Reference no: EM132877935
The AVCO Insurance Company is a very small, highly specialized firm. It offers only one kind of insurance: malpractice coverage for physicians. The firm is over 50 years old and caters to a highly select clientele. It charges the highest rates but offers the best coverage in the business. Demand for an AVCO policy is very high. However, the firm chooses its policyholders with great care. To be approved, the applicant must have been in practice for at least 10 years and must have avoided any malpractice claim (true or false) during that time. Once an applicant becomes a policyholder, the firm is quite aggressive in defending him or her if a lawsuit is later filed. Insiders in the insurance industry know that AVCO settles out of court less often and has the best scorecard for winning lawsuits of any company in its field. Much of the company's success is attributable to the people who work for AVCO. The company employs a mere 70 people, excluding agents who sell policies. The firm is structured along functional lines: There is a sales division (with only 6 people), a policy and claims division (with 22 people), a legal division (with 8 people), a finance and billing division (with 28 people), and a personnel division (with 3 people). The chief executive, his secretary, and his top assistant bring the total to 70. AVCO has long pursued a business strategy best called "stable growth." The managers are highly averse to risk, preferring instead to concentrate on the market they know best: physician malpractice insurance. Though they could no doubt seize most of their market if they wished to do so-malpractice insurance is being dropped by many large companies-they want to concentrate on doing what they do well. They do not believe that the company can handle growth that is too rapid. Nor are they concerned about being the biggest or even the most profitable in their market; rather, they want to offer the highest quality to the safest clientele.
The company's strategy for human resources reflects that of the firm itself. The managers prefer to hire only the most experienced in their field. They want to minimize training costs, but are willing to pay better than the going rate. The company is not unionized. The HR department consists of one manager (a 60-year-old who has had 40 years with the company), her assistant (a 50-year-old with a Ph.D. in organizational behavior and 20 years in the industry), and a secretary. The HR manager enjoys the confidence of the company president and participates in strategic business planning. The HR Grand Strategy reflects that of the company: It is one of stable growth. The highest priorities are recruiting top-flight talent and keeping salary rates above those of its competitors.
Questions
1. How can top managers in AVCO establish a. Strategic objectives for recruitment? b. Strategic objectives for compensation/benefits?
2. In what ways can the HR manager exercise leadership in implementing HR Grand Strategy?
3. How much support for this HR Grand Strategy would you guess exists among managers in the firm? Why do you think so?
4. How can control be exercised over this HR Grand Strategy?
5. What policies for HR should a. Be reviewed? b. Be created?
6. What impact, would you guess, will the firm's heavy emphasis on recruiting experienced talent and paying above-competitive-rates exert on appropriate initiatives in such HR practice areas as a. Career Planning? b. Training? c. Organization Development? d. Job Design? e. Employee Assistance Programs? For each one, explain why you believe this influence is likely.
7. How do you think the HR department a. Should contribute to implementing HR Grand Strategy? Why? b. Should be structured?
8. What changes, if any, do you feel will be necessary in the HR department if it is to assume a major role in implementing a new HR Grand Strategy?