ANALYZING MANAGERIAL DECISIONS: Global Insurance Global Insurance is a disability insurance company. Traditionally, it has organized its corporate headquarters around functional specialties. After an application for an insurance policy arrives at headquarters from a field agent, it is processed through a series of functional departments. One department checks to see if the application is filled out correctly, another department checks the medical history of the applicant, and so on. Among the final steps is the underwriting decision, where the company agrees to accept the policy. This task is handled by trained underwriters. One of the more important departments at Global is human resources. The human resources department administers the personnel system (for instance, screening job applicants, reviewing promotion decisions, having key decision rights on salary levels and job classifications, and providing training throughout the organization). Currently, the system includes nearly 2,000 discrete job titles. The director of human resources is viewed by most employees as a key person in the organization. A major problem at Global is that it takes nearly a month to process an insurance application. Applications can sit for days in in-boxes, as they move from department to department. Global’s CEO has decided that the company must reorganize to remain competitive. He has a vision to do away with most of the functional departments. Insurance applications would be handled by caseworkers responsible for all the steps from initial inspection of the application through underwriting. These caseworkers would be supported by a computer system that would allow access to medical record databases and other information necessary for processing an application. The management information system manager would be charged with developing the information system. Caseworkers would receive training in underwriting from the existing underwriters in the firm. Entry-level caseworkers would be required to have at least a 2-year degree from a community college. The number of job titles would be reduced significantly. Most of the people would have titles like associate or partner. Training, promotion, and hiring rights, currently held by human resources, would be decentralized to senior case managers (partners). The human resources department would play an important role in transitioning to the new system (dismantling existing training programs and turning them over to case managers, reducing the size of its staff, and so on). Through similar programs, other insurance companies have been able to reduce their application processing times dramatically. They also have reduced their workforces significantly.
1. Which employees in the organization do you think will oppose the new proposal? Who will support it?
2. What problems can the opponents cause in implementing the plan?
3. What actions should the CEO take to increase the likelihood that his plan will be implemented successfully?