There have been some major changes at Allstate Corporation over the past 18 months. When Edward Liddy took over as chief executive in 1999, the company was so out of touch with the times that, as Business Week recently observed, “it didn’t even have customer toll-free numbers.” Needless to say, the insurance giant was light years away from using the Internet at a marketing tool. Liddy, who as CFO had led the turnaround of the financial services subsidiaries of Sears Roebuck & Company, set about making some dramatic changes.

“In November 1999 we announced a new business model,” says Peter Debreceny, the company’s vice president of corporate relations. “We announced that we would make products available not only through agents but also via an 800 number call center and the Internet. And we announced that we would go live with this new approach by May 1, 2001.”

To make good on that pledge, the company needed to take dramatic action. Last year, Liddy fired 6,2000 employee agents—who had been under-performing their commission-driven counterparts—and offered them contracts to work as independents. About 3,800 accepted. He cut an additional 4,000 jobs, or about 10 percent of the workforce, and channeled the savings into technology. The company introduced new products and new sales channels.

The transformation has not gone entirely smoothly. Several employee lawsuits were filed as a result of the layoffs and the Equal Employment Opportunity Commission ruled in September that Allstate had violated federal laws when it asked former employees to accept positions as outside contractors. But Debreceny says “all of these changes could not have happened without the help of our employees,” and so the company wanted a 2001 annual report that would focus not on the role of Liddy and his management team but on the contributions of workers at all levels.

“We wanted to do two things when we created the annual report,” says Debreceny. “We wanted to show investors that Allstate has the people to do all the things we were talking about doing, that it has the ability to become more agile, which is not the way most people perceive insurance companies. We felt we could do that by focusing on the people who were involved in the execution of the company’s change plan, and by letting them tell the story in their own words. We wanted to make them the heroes.

“We also wanted to demonstrate that we understood the Internet, and so we created a web version of the annual report that was not just a duplicate of the print version.”

Working with design firm Meta-4, Allstate came up with an annual report that was eye-catching even in its print form. Slightly smaller than the average annual report, Allstate’s featured employees such as customer care manager Jeri Smith age4nt Kevin McDonald, and advertising and communications manager Katie Geraty discussing the company’s vision and its future. Says Geraty, “What’s interesting to me is taking an established brand and extending it into new territory.”

In a move designed to drive investors to Allstate’s website, the report also contains a poster that features the company’s employees on one side, and a “road map” to its website on the other.

The online version of the annual report is available as a series of PDF downloads, but also in a Flash version that provides audio clips featuring the same employees featured in the annual report. It’s an unusually sophisticated use of the Internet that is likely to excite as much comment among employees as it does among shareholders, which is okay by Debreceny.

“Our employees are a very important audience,” he says. “Almost all of them are shareholders in some form or another, either directly or through the profit sharing plan, and they are the people who have helped make change happen. It’s important they know we appreciate their efforts and its important they understand where we are headed.”