Reference no: EM132734378

The Importance of HR Planning in an Insurance Organization

• Ram Narayan (Narayan) began his career as a management trainee in a private organization. His special interest in studying human behavior and his background in psychology often made him analyze the emotional reactions and behavioral patterns of people around him. It was his ambition to become a human resource consultant in a reputed company. Therefore, after his graduation, he took a diploma course in human resource management.

• However, when he came across an opportunity to enter the insurance industry, he joined an insurance company as a junior manager. Later on, he worked in different capacities in the HR department of four other insurance companies before working as the human resource manager for LMH Insurance Company. Within a short time, he gained considerable reputation at LMH. Some crucial decisions he had taken related to employee compensation and reward systems in the company paid off rich dividends in due course of time. He was hence considered a key member in the organization.

• As part of the human resource policy, Narayan wanted to develop a lean structure for the organization. LMH was in an expansion mode during those days. Narayan felt that having a lean organizational structure during the expansion period would help the company become more flexible in adapting to change. He believed that a fast growing organization should have a limited number of personnel. But Narayan was against employee retrenchment and layoffs. His policies worked well, and he became an instant success with both the employer and employees in the organization.

• Over the years, however, the business environment changed and the organization expanded in size because of diversification. Narayan, therefore, advised the top management at LMH to change its HR policy and develop a strategic human resource plan that would take care of the future needs of the organization. However, the top management ignored his advice and continued with the existing HR policy since this involved lesser costs.

• The consequences did not favor the company in the last three years. The company had to struggle to maintain its existence in the business during the last three years. One of the basic reasons was that the organizational structure was too lean. The company's HR policy actually led to a shortage of manpower.

• The company's eagerness to increase its profits rapidly made the management decide to make a temporary arrangement of recruiting people on an emergency basis and provide them with fast- track training.

• Owing to space constraints, the company was forced to move to a bigger office, and its monthly expenses and cash requirements increased. The top management decided that things could improve only if the company sold more policies and expanded its client base. It pushed its employees to work for extra hours, often with no overtime allowance. Due to such pressure on the employees, their productivity declined.

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The Importance of HR Planning in an Insurance Organization

• There were other problems, too. When the company came up with an innovative product, there was always the threat of big players following its course by releasing a similar product. In addition, such competition added to the burden on the already overstressed personnel and other resources. The situation deteriorated fast as people started to quit in droves. Those who stayed felt insecure. Total confusion prevailed in the entire organization and the employees started losing confidence in the management.

• A meeting was convened to resolve the problem. Ram Narayan too, attended the meeting. He brooded over the problems. While talking about the changes required to solve these problems, he advised the top management to formulate a strategic HR plan. For the time being, he suggested tactical human resource planning. He convinced the management that once the present problems are solved, the company would have to implement the strategic HR plan.

Discussion 1: Describe the HR problems that LMH Insurance Company faced. What were the reasons for these problems? Could the company have avoided these problems? If so, then how?

Discussion 2: Under the present circumstances, Ram Narayan emphasized the need for tactical human resource planning. What is tactical human resource planning? How will it benefit LMH Insurance Company?