1.2. A model insurance company
The head of human resources at ASN Insurance Company was on his way to the stage of the assembly hall, for the third time in a row, to collect the award for the best national company to work for in 2011, according to what his own employees had assessed a few months earlier . Once again he trotted up the stairs, smiling, addressed the crowd and began a short but energetic speech of thanks. “It is not me, but the more than 3,500 employees of ASN, to whom you have to give this award.” Looking down slightly, after an imperceptible pause he continued “The insurance industry is sometimes perceived as traditional, bureaucratic, and even impersonal. However, the talent and commitment of all the people involved in ASN has allowed, once again, this company to stand out among more than 150 companies from 20 different sectors”. Only those who knew this manager very well would have detected a slight shadow of doubt on his face when pronouncing these words.
ASN, was founded 50 years ago by a group of factory owners from the north of Spain who decided to get together to protect each other from possible fires in their facilities. This group appointed Don Lucas Sombrero as general manager of the fledgling insurance company.
Don Lucas quickly imprinted his personal management style on the company, with his leadership skills to lead ASN to be a national insurance company covering not only fire insurance but a complete range of insurance for industrial facilities and homes.
In 1970 Don Lucas retired, handing over the baton to his number two, Antón. Anton, had been its commercial director for the last 7 years, developing the expansion and consolidation of the company throughout the country.
Antón, with a personality similar to Don Lucas, and even greater ambition and vision, would initiate a strong expansion movement for ASN to become a benchmark in the insurance sector in Spain. It expanded the coverage offered by the company, including life and death insurance for individuals, as well as different types of industrial insurance such as freight transport, import and export, production insurance, agriculture, machinery and automobiles, etc. ASN would systematically and uninterruptedly grow organically throughout the country. It developed an important chain of commercial branches that expanded to all the provincial capitals of the country, as well as the rest of the cities with more than 75,000 inhabitants. It developed a network of commercial agents and provided products and services to more than 4,000 insurance brokers in the country. His tenacity, commitment and leadership deeply influenced all employees of the company, who quickly aligned themselves with the strategy and objectives of the management contributing to this strong organic growth.
The company would continue to grow, also encouraged by the country’s growth situation until 2008, when it consolidated its workforce of more than 3,500 employees, more than 700 commercial offices and more than 5,000 external collaborators (insurance brokers and agents).
As of 2008, with the economic crisis in Europe, the company began to suffer. The disappearance of many small and medium-sized companies from the productive fabric, precisely a segment in which ASN is especially strong, was noted in the company’s income statement.
Individuals also limited their insurance premiums, and many companies were forced to start a price competition to which ASN was no stranger. In the words of its own leader “in 50 years of life we have never faced such intense transformations in the sector as those that are coming in the coming years”.
The people at ASN have always been the fundamental asset. A motivated workforce aligned with the vision and objectives of its leaders, who had grown with the company itself. However, it is not a secret that in recent years this has worsened a bit, possibly the economic crisis as well as the need declared by Antón to introduce significant changes in the organization, may have generated a certain feeling of uncertainty that is reflected in the work environment within the organization.
ASN template structure
Although in managerial positions the majority are men versus women (see graphs below) in recent years, a program called “For women” had promoted the hiring and professional development of female personnel, consequently an improvement in the proportions up to a current 60% – 40% in the insurer’s workforce.
Decision-making was relatively centralized, although there were good levels of trust in middle managers who could, on certain issues, make their decisions based primarily on their experience and the vision they knew of their leader.
In the company there are no very formal operating procedures since most of the employees have known each other for a long time and it is easy for each other to agree to carry out the projects and carry out the activities. Two departments collaborate especially if their bosses get along. This has sometimes brought with it some minor collaboration issues that have been quickly resolved.
Almost all of the company’s fundamental operations are located at its headquarters in Bilbao, although there are also operations in Madrid, especially those related to the company’s information and technology management systems. The commercial branches have few employees and their function consists exclusively of the sale of insurance designed from the main office.
Distribution by sex of ASN staff Distribution by sex of staff
The age distribution of the workforce is as follows:
The average seniority of the employees is around 10 years, their average age is 35 years, and the educational level is relatively good for their sector (see graph below). The investment in training is around 40 hours of training per employee and year, below the average for the sector, which is around 60 hours. However, in recent years an effort has been made to improve these values, especially by developing online training systems, which allow employees to receive courses in a more flexible way.
The workforce has traditionally been very loyal to the company, with external turnover rates of around 7%, which is 4 points below the industry average.
Internal turnover and general mobility of the workforce is also low, with around 12% of staff rotating internally each year. The insurance sector in Spain has internal turnover ratios of around 20%, and in Europe this ratio rises to 35%.
Overall staff satisfaction
Staff satisfaction has always been high. It has always been a source of pride for the company. Every year a survey is carried out among all workers to determine a satisfaction index. To do this, employees are asked various questions about their identification with the company, job satisfaction, internal communication, teamwork, promotion expectations, meritocracy, salary, etc. With all this, since 1999 an index has been prepared that can be seen in the graph below:
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
A certain drop has been observed since 2008, coinciding with the beginning of the crisis, but the values above 70% are still considered very good.
The aspects traditionally best valued are the work environment and identification with the company, while meritocracy or promotion expectations tend to be the worst.
Performance evaluations and objectives
The truth is that the subject of performance evaluation had never been taken too seriously. It is true that there was an ambitious 360 evaluation program, in which all employees valued their direct managers, colleagues and subordinates, but, nevertheless, the results of it did not usually significantly affect the professional evolution of the workforce. After all, they all knew each other more or less, and they knew who worked more and better and who did less and worse.
1.4. The fusion
While it’s true that no one was totally taken by surprise either, the announcement from senior management that ASN would merge with English insurance company York Insurance Incorporated sent a shock wave through the organization.
York Insurance (YII) was a reference in the world of insurance, operating in more than 46 countries and with a workforce of 45,000 employees of 120 different nationalities, it was one of the largest companies in the sector in Europe. A company whose growth had been mainly through mergers and acquisitions, and which had quickly gained a leading role in the insurance and reinsurance sector throughout Europe. Its commercial aggressiveness, speed of expansion and risky decision making were some of its hallmarks. Its innovation in the sector was also a distinctive sign. It had successfully developed in many countries new business models based on the direct distribution of insurance (through the Internet and the telephone), skillfully developing a consumer market hitherto abandoned by many large insurers. Their aggressive marketing, original and provocative, quickly made their products known to individuals around the world. In the corporate insurance segment, they were also good, using innovative products and a good sales network, they had quickly penetrated some important businesses such as factory catastrophe insurance and even in the reinsurance sector, reinsuring smaller insurance companies.
YII was very efficient compared to ASN. Their comparative operating costs were around 20% lower, and their speed in implementing new projects was amazing.
The different departments of YII had their objectives very well defined and the employees worked exclusively for their achievement. The evaluation, management and reporting systems were very sophisticated and were taken into account in decision-making.
YII’s internal turnover ratios were very high, around 40% (five points above the sector), external turnover was around 18% per year. Mobility was also high. Around 5% of the workforce changed countries annually, and at least 13% changed cities.
The investment in training was very high, around 80 hours per employee per year, with an exam and certification plan that forced employees to constantly learn and prepare for new challenges.
Internal communication systems are formal, as is the hierarchical organization, leaving little room for informal power relations.
The requests that a department made to another department always had to be made through a “workflow” tool that recorded the start date of the request and its end date, so it measured the productivity of each department quite accurately.
- Case Resolution
2.1. Before the merger
The student is required to make a complete diagnosis of ASN in the context of organizational behavior, prior to the merger with YII.
You must analyze aspects such as what type of organizational system you have, what are its main strengths and weaknesses, how is the company’s internal communication, such as procedures, how are employee expectations managed, how is training, what types of conflicts can appear between them.
Make a proposal of what are the dominant values in the organization and the leadership model.
2.2. After the merger
It is evident that the organizational culture of ASN and YII are very different. The student must design an adaptation plan for the ASN human organization so that it can satisfactorily carry out the merger with YII. What changes should be introduced in the organization? What could be the new values? and the way of working, should it change in any way?
How new problems will be solved such as:
• Cultural diversity
• Diverse languages in the organization
• ASN bureaucratization with a parallel improvement in productivity.
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