Implementing Teams at Aal and Ips

Major Issues:

The case discusses about the process by which Insurance Product Services (IPS) one of the departments of Aid Association for Lutherans (AAL) was transformed from traditional hierarchical structured to team based organization. The need for change at IPS was because the management felt AAL was not customer centric and the skills & abilities of the employees were untapped. Since the organization was hierarchical in nature the decisions were being framed at higher levels and people actually associated with the problems were not being consulted. The new vision of the IPS was to be a flat organisation with fewer levels of supervisions where customers will be their primary concern. To effectively implement their new vision IPS proposed to create self managed teams. This drastic organisation change at AAL initially won very few fans. Employees were not satisfied with the new compensation system and also employees demanded more training for their new roles and responsibilities.

Key Characters:

Dick Gunderson: The president of AAL who was appointed in 1985 from another insurance organization. Looking at the trends in the insurance industry Dick was convinced that AAL needs to cut costs by $50 million in order to stay competitive in the market. The only solution to the problem according to him was organizational transformation.

Jerome Laubenstein: Former marketing executive was brought in as the new IPS department head for his remarkable participatory style. He was the key figure in designing and implementing the new organizational change. Jerome along with a team of five individuals, which he had hand picked, were responsible for making the company more customer driven and also downsizing it.

Analysis of the issue:

While implementing the new organizational structure the managing body of AAL felt that the concept of self managed work teams can contribute to three major dimensions of effectiveness. First from the managements perspective such teams will reduce the need for hierarchy, boost productivity and more integrated working relationships. Second from a customer perspective such teams will enhance customer satisfaction and provide higher quality of services thus leading to enhanced customer loyalty. Finally, from an employee perspective, self-managing teams will enrich jobs and improve quality of work. AAL organisation over estimated the effectiveness of self managed teams as they felt it would simultaneously maximize all the three types of dimensions. However it has been found out through the case that employee QWL has no relation with customer satisfaction or the performance of an employee. In fact customers do not care whether employees are friendly and displayed positive emotions instead they cared about the efficiency and competence of the service provider.