Gulf Insurance Company Ltd
Content
Gulf Insurance Company Ltd: Management Challenges After The Takeover
Introduction: Gulf insurance, a general insurance company was incorporated as a public limited company on September 1, 1985 under the Companies ordinance 1985 with a paid up capital of Rs. 5 Million by the NICFC. It primarily conducted in house business and it¶s product portfolio included Motor, Fire, and Marine insurance with Motor being the major profit contributing segment. In 1991, Arif Salam was elected as the chief executive and the managing director of the business. He took many major steps to transform the business. His vision was to make Gulf the top most company in the insurance industry. Before he could accomplish his goals, Arif needed to address certain issues that the company faced. A list of problems as per our analysis is discussed as follows: Minor Problems: Diversify the Product Portfolio: A minor problem at hand for Gulf insurance was to take a decision about diversifying the product portfolio. Gulf saw a potential growth in the health care insurance segment and was willing to invest in it. Expansion: Another minor problem at hand was about taking a decision to expand the business geographically into the entire Punjab region and then go penetrate the middle-east market.
Major Problems: Organization Structure: A major issue at hand was about having an organization structure that was well integrated. The original structure included four departments at the head office level while the major sales areas were reporting directly to the general manager. Arif redesigned the whole structure by firstly separating the Underwriting and Claims sections and merging the Company Secretary and Chief Accountant as per his operating with minimum staff policy. Furthermore, he wanted to add a sales manager to whom all sales regions would report and who will form the link between the top management and these sales regions. What we recommend is to divide the sales regions into two regions such as North and South, and then have two separate sales managers for these regions. This would help simplify management and provide efficient control over the activities of these sales regions. (the exhibit on the last page shows a new proposed structure on the last page) Inter Communication System: Arif also identified the need to have an intercommunication system in the company. His new policy of handling claims within 24 hours meant that the company needs a proper MIS system to bridge the gap between all the functional departments and smooth out processes and communication. The MIS should be implemented in form of a separate department. Expense Control: Gulf needed to cut back on its expenses and still be competitive in the market. Gulf increased the number of branches to 13 by 1996, while the staff strength in the head office was reduced from 54 in 1993 to 33 in 1996. Employee related Decisions: One of the most important issues at hand for Gulf was taking decisions about the Human resource of the company. As soon as Arif stepped in as the CEO, he realized that his people needed training and motivation. Policies had to be formulated for the Recruitment and Development of the staff in order to ensure that the most competent people enter the organization and that their careers were developed to in order to have mutual benefits for both the company and the people. Furthermore, decisions had to be taken for the staff appraisals, promotions, and incentives for the employees.
Core Issue: Mr Arif needs to bring in specialists to run Gulf. When Arif stepped in as the MD of the company, he faced many employee related issues and rather then having a specialist HR Manager to over look these employee related issues, Arif himself took over the responsibility of solving these problems. As a CEO his job is to give strategy and direction to the overall operations of the company and facilitation in the achievement of those goals. He can restructure the organization and give specialized roles to specialized people for example, setting up a separate HR department which will look after problems pertaining to the employees such as recruitment, selection, identifying competent employees, training and development, updating employee knowledge, compensation and benefits, career development and retaining high performing employees. He took various initiatives to improve the standard of management at Gulf but he was clueless how he could further improve or maintain the high standards that he wanted Gulf to achieve. He didn¶t know if his actions would help achieve a balance between the cost efficiencies and the competent salary package that Gulf was maintaining. It clearly shows that he is experimenting with ideas rather then being certain about what he is doing. As a fresh graduate he has no experience of handling people and that is why he is not confident of his own abilities. We therefore suggest that he should restrict his role to providing a vision and overall strategy to the organization such as expansion, product portfolio expansion etc. but, should not over manage the organization at each level. This would only lead to inefficiency and cause more problems then the firm already faces.
Introduction: Gulf insurance, a general insurance company was incorporated as a public limited company on September 1, 1985 under the Companies ordinance 1985 with a paid up capital of Rs. 5 Million by the NICFC. It primarily conducted in house business and it¶s product portfolio included Motor, Fire, and Marine insurance with Motor being the major profit contributing segment. In 1991, Arif Salam was elected as the chief executive and the managing director of the business. He took many major steps to transform the business. His vision was to make Gulf the top most company in the insurance industry. Before he could accomplish his goals, Arif needed to address certain issues that the company faced. A list of problems as per our analysis is discussed as follows: Minor Problems: Diversify the Product Portfolio: A minor problem at hand for Gulf insurance was to take a decision about diversifying the product portfolio. Gulf saw a potential growth in the health care insurance segment and was willing to invest in it. Expansion: Another minor problem at hand was about taking a decision to expand the business geographically into the entire Punjab region and then go penetrate the middle-east market.
Major Problems: Organization Structure: A major issue at hand was about having an organization structure that was well integrated. The original structure included four departments at the head office level while the major sales areas were reporting directly to the general manager. Arif redesigned the whole structure by firstly separating the Underwriting and Claims sections and merging the Company Secretary and Chief Accountant as per his operating with minimum staff policy. Furthermore, he wanted to add a sales manager to whom all sales regions would report and who will form the link between the top management and these sales regions. What we recommend is to divide the sales regions into two regions such as North and South, and then have two separate sales managers for these regions. This would help simplify management and provide efficient control over the activities of these sales regions. (the exhibit on the last page shows a new proposed structure on the last page) Inter Communication System: Arif also identified the need to have an intercommunication system in the company. His new policy of handling claims within 24 hours meant that the company needs a proper MIS system to bridge the gap between all the functional departments and smooth out processes and communication. The MIS should be implemented in form of a separate department. Expense Control: Gulf needed to cut back on its expenses and still be competitive in the market. Gulf increased the number of branches to 13 by 1996, while the staff strength in the head office was reduced from 54 in 1993 to 33 in 1996. Employee related Decisions: One of the most important issues at hand for Gulf was taking decisions about the Human resource of the company. As soon as Arif stepped in as the CEO, he realized that his people needed training and motivation. Policies had to be formulated for the Recruitment and Development of the staff in order to ensure that the most competent people enter the organization and that their careers were developed to in order to have mutual benefits for both the company and the people. Furthermore, decisions had to be taken for the staff appraisals, promotions, and incentives for the employees.
Core Issue: Mr Arif needs to bring in specialists to run Gulf. When Arif stepped in as the MD of the company, he faced many employee related issues and rather then having a specialist HR Manager to over look these employee related issues, Arif himself took over the responsibility of solving these problems. As a CEO his job is to give strategy and direction to the overall operations of the company and facilitation in the achievement of those goals. He can restructure the organization and give specialized roles to specialized people for example, setting up a separate HR department which will look after problems pertaining to the employees such as recruitment, selection, identifying competent employees, training and development, updating employee knowledge, compensation and benefits, career development and retaining high performing employees. He took various initiatives to improve the standard of management at Gulf but he was clueless how he could further improve or maintain the high standards that he wanted Gulf to achieve. He didn¶t know if his actions would help achieve a balance between the cost efficiencies and the competent salary package that Gulf was maintaining. It clearly shows that he is experimenting with ideas rather then being certain about what he is doing. As a fresh graduate he has no experience of handling people and that is why he is not confident of his own abilities. We therefore suggest that he should restrict his role to providing a vision and overall strategy to the organization such as expansion, product portfolio expansion etc. but, should not over manage the organization at each level. This would only lead to inefficiency and cause more problems then the firm already faces.
