National Insurance is among the largest publicly held insurance companies in the u.S. With approximately 37,000 employees, it provides insurance products to more than 17 million households. Recently, national merged its accounting Services department with its agency and customer Support unit-two organizations with similar DNA but used to working in silos—to form the customer and Enterprise Services (CES) organization. CES employs 5,000 workers in 18 locations to operate the company’s call centers and per-form a variety of back office functions, including accounting, document printing, mailing, archiving and imaging, policy processing, and property inspections. customers and internal clients were both seeking change from the new CES organization. customer feedback suggested that improving direct sales/service processes and the total value of products/services would go a long way to raising customer loyalty. Internal business clients wanted cES to help them grow their business, improve its cost effectiveness, and establish service agreements in line with business goals. The leader of the CES organization noted that although the challenges facing the business were operationally oriented, they were culturally based. It was a function of the organization’s long bureaucratic history. To improve performance, behavior change as well as changes in processes and systems needed to take place. In response, he launched a large-scale culture transformation effort with the help of an internal design team, internal OD resources, and external OD consultants. The objective of the transformation was to “thrill our customers” as an innovative, cost-effective, and inclusive organization. In keeping with the inclusive part of the objective, the change process was highly participative. It began with a broad set of inter-views from around the organization that were fed back to the leadership team. With the consultants, they formulated and implemented a transformation roadmap. about 12 months into the change process, the head of the cES organization asked their OD consultants to arrange for a mid-term evaluation of the pro-cess. The consultants recommended an OD professor who recommended another round of interviews and a survey of all CES members. The results of the evaluation, in terms of implementation and evaluation feedback, are summarized below. Implementation Feedback Interviews of the cES leadership team, design team members, and participants in the change process provided two broad areas of implementation feedback. The first area represented attitudes and beliefs about how the change pro-cess had been planned and implemented. There was a strong belief that the design and implementation of the transformation was sound. Respondents agreed that there was a “clear need for change” and that leadership had been “clear about its responsibilities for change.” In addition, half of the sample believed there was a “defined common purpose” and that a strength of the implementation was the way it “integrated inclusion and transformation.” four other themes supported the conclusion that people believed the change had been well designed and implemented. If the change was seen as successful, there was a strong case for a change process that had utilized many of the actions found in published and popular models of organization development and change. a second broad area of implementation feedback was a set of inputs regarding next steps. By far the biggest recommendation was to focus attention on supporting and developing leadership capabilities in the middle-management levels of the organization. The issue became known as the “unpopped kernel” problem. There was a sense that not enough middle managers were making the behavior changes required to support the transformation. The interviewees recommended a series of complimentary actions, including clarifying “what’s in it for me” (rewards and recognition) and what the next steps in the change process would be. With the exception of the call for more leadership development, there was no clear or shared sense regard-ing the need for new capabilities. The researcher wondered whether there was no particular need for developing specific capabilities, there was no shared consensus about what that specific capability is, or if the felt need to address middle managers was truly accurate. Evaluation Feedback The survey and interview data also provided some preliminary evaluation feedback. The survey asked about the extent to which people saw different organizational characteristics as present in the new organization, including a clear purpose, flexible processes, rewards for performance, and the ability to manage change. In all, 14 different dimensions were measured. Scores on the survey ranged from 4.12 to 3.56 (out of 5 or “to a great extent”). The highest rated themes were a sense of shared purpose (4.12) and encouraging innovation (4.02). The transformation had produced an organization that was clear in its direction and mission, more innovation oriented, and more aligned. The lowest scores were for flexible reward systems (3.56) and the ability to quickly move resources to their best use (3.68). Based on similar surveys in other companies, the cES scores were relatively high. Because the transformation was aimed at changing the cES culture, the survey also included dimensions from the “competing values” approach to culture (see chapter 11). Respondents were asked to indicate whether the culture at cES was externally (versus internally) focused, organic (versus hierarchical), creative and innovative (versus stable), people (versus results) oriented, and long-term (versus short-term) focused. Overall, the cES organization had a good balance of internal and external focus, was slightly more rule bound and hierarchical, more innovative, more results oriented, and more long-term focused. These results were seen as movement in a positive direction by members of the cES leadership team. The interview data also collected observations about the impacts of the transformation on the cES organization and results. Interviewees believed that employee engagement had increased (80 percent), that a new culture was emerging (50 percent), that the organization was getting better at managing change (50 percent), and that customer/client relationships were improving (50 percent). The range of the impacts suggested that the transformation had been a pervasive change in the organization. There was much discussion about whether the transformation had affected business results. Half of the sample talked about improvements in customer satisfaction, 40 percent talked about differ-ent business measures, and 20 percent mentioned budget savings. In fact, a widely shared measure of customer satisfaction had been increasing over the last several months. The researcher worked with the OD consultants and the CES leadership team to understand the data and its implications for change. The inter-view and survey data painted a very clear picture. The CES transformation was designed well, executed with speed and enthusiasm, clearly affected the organization, and was beginning to show important financial and customer benefits. continuing the transformation would likely generate additional benefits. going forward, there was also a clear warning. people were concerned about middle management support. people who held a lot of power in the organization and were, in general, supporting the transformation were also its biggest threat. a few “unpopped kernels,” if left unmanaged, could damage the leadership team’s commitment and credibility regarding change. The CES leadership team and its consultants began thinking about “what’s next?”
Read the Evaluating Change at National Insurance case above and . Answer, discuss, and examine the following questions:
What is your assessment of the challenges National Insurance currently faces?
What were the key results of the CES interviews?
Describe how you will develop a change process at National Insurance and list the critical issues you will face in managing the change.