In 1950, with the enactment of the Insurance Act, Government of India decided to bring all the insurance companies under one umbrella of the Life Insurance Corporation of India (LIC). Despite the monopoly of LIC, the insurance sector was not doing well. Till 1995, only 12% of the country's people had insurance cover. The need for exploring the insurance market was felt and consequently the Government of India set up the Malhotra Committee. On the basis of their recommendation, Insurance Development and Regulatory Authority (IRDA) Act was passed in parliament in 2000. This moved allowed the private insurers in the market with the strong foreign partners with 74:26% stakes. XYZ Moon life was one of the first three private players getting the license to operate in India in the year 2000. XYZ Moon life Insurance was a joint venture between the XYZ Group and Moon Inc. of US. XYZ started off its operations in 1965, providing finance for industrial development and since then it had diversified in to housing finance, consumer finance, mutual funds and now its latest venture was Life Insurance. Its foreign partner Moon Inc. had its presence in Asia since the past 75 years catering to over 1 million customers across 11Asian countries. Within a span of two years, twelve private players obtained the license from IRDA.IRDA had provided certain base policies like, Endowment Policies, Money back Policies, Retirement Policies, Team Policies, Whole Life Policies, and Health Policies. They were free to customize their products by adding on the riders. In the year 2003, the company becomes one of the market leaders amongst the private players. Till 2003, total market share of private insurers was about 4%, but Moon Life was performing well and had the market share of about 30% of the private insurance business. In June 2002, XYZ Moon Life started its operations at Nagpur with one Sales Manager(SM) and ten Development Officers (DO). The role of a DO was to recruit the agents and sell a career to those who have an inclination towards insurance and could work either on part time or full time basis. They were very specific in recruiting the agents, because their contribution directly reflected their performance. All DOs faced three challenges such as Case Rate (number of policies), case size (amount of premium), and recruitment of advisors by natural market, personal observations, nominators, and center of influence. Incentive of offered by the company to development officers and agents were based on their performance, which resulted in to internal competition and finally converted into rivalry. In August 2002, a branch manager joined along with one more sales manager and ten development officers. Initially, the branch was performing well and was able to build their image in the local market. As the industry was dynamic in nature, there were frequent opportunities bubbling in the market. In order to capitalize the outside opportunities, one sales manager left the organization in January 2003. As the sales manager was a real performer, he was able to convince all the good performers at XYZ Moon Life Insurance to join the new company. In April 2004, the company faced a grave problem, when the Branch Manager left the organization for greener pastures. To fill the position, in May 2004, the company appointed a new branch manager, Shashank Malik, and a sales manager, Rohit Pandey. The branch manager in his early thirties had an experience of sales and training of about 12 years and was looking after two branches i.e., Nagpur and Nasik. Malik was given one Assistant Manager and 25 Development Officers. Out of that, ten were reporting to him. He was given the responsibility of handling all the operations and the authority to make all the decisions, while informing the Branch Manager. Malik opined that the insurance industry is a sunrise industry where manpower plays an important role as the business is based on relationship. He wanted to encourage one-to-one interaction, transparency and discipline in his organization. While managing his team, he wanted his co-workers to analyze themselves i.e., to understand their own strengths and weaknesses. He wanted them to be result-oriented and was willing to extend his full support. Finally, he wanted to introduce weekly analysis in his game plan along with inflow of new blood in his organization. Using his vast experience, he began informal interactions among the employees, by organizing outings and parties, to inculcate the feelings of friendliness and belonging. He wanted to increase the commitment level and integrity of his young dynamic team by facilitating proper channelization of their energy. He believed that proper training could give his team a proper understanding of the business and the dynamics of insurance industry.
Questions 1
As Malik, I would solve this problem by coming up with a democratic management style. This ensures that the employees contribute to the decision making within the organization and creating an environment whereby the employees are rewarded for their effort at work. This goes hand in hand with recognizing the employees for their contribution within the organization.
Question 2
In view of turnover in the organization, someone like Malik can be retained by ensuring that he is engaged in the decision making on various policies or decision making within the organization. This move will be a big motivating factor for such a person and will be dedicated since he feels engaged in the organization and his contribution is considered to be as valuable as those of that of the directors.