Case preparation - Organizational Change: Planning and Implementing Teams at AAL and IPS
Analysis context - “ Organizational Change and development”
Major Players and Issues -
Aid Association for Lutherans
Insurance Product Services department of AAL
Richard Gunderson, CEO AAL
Jerry Laubentstein , Department Head, IPS
Team members of IPS
Discuss the Issue:
The Aid Association for Lutherans (AAL) is a large fraternal benefit society with a large insurance business. The insurance business is handled by the Insurance Product services Department. During the period starting in 1985, AAL and the IPS department specifically, went through an organizational metamorphosis. IPS was originally a traditionally functioning, hierarchal organization. They remodeled into a relatively flat, regionally based and completely customer focused organization. Unlike the hierarchy before, the new work units were Self Managing Work Teams (SMWT). These teams provided all services to the field agents in their geographical area (being region based now.) From my understanding of the insurance industry, IPS was one of the first to use self managed work teams.
It was interesting to read how change affected the employees. It increased productivity and performance, as well as communication. One of the main things that stood out to me was how they were able to nullify the principle-agent problem they were having. This arose due to the height of the organization and asymmetric information. By making the organization flat and semi-autonomous, this problem was alleviated. In complicated organizations that are large, asymmetric information can be a huge drain on productivity and can also become a financial drain. IPS was able to see this before any of these things happened, and also was able to create a seamless platform to become a customer oriented department.
Applying the theory/Reading
Pressures for Organizational change
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