Business Analysis of the Northampton Insurance Company


Northampton Insurance Company (NIC) is owned by the bank and is one of the largest financial service organisations in UK. NIC is currently facing internal and external problems regarding their working environment and policies. To resolve these issues, the bank has established a management team headed by Gloria Barker, to identify the core problems and solve them. Some of the problems already identified by Gloria in a briefing were that the environmental is very formal and discriminative. There is division in the office buildings according to the status of the employee which demoralises the lower staff. The financial products that NIC offers has only managed to attract the low income customers and even though the company has struggled to break into the high-income households, it hasn't managed to do so. The main focus of this report is to understand the key problems faced by NIC and analyse them and prepare an effective Human Resource Strategy to modernise the company under 'Building the New NIC' programme. The report highlights the importance of cultural vision and elements of the proposed cultural vision for Northampton Insurance Company (NIC). In addition, the report focuses on HR strategy key features and its effectiveness which would be playing a vital role in change program at NIC.

1.1. Cultural Vision:

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According to Greenberg and Baron (1997) "cultural vision is a cognitive framework consisting of attitudes, values, behavioral norms and expectations". Culture allows an incorporation of influences and opinions into the visioning process from different levels and will add towards a shared vision. Schein (1990: pp. 109-19) reveals that organizational culture consists of two layers of concepts, namely visible and invisible characteristics. The visible layer means external buildings, clothing, behavior modes, regulations, stories, myths, languages and rites. The invisible layer means common values, norms, faith and assumptions of business organization members. According to Payne (1988: pp. 273 -277) culture change programs should focus on particular aspects of the culture, for example; performance, commitment, quality, customer service, team work, and organization learning. Hofstede (1994) argued that a 'good' culture exerts a positive influence on organizational behavior. It could help to create a high- performance culture, one that will produce a high level of business performance. A good culture is consistent in its components and shared amongst organizational members, and it makes the organization unique, thus differentiating it from other organizations, (Deal and Kennedy, 1982). Cultural vision is heavily influenced by factors such as the industry in which the company operates, its geographic location, events that have occurred during its history, personalities of the employees, and their patterns of interaction.

Figure: 1 - Cultural Classification

(Source: Want jerry (2003), Corporate Culture)

1.2. Elements of Cultural Vision:

Robbins (1996) contends whenever the individual demand is congruent with cultures, it will result in the highest job satisfaction. For example, the individuals with high autonomy and high achievement motives will result in higher satisfaction under the organizational culture with loose supervision and emphasis of achievement rewarding. Nowadays, there is an increasing consensus on the idea that organizations making the effort to introduce a culture which encourages communication among their members, experimentation and risk taking, and motivates employees to question fundamental beliefs and work patterns, will achieve a favorable working atmosphere for the development of their capacity to learn, (Lopez and Ordas , 2004: pp. 93-104). Cultural vision is divided into elements which make it easy to define and implement the cultural vision required for the Northampton Insurance company (NIC). Following elements may be considered important in making the Northampton Insurance Company environment more positive, (Osborne and Cowen 2002: pp. 227 - 231).

1.2. (a) Vision of Future: The Northampton insurance company (NIC) should have simple but well defined vision for the future; one which can appeal to the employees as well as to the customers and rejects the mechanical thinking of money-making.

1.2. (b) Faith in the Vision: By creating a proper vision for the organisation and motivating employees by involving them in it will make them feel a sense of identity and responsibility towards the goal of organisation which can bring a sure success to NIC.

1.2. (c) Fair Play: Improving the culture of NIC by making it free from prejudice and fair, NIC can increase the retention of the employees and enhance the self-confidence in them which is the core success for employees.

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1.2. (d) Mutual Respect: NIC must change the environment of bullying and create a mutual respectful environment. This will make the environment comfortable and motivational for the employees, which in turn help the organisation to acquire its goals easily.

1.2. (e) Long-Term Relationship: In an environment where an employee feels respect and comfortable to work, employee retention increases which enhances performance of the employee. In such environment, employees tend to work together and avoid making enemies with colleagues and consider success of organisation synonym to their own.

1.2. (f) Acknowledging Achievements: NIC should develop a culture of celebrating the achievements by taking initiative and giving benefits to the employees who have achieved a goal or have gone beyond their capabilities to benefit the company.

1.2. (g) Redesigning the Organisation: Making NIC leaner and more interactive could mean encouraging environment for the employees at lower stages. Top management should be either trained or replaced with people who are more passionate about the work. Feedback should be taken frequently which will evaluate standing and understanding of the goals of each employee in NIC.

1.2. (h) Customer Focus: One of the main element of cultural vision is to make NIC more customer focused. This means covering a broader range of customer market and giving them facilities to acquire the information about the packages and deal that NIC has to offer. This will also make customers communicate in better way with NIC, (Osborne and Cowen, 2002: pp. 227 - 231).

Implementation of positive culture at NIC facilitates organization to enjoy many benefits, like: when the members of NIC will familiar with the culture, the work environment tends to be more enjoyable, which boosts morale. This leads to increased levels of teamwork, sharing of information, and openness to new ideas, (Gofee and Jones, 1996: pp. 133-48). The resulting increased interaction among employees activates learning and continuous improvement because information flows more freely throughout the organization. Additionally, such a culture helps to attract and retain top employees, (Greger, 1999: p.10). "Capital American financial corporation exemplifies the high performer culture, ( While still a tiny company, the insurance entrepreneurs and his executive team adopted $1 billion as a sales goal, laughable to some, but not to the handful of employees who believed in the dream. They cultivated a "true believer" mindset throughout the company and grew from $3 million to $500 million of revenues in the 15 years before the company was sold for $760 million in 1996. Growth became the imperative of every decision, every strategy. High performers, those who delivered growth, were inundated with incentive rewards and, above all, recognition. Photo of high performing employees lined the corporate offices. A high- performer "Hall of frame" was created. Members of the Hall were given distinctive green blazers to wear at work. High- performers were literally heroes in this company", ( "Wal-Mart's founder Sam Walton (, showed concern and respect for his employees from the company's inception. This created an environment of trust that persists to this day. Walton also modeled the behavior that he desired from the employees, especially customer service (both to internal and external customers), by visiting his stores, meeting customers, and greeting employees by their first names. Walton also embraced and encouraged change in order to remain competitive, and developed employees by having them work in a variety of positions. Wal-Mart considers its culture the key to its success, and to this day employees continue to think about "how Sam would have done it" when making decisions", (Discount Store News, 1999: pp. 103-67).

2. HR Strategy:

HR strategies defines what the organization wants to do about its different aspects of human resource management and practices, (Armstrong, 2006). Human resources are the productive services that human beings offer to the firm in terms of their skills, knowledge, and reasoning and decision making abilities. Human Resource Management can be defined as an approach to managing people based on four basic principles -

Human resources are the most important assets of any organization and its effective management is the key to the success of the organization.

The success is achieved only if the personnel policies and procedures of the enterprise are closely interlinked and make a major contribution to the achievement of corporate objectives and strategic plans.

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The corporate values and culture, behaviour of the management and the environment of the management influence the achievement of excellence.

HRM is concerned with integration, getting all the members of the organization together to work on common goals and objectives, Armstrong (1990).

2.1. Key Features of HR strategy for NIC:

Pfeffer (1999: p.24)  in his HRM model of best practice approach has included many things like employment security, careful recruitment, teamwork and decentralization of the management, high pay with rewards and recognitions, extensive training to employees, narrow status differentiation and extensive communication. NIC should follows best practice approach in terms of its HR in the following ways -

The NIC Senior Personal Manger should be an effective member of the business team, and can discuss competently the key business issues, and contributes to the business decisions. All personnel practices and procedures comply with spirit of law, and should promote the highest standards of integrity. Standards of environment and housekeeping in NIC offices should be beyond criticism, (Matthewman, 1993).

The CEO of NIC should have meetings with its employees twice a year wherein it makes the employees feel that they are an important part of the company. Also the managers and the employees in the company communicate extensively through emails, newsletter, video conference and web discussion forums. There should be many regional "coffee talks" also, which gives the opportunity to the employees to question the CEO. And if an employee lodges complain against the higher management, he would not face any bad consequences.

NIC should believe in Trust and Integrity. NIC should have an "Open Door Policy" which encourages all its employees to seek the help or just meet the higher management. NIC should use the Management by Walking Around technique which was started by Hewlett- Packard, (Margerison, 1993). This technique forges a kind of strong motivation and a sense of pride and self-being among the employees and helps to improve management performance and development. Hewlett-Packard believes that when people are given the right tools, training and knowledge, they will deliver their best. Internal communication among the employees of HP helps them to be well informed and keeps them actively involved in the company's activities. HP also promotes Open Door policy which allows people to interact freely with their seniors, share their ideas, and also makes communication very easy and effective. Communication is a two way process which involves giving out message from one person and the understanding and receiving at the other end, (Torrington and Hall, 1991).

According to the research proposed by Davis (1951), job satisfaction can make employees achieve organizational goals, take more interest in work, and feel honored to be part of their organization. NIC should also stress on its employee development. Or rather it can be said that they need to stress a lot on the job security of its employee. And should not believe in Hire and Fire technique, but always keeps on giving chances to its employee to improvise them selves by changing their job responsibilities rather firing them. NIC encourages all its employees to develop their work and personnel life in order to achieve personal as well as career goals. NIC should introduce the process of "learn till you live", because it will give its employees an opportunity to come up with new ideas and skills. The lack of lay-offs and strikes in Southwest Airlines means that the employees feel secure in their job, and enjoy a high level of compensation. The benefits offered are the highest in the US airline industry, (Donlon 1999: pp. 32-42).

NIC should have a man power plan looking four quarters ahead should be produced each quarter. NIC personnel staff involved in recruiting have had specialized training in recruitment and selection, including occupational testing as appropriate. All new employees receive company, division, departmental and personal induction training, (Matthewman, 1993). Recruitment and Hiring at NIC should be done in a very simplified and filtered manner. For the associate jobs, NIC should have online CV and profile applying system. And candidates should ask to fill in a questionnaire on the basis of which the filter is done since each candidate will be competing against. Thus as soon as the candidate applies for a job at NIC, his CV and profile if filtered at that time itself which make recruitment very easy.

Robbins (1996) indicates that leadership and organizational culture substantially cause influence on output of personnel resource, e.g. productivity, job resigning, unreported job absence, and job satisfaction. NIC managers require leadership proficiencies. For example, they need the ability to work with and lead management groups, and to drive the changes required, for instance, to implement new employees screening and training systems.

The NIC should recognizes the importance of a diverse workforce not only in terms of gender, ethnicity and disability but also in the broadest sense of reflecting the wider community and how such a workforce might best serve its interests. NIC should have a commitment to a diverse and valued workforce both for business and equity reasons and seeks to recruit, select and develop the potential of the most talented people in all its areas of activity. It takes the view that the performance of the NIC overall can be improved by a diverse workforce which can drive forward its key strategic aims. The NIC should have appraisal systems in place and NIC should be committed to addressing poor performance; there is an expectation that performance issues should be addressed and in some cases members of staff should be dismissed if their performance is not adequate.

NIC should introduce different insurance policies that would attract both low income individuals and those with better earnings; this would cover the wide range of market and help increase the business. NIC should also make sure that the information about the policies is properly conveyed to its customer through all sorts of media: telephone, emails and websites.

2.2. Proposed NIC HR Mission:

NIC proposed HR mission would be - NIC provide quality HR services to attract, develop, motivate and retain workforce within a supportive work environment. NIC can do this with an emphasis on customer service based on consultation and communication with the members of the campus community.

3. Effectiveness of HR Strategy:


The ultimate measure of the effectiveness of the HR functions is the contribution it makes to meeting the objectives of the business and to improve organization performance. Effectiveness and measurement go hand in hand. Effectiveness is used to describe performance but this not only demands clear goals and targets, it also requires monitoring, (Matthewman, 1993). Companies are continually seeking more effective methods to assess the performance abilities and performance potential of their employees, (Armstrong, 1990). The proposed NIC HR strategy based upon Pfeffer (1999: p.24) HRM model of best practice and defines what the organization wants to do about its different aspects of human resource management and practices. HR strategies support business strategies and also affect business strategies, (Armstrong, 2006). Identifying and appraising the stock of human resources within a firm is complex and difficult. Human resources are appraised at the time of recruitment, where qualification and experience are used as indicators of performance potential, and in employment, typically through annual performance reviews. Pfeffer (1997: pp. 357-65) points out the major problem with measurement of HR is that, managers often use measures produced by the organization's accounting systems and focus attention on what is most easily measured, for example cost of operating the HR function or number of people processed through the recruitment process. However, such measures do not tell exactly what is being done with the resources or if the money is spent wisely. The contributions from an effective HR strategy are not always readily apparent nor are they necessarily easy to identify. Over a period of time, however, some quantified measures may serve to provide management with an indication of effectiveness. Possible examples include staffing costs, turnover and stability indexes; promotions and staff development; errors in work; levels of absenteeism and sickness, timekeeping, accidents at work; the number of discipline or grievances hearings, dismissals, labour dispute, employment tribunal cases; complaint from suppliers or customers. Strong leadership and organizational development processes should combined with detailed knowledge of demographic trends to make sure that the capabilities are in line with the long term plans. Whereas, for the annual plan, the performance management system which uses various techniques to plan, monitor and asses individual performance. It can be said that one HR practice supports another HR practice and their common requirements are met by initiatives in different areas of HR practice. NIC should adopt a holistic approach. For example, NIC encourages performance related pay, which is a key element of Total Rewards system and it offers employees the feeling of being an important part of the organization and sharing its success. Thus the employee's salary will reflect how much he has contributed to the achievement of the company. The pay and reward practice at NIC should be in conjunction to its Resourcing practice also. NIC appoints skilled, diverse and creative people from all over the world that will recognize their contribution and efforts. NIC should also use unique way to promote its employees. When it comes to promotion, the next one in line is not promoted but the one who is the best is selected to be promoted. The aim of recruitment and selection process is to obtain a pool of suitable candidates, and to ensure that all recruitment activities contribute to company's goal and create a desirable company image and also foster a sense of integration in the candidate. Finding the right person for the right job is always difficult. Therefore NIC should hires innovative and bright people and inspires and motivates them to be more innovative.

3.1. Balance Scorecard:

Figure: 2 - Balance Scorecard

(Source: Kaplan and Norton, (1997) The Balanced Scorecard)

The most popular performance measurement framework is Kaplan and Norton's "Balance Scorecard". A well-balanced performance measurement system will help to:

Develop, discuss and formulate the company's strategy;

Communicate the strategy throughout the organization;

Define objectives and specify targets for business units, project teams and employees;

Motivate and monitor employees and managers and guide their actions;

Inform employees, managers and shareholders on the efficiency and effectiveness of past actions and strategies and the likelihood of success for future actions

According to Kaplan and Norton (1997) the balanced scorecard translates a mission and strategy into a set of measures built around four perspectives.

3.1. (a). Financial: Within NIC balanced scorecard, financial measures remain an important dimension. Financial performance measures indicate whether a company's strategy, implementation, and execution are contributing to bottom-line improvement.

Long term financial objectives include:

To Increase economic value added

To Improve operational performance

To Achieve financial growth

To Improve return on investment

3.1. (b). Customers: Since companies create value through customers, understanding how they view performance becomes a major aspect of performance measurement.

Long term customer objectives include:

To Increase employee satisfaction

To Increase employee retention

To Improve employee acquisition

3.1. (c). Innovation and improvement: How can we continue to improve our processes and systems in order to create value? According to (Kaplan and Norton, 2000), this perspective of the balanced scorecard identifies the infrastructure that the organisation must build to create long- term growth and improvement. Learning and growth come from three principal sources:


Systems and

Organisational procedures.

Long term innovation and improvement objectives include:

Improve quality

Improve service development

Improve response time

Improve complaint handling

Understand employees

3.1. (d). Employees: The effectiveness of the proposed NIC strategy could be evaluated by the results of the employee's satisfaction surveys, training programs, Human Resources Information System (HRIS), 360 feedback, and management by objectives (MBO). The surveys will generate the results of the satisfaction levels of the employees, after a very short period of implementation of the HR strategy. The survey would include the long term objectives of the company which would be: Reduce turnover, Increase productivity, Increase skills, Increase cross training, Improve performance, and Develop incentives.

4. Conclusion:

There is no one best way to manage employees. Organizations should utilize their human resources to fit their changing situations, (Schuler, 1996). NIC should formulate new approaches and look towards the need of the future due to technological changes, intensification of competition in the market and economic internationalization. Improving business performance often focuses on clearly articulated strategies, definite goals and structural change. However, even the best laid plans for change often fail to address that performance is inseparable from how an organization does what it does. Improved performance is impossible without new behaviours and redefined values. An effective culture must be aligned with employee values and be consistent with the environment in which the organization operates. NIC should furnish all its employees the best possible environment to work, where people and their beliefs are respected and valued. Effectively managing people is the key to achieving better organizational performance.

Companies that seek sustainable success may benefit from the experience of those that have achieved it - if they take a hard look at cultures, staffing practices, and management systems and take steps to bring their organizations in line with the high- performance profile. In a rapidly changing business world, the process of defining strategies for the development of the workforce is ongoing. NIC should adopt policies and procedures which includes; Non-discrimination policy, Electronic job posting, Harassment-free work environment, Domestic partner benefits, Employee network groups, Open Door Policy, Education Assistance Program, Employee Assistance Program (EAP), Open communications, Management by objective, Share in company's success, Provide development opportunities, Flexible work hours ,Safe and pleasant work environment.