Reference no: EM132831797

Creating Cross-Functional Teams

The Direct Response Group (DRG) at Capital Holding is a direct marketer of life, health, property, and casualty insurance. In the past, it sold a mass-produced product to a mass market. Over time, however, sales slowed, profits eroded, and the company decided it had to refocus its efforts. That meant, for one thing, selling to particular, identifiable customers and giving those customers a customized product/service package that was world class, enabling the company to compete globally.

An analysis of the corporate culture showed that people were more concerned with pleasing their bosses than pleasing the customer. People hoarded information instead of sharing information because the people with information had power. The information system had to be changed to encourage sharing.

Organizational change began with a vision statement that emphasized caring, listening to, and satisfying customers one-on-one. To accomplish that goal, the company formed a cross-functional team to study the sales, service, and marketing processes and completely redesign those functional areas. The idea was to have a world-class customer-driven company. That meant gathering as much information as possible about customers.

Frontline customer-contact people were empowered with user-friendly information systems that made it possible for one contact person, working with a support team, to handle any question that customers had. Management used external databases to get detailed information on some 15 million consumers. The combined internal and external databases were used to develop custom-made products for specific customer groups.

The whole company was focused on satisfying customer wants and needs. That meant changing processes within the firm so that they were geared toward the customer. For example, one case worker is now attached to each customer, and that case worker is responsible for following an application through the entire approval and product design process. Previously, many people handled the application, and no one person was responsible for it.

A pilot program was started whereby a customer-management team was formed to serve 40,000 customers. The team consisted of 10 customer service representatives and their support team (a marketer, an expert in company operations, and an information systems person). Employees are now rewarded for performance, and merit raises are based on team performance to encourage team participation.

1. Are traditional bureaucracies set up to provide custom-made products to individual consumers? Could they be, or is it always better to have customer-oriented teams design such products?

2. Anyone who has worked in team situations has discovered that some members of the team work harder than others; nonetheless, the whole team is often rewarded based on the overall results, not individual effort. How could team evaluations be made so that individual efforts could be recognized and rewarded?

3. What service organizations, private or public, would you like to see become more customer oriented? How could this case be used as a model for that organization?