Abhishek Mishra ISBE-A//SS//10-12 (SB3) ORGANISATION DEVELOPMENT ASSIGNMENT

Q1.Why was the restructuring exercise done? Answer: AAL (Aid Association for Lutherans) is a fraternal benefit society that provides benefits and financial security for Lutherans and their families based in Appleton, Wisconsin. AAL markets its products and services through a sales staff of over 2400 employees. In December 1985 the consultants Roy Walters and Associates diagnosed the need of renewal or Transformation. After the announced retirement of the president of AAL the new president Dick Gundersons studies of the insurance industry convinced him that AAL had to cut $50 million over the next five years to stay competitive. Even the company was doing well, the consultant Bob Janson discovered Positive dissatisfaction and had a feeling that even AAL is doing well, they have an even higher potential to reach. A team of 12 managers diagnosed and identified areas to be strengthened like members and market, financial strength, fraternal focus and reputation, dedicated employees etc.the team found out areas which needed attention and the teams report clearly threw light on the need for change in the AAL. AAL found out the gap between the mission and vision of it. Gaps to be addressed in areas of organization structure, management style and marketing strategy. Q2. Explain the process of restructuring undertaken. What were the benefits to the organization?
1 |Page

Answer: The change efforts of IPS management were supported by Gunderson and top management. The study identified the areas of concerns in old structure. In December 1986, Jerome laubenstein, IPS department head was given charge to regionalize the service function in order to get closer to the customer and to address the corporate downsizing goal. Jerry brought in a new senior level management team of 5 skilled and action oriented individuals to manage 5 geographic service regions. This team first developed the new vision for the new IPS organization. COMMUNICATION One of the first major tasks was to communicate the reasons for pursuing a change in work design to every employee in the department. Employees were called to conduct unit meetings, explaining the reasons and parameters for change. They were given information and support materials. MORE COMMUNICATION Second effort lead to more communication as first approach had limited success. Group meeting were arranged for 100 employees per group in which jerry also participated. Periodic meeting were continued and newsletters were circulated. DESIGN TEAMS Ten teams including employees nominated by managers, supervisors and employees were selected for various functions of the new structure. ROLE CLARIFICATION Role was clearly articulated and this approach was considered as high involvement rather than participative management because it reduced the confusion of role accountability and decision making.

DECISION MAKING AND IMPLEMENTATION

2 |Page

Two of the three structure management teams submitted the organization proposals parallel to the new work design. It explained the need to move away from hierarchically arranged functional and highly specialized structure to move toward a flat, full-service, self managing, and self regulating structure. IMPLEMENTATON Implementation teams were named and were given task of doing everything necessary to ready the department for a physical move to the new organizational structure. EMPLOYEE ASSIGNMENTS New management team addressed the issue of assignment. SECURITY The redesigned structured reduced supervisory positions from 62 to 22. To reduce the stress caused by the downsizing, stress management sessions and a course on management change was offered to employees, career counseling service was offered to employees whose jobs were eliminated. THE MOVE The physical move from a functional structure to one centered around self managing teams was made in august 1987.Physical resource implementation team arrived at an alternative to move people but not the work stations. Q3. What was the impact the exercise had on the employees? Answer: The significant impact of change can be noted in overall satisfaction of employees. A very stable comfortably staffed functional organization in 1983 resulted in a relatively high level of overall satisfaction. New work design implementation also resulted into deterioted employee satisfaction but they responded that they would not want to go back to the old structure and organization, eventhough there are some things about the new they dislike.
3 |Page

Approach used to assign employees to new work teams had a significant negative impact on the existing social system. The other major impact on employee satisfaction was the installation of new compensation system that has the effect of putting a part of their compensation at risk based on performance. All these led to negative impact on employee satisfaction. But after 1991, communication between employee and customer improved. Employee feels challenged to innovate. He feels free to use his own judgment rather than his supervisors. And large amount of employees favor the new compensation system because of the positive impact it has had on their ability to influence their earnings.

The End

4 |Page