STUDY CASE 9

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 behaviour 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.

1. How can top managers in AVCO establish

a. Strategic objectives for recruitment?
Answer:
- Define company goals and required skills.
- Assess strengths, weakness, and values.
- Set measurable recruitment objectives.
- Develop strategy aligned with goals.
- Implement and adjust as needed.
b. Strategic objectives for compensation/benefits?
Answer:
- Analyse current structure.
- Determine desired levels to attract talent.
- Set goals for satisfaction, retention, and cost-effectiveness.
- Develop strategy aligned with goals.
- Monitor and adjust regularly.
2. In what ways can the HR manager exercise leadership in implementing HR Grand
Strategy?
Answer:
The HR manager can lead the implementation of the HR Grand Strategy through the
following roles:
1. HR Planning Manager: Oversees HR functions and ensures alignment with the HR Grand
Strategy.
2. HR-Organizational Coordinator: Links HR plans with organizational goals and objectives.
3. HR Integrator: Aligns HR strategies with the organization's strategic objectives.
4. HR Forecaster: Estimates future HR needs and assesses current HR practices for long-term
strategy.
5. HR Planning Formulator: Devises HR strategies and selects appropriate grand strategy
based on job and people analysis.
6. HR Planning Evaluator: Monitors and evaluates the effectiveness of the 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?
Answer:
The search results do not provide information on the HR Grand Strategy or the level of
support for it among managers in the firm. However, they do discuss the importance of
strategic planning for human resources, which includes anticipating long-range HR and talent
needs, and the role of HR planners in analysing work and identifying competencies that
distinguish successful performers from fully successful ones. Additionally, they mention the
need for HR planners to provide managers with detailed information about how the
organization performs its functions and achieve its goals and objectives, which is the
foundation for all other HR initiatives.
4. How can control be exercised over this HR Grand Strategy?
Answer:
To exercise control over the HR Grand Strategy, the following steps can be taken:
- Monitoring: Regularly review the progress of the HR Grand Strategy implementation
to ensure that it is on track and producing the desired results.
- Adjustments: Make necessary adjustments to the HR Grand Strategy as needed to
address any changes in the organization or its environment.
- Communication: Clearly communicate the HR Grand Strategy to all stakeholders,
including employees, managers, and external partners.
- Training and Development: Provide training and development opportunities for
employees to help them acquire the skills and knowledge needed to support the HR
Grand Strategy.
- Rewards and Recognition: Establish a system of rewards and recognition to motivate
employees to contribute to the success of the HR Grand Strategy.
- Continuous Improvement: Encourage a culture of continuous improvement within the
HR department, with a focus on identifying and addressing any issues or challenges
that may arise during the implementation of the HR Grand Strategy.

5. What policies for HR should

a. Be reviewed?
- Recruitment policies: Review the effectiveness of current recruitment strategies and
identify areas for improvement.
- Compensation and benefits policies: Evaluate the competitiveness of current
compensation and benefits packages and make necessary adjustments.
- Training and development policies: Assess the effectiveness of current training
programs and identify areas for improvement.
 - Performance management policies: Review the effectiveness of current performance
management processes and identify areas for improvement.
- Employee relations policies: Evaluate the effectiveness of current employee relations
policies and practices and make necessary adjustments.
b. Be created?

- Diversity and inclusion policies: Develop policies to promote diversity and inclusion
in the workplace.
- Succession planning policies: Establish policies to ensure the continuity of leadership
and key positions within the organization.
- Employee engagement policies: Develop policies to enhance employee engagement
and retention.
- Health and safety policies: Establish policies to ensure a safe and healthy work
environment.
- Sustainability policies: Develop policies to promote environmentally sustainable
practices within the organization.

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? The emphasis on experienced talent may lead to a focus on career
development programs for employees, as the firm may be more interested in retaining and
developing existing talent rather than constantly recruiting new employees.
b. Training? The firm may invest more in training and development programs to ensure that
their employees have the necessary skills and knowledge to perform at a high level.
c. Organization Development? The emphasis on experienced talent may lead to a focus on
organizational development initiatives that help to create a culture that values and retains
experienced employees.
d. Job Design? The firm may redesign jobs to better accommodate the needs and expectations
of experienced employees, such as offering more autonomy and flexibility in their roles.
e. Employee Assistance Programs? The firm may invest more in employee assistance
programs to help support the mental and emotional well-being of their employees, as
experienced talent may be more likely to experience burnout or stress due to the demands of
their roles.
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?
 Developing and implementing HR policies, programs, and practices that align with the
organization's strategic goals and objectives.
 Ensuring that the workforce has the necessary skills and competencies to meet the
organization's current and future needs.
 Providing leadership and guidance to managers and employees on HR-related issues.
 Collaborating with other departments to ensure that HR initiatives support the
organization's overall strategic direction.
 Monitoring and evaluating the effectiveness of HR initiatives and making necessary
adjustments.
b. Should be structured?

- Establishing a clear HR department mission and goals that align with the
organization's strategic objectives.
- Creating a hierarchical structure with clear lines of authority and responsibility.
- Developing a comprehensive HR plan that outlines the department's strategies,
initiatives, and resources.
- Establishing performance metrics and accountability mechanisms to ensure that the
HR department is meeting its objectives.
- Providing ongoing training and development opportunities for HR staff to ensure that
they have the necessary skills and knowledge to support the organization's strategic
goals.

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?
- Aligning goals with organizational objectives.
- Ensuring strategy alignment.
- Forecasting future HR needs.
- Devising and executing strategies.
- Monitoring and evaluating strategy effectiveness.
- Conducting audits to identify strengths and weaknesses.
- Analyzing external factors.
- Developing robust HR information systems.
- Establishing effective communication and training programs.
- Implementing performance metrics for tracking effectiveness.
REAL CASE
An example of a company that has successfully implemented an HR Grand Strategy is
Microsoft. Microsoft has a strong focus on attracting and retaining top talent, which is
evident in their compensation and benefits policies. They offer competitive salaries, stock
options, and other perks to attract and retain top performers. They also invest in training and
development programs to help employees grow and develop their skills. In terms of career
planning, Microsoft offers a range of career development opportunities, including mentoring
programs and career planning resources. They also have a strong focus on organizational
development, with a focus on fostering a culture of innovation and collaboration. Microsoft's
HR department plays a major role in implementing these strategies, with a focus on aligning
HR initiatives with the company's overall strategic objectives. They also have a strong focus
on measuring and evaluating the effectiveness of their HR initiatives, using metrics such as
employee engagement, turnover rates, and performance metrics to track progress and adjust
as needed.