1949, and then doubled again by 1952.
The following year, when the company's offices on Grayson Street in San Antonio had become badly overcrowded, USAA's board of directors agreed to spend $6 million to construct a new facility in the city. Containing such amenities as an employee cafeteria, the facility was designed in the hopes of lessening the company's employee turnover rate of more than 100 percent a year. By 1956, the new building on Broadway was complete, and the company's 802 employees, nearly all of whom were female, had been installed.
That year, USAA's bylaws were altered to modernize the company's corporate structure. The company's general manager was named president, and his assistants were named vice-presidents. This change was made to accommodate USAA's ever-expanding operations, since the company's business had doubled again between 1952 and 1955. In 1957, USAA installed an IBM 650 computer, the first move in the drive to automate its cumbersome operations.
Within five years, the company's new facilities were again deemed inadequate. In 1962, USAA added 110,000 more square feet to its San Antonio building and began conversion to a newer, larger computer system, the IBM 7074-1041. Also during this time, the board of directors amended the bylaws to enable the company to offer life insurance, along with property and casualty insurance. With $5 million in seed money, the company began to organize the USAA Life Company.
By 1967, USAA's assets had reached $206 million, and its membership topped 650,000, a rapid rate of growth attributed to the mass mobilization of troops to fight in Vietnam. In 1969, the company's presidency was assumed by Robert F. McDermott, a retired Air Force brigadier general who had previously been Dean of the Faculty at the Air Force Academy. McDermott set out to reform the company, instituting more modern, streamlined procedures to improve employee morale and customer service.
Such reform was necessitated largely by USAA's failure to implement adequate computer systems. For example, in the late 1960s, the company was still keeping separate claims and underwriting files on each of its members. In order for a new insurance policy to be issued, 55 steps had to be performed in 32 different locations spread across four separate floors. Files piled up on employees' desks and were continually misplaced. The company hired dozens of college students to come to its offices every night to search, often in vain, for missing folders.
Moreover, the many separate units of USAA had poor lines of communication, and personnel problems at the company were rampant. Managers were promoted solely on the basis of seniority, which often caused friction, and many jobs were regarded as repetitious and boring, as some people were assigned such tasks as unsealing envelopes and pulling staples. Not surprisingly, the annual turnover rate stood at 43 percent.
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