group 2-pam project report

8/8/2019 Group 2-PAM Project Report

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ContentsObjective of Study ............................................................................................................................................. 3

Methodology ....................................................................................................................................................... 3

Overview of Indian Insurance sector ............................................................................................................. 3

Performance indicators of insurance agents .................................................................................................. 4

Organizational Citizenship behaviour (OCB) ........................................................................................... 6

Performance indicators of sales managers ..................................................................................................... 9

ICICI Prudential .............................................................................................................................................. 10

Performance Management at ICICI Prudential ...................................................................................... 11

Employee retention strategies for Management Trainees ................................................................. 11

Training and Development Programs (MDPs) ................................................................................... 11

General career path for a management trainee ................................................................................... 12

Performance Appraisal ........................................................................................................................... 13HR policies, and work environment in the company ........................................................................ 13

Competitor Analysis ........................................................................................................................................ 14

Bajaj Allianz .................................................................................................................................................. 14

Company Overview................................................................................................................................. 14

Performance Management at Bajaj Allianz Life Insurance ............................................................... 14

HDFC ................................................................................................................................................................ 17

Company Overview ..................................................................................................................................... 17

HDFC ............................................................................................................................................................ 17

Company Overview................................................................................................................................. 17

Characteristics of current Performance Appraisal Management of HDFC Standard Life ........... 17

Improvement Suggested by the management ..................................................................................... 18

References ......................................................................................................................................................... 19


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Objective of Study

To study the various performance measures set for sales managers and insurance agents in a

Life insurance organization in India. To compare them with those set by industry leaders and

see how well these measures are aligned to their overall business objective.

Methodology

We propose a two phase data collection method in order to gain perspectives on the current as

well as historical trends in performance measurement methods in the insurance sector.

Secondary Data Industry analysis, industry practices specific to performance measures,

competitor analysis. The source for this data will be the internet and the IIM Lucknow

databases.

Primary Data In-depth interviews with the company HR Manager/ HR Dept Head to find the

company specific details. The instrument used to gather the primary data will be a survey

questionnaire.

Overview of Indian Insurance sector

The life insurance sector in India was immerged in 1818 in Calcutta with the establishment of

Oriental Life Insurance Company. Coventationally Insurance sector could be broadly divided

into Life Insurance and non-Life insurance. Indian insurance market is worlds fifth largest

insurance with market value of US$41 billion adding 4.1 % GDP of Indian economy and is

growing at the pace of 34% annually. As per IDRA Life Insurance of India constitutes 65%

market share and rest 35% is contributed by major private players. Traditionally the insurance

companies are employing larger workforce with significant frontline seller with a notion to

reach larger customer base. But with the ups and downs in the market and entrance of a large

number of players, now they are focusing more towards the productivity of the sales force both

externally and internally rather than size. Recently there has been huge attrition rate among

the insurance sales force which adds to the quality problem of agents. For better understanding

of customers need and to bring quality service, insurance companies are increasing emphasis

on training and other developmental programs.


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Insurance is one of the few industries that showed positive growth even under recession. India is a

country which is still under insured to a larger extent. The employment opportunities and the change in

lifestyle have changed people perceptions on Life insurance. Life insurance is slowly moving from a tax

saving product to an investment product. Almost all the Life Insurance companies have a range of

products that are common across the industry. So the companies have to differentiate with their unique

positioning among customers and its service operations. Educating the customer, timely response to

their queries and quick clearance times would attract more customers earning more brand loyalty to

the company.

Certain business questions require regular assessments to track changes in the competitive environment

or shifting demand dynamics. In rapidly evolving industries, progress is often measured in weeks or

months, instead of the annual progression that characterize more stable industries. Companies

operating in fast-paced industries need to be aware of important shifts in their environment as they

execute on their growth plans. Strategies that were built on yesterdays market conditions may be ill

suited to tomorrows world. In this regard, regular tracking studies are often the best way for companies

to stay sharp.

In business, one always needs to know what ones competitors are doing. To survive one must perform

competitive intelligence activities and monitor the broader market for new developments that could

affect their company, products and brands, suppliers, and distributors.

Tracking its competitors is the only way to make sure a company is thwarting threats, taking advantage

of opportunities, marketing effectively, and, ultimately, winning in the marketplace. By performing

competitive intelligence, it will significantly increase its margins and profitability.

Hence this entire exercise is to identify the best in class services practices followed by insurance

companies to evaluate the performance of its agents and sales managers so that they are involved and

are satisfied with their job and also see the entire evaluation process as fair .

Performance indicators of insurance agentsThe following are the performance measurement indicators adopted by many insurance

companies in India for insurance agents.

1. New clients/customers

2. Number of referrals or buddies brought into the company

3. Ability to increase commission income


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4. Suggestions on compensation product, service, and/or agent training problems

5. Targets metany slippages

6. Trainings attended

7. Calls attended with juniors/ freshers

8. Number of customer complaints

9. Response time to customer queries

10.Discrepancies in application data

11.Special recognitions or awards (RnRRewards and Recognition)

The commission targets are checked periodically to see if the insurance agents are eligible for

any elite clubs or qualified to be sent on world tour trips which are part of the Rewards and

recognition given to agents.

Performance Measurement of any organization is very important as it determines the

Organization-employment relationship and outcome of which is visible in the behaviour of the

employee. Organization-employment relationship could be understood by Equity theory.

If the person is not satisfied with the appraisal as compared to his/her peers the productivity of

person drop or attrition rate of organization will rise.

Performance management should be carefully designed especially in environments where

attrition is high. Designing rewards and Recognition should be based on the kind of work

performed, personality of the employee/agent and his expectations.

Step 1

A person

evaluates how

he or she is

being treated

by the firm.

Step 2

The person

forms a

perception of

how a

comparison

other is

being treated.

Step 3

The person

compares his

or her own

circumstances

with those of

the comparison

other.

Step 4

On the strength

of this feeling,

the person may

choose to

pursue one or

more

alternatives.


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Need expectancy theory would throw more light as to how the rewards has to be designed.

Need Expectancy Theory

Some companies like DLF Pramerica Life insurance, Birla Sun Life offer agents (after achieving

certain target or after being with the company for a certain period of time) to be part of the

companys payroll and become an employee in the company.

Companies like LIC also give Best insurance agent of the Year awards apart from the

perquisites, trips, gifts.

Organizational Citizenship behaviour (OCB)

Several researches have been done on organizationally desired behaviour for insurance

agencies. According to Organ (1988), OCB is defined as individual behaviour that is

discretionary, that is not directly or explicitly recognised by the formal reward system, and that

in the aggregate promotes the effective functioning of the organization. Typically these are not

behaviours that are (i) part of ones job description (ii) one is trained to perform, and/or (iii)

one would be punished for failing to exhibit. Podsakoff and Mackenzie (1994) indicate that

helping, sportsmanship, and civic virtue are the ones most often recognized by sales managers.


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They also study the impact of these 3 forms of OCBs on the performance of life insurance

agencies. They found that (a) helping behaviour was positively related to overall efficiency,

customer satisfaction, revenue to full time equivalent, and quality of performance (b)

sportsmanship is negatively associated to customer complaints and (c) civic virtue correlated

negatively with the number of customer complaints.

Organ (1988) has suggested that OCBs increase in importance of upper-level managers, since

the higher the rank of an organizational member, the more diffuse is the expected, role-

related obligations of that member.

When evaluating their sales personnel, many managers rely on objectives sales productivity

(e.g., rupee sales volume and percentage of quota) as the principal indicator of a salespersons

overall performance. However, this often is not only the factor that they consider. The sales

management literature (e.g., Churchill et al 1990; Jackson et al. 1983; Jackson et al. 1995) has

identified a wide range of factors that sales managers use to evaluate performance in addition

to objective sales productivity. Many of these supplementary factors are salesperson

behaviours that managers believe are the precursors to sales productivity (e.g., calling on

customers, prospecting activities, planning and preparing for sales presentations, setting up

advertising displays, making service calls) are some of the measures that managers see as

contributing to the organisation in other ways (e.g., good citizenship behaviour, having a good

attitude, maintaining good relationship with co-workers, being cooperative). Also managers

may values OCBs because they enhance a managers

a) personal productivity,

b) efficiency of his or her unit

c) ability to attract the best employees, and/or

d) ability to adapt a changing environment

A sales managers personal productivity may increase when salespeople

a) help each other with work-related problems, because it allows the manager to spend more

time on productive tasks (e.g., strategic planning, improving business processes, securing

valuable resources);


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b) are conscientious, because it frees up the managers time, allows the manager to delegate

ore responsibility to them, and they require less supervision;

c) exhibit sportsmanship, because a managers time is not wasted dealing with petty

complaints;

d) take steps to avoid creating problems for co-workers (courtesy), because it allows the

manager to escape the trap of falling into crisis management; and

e) provide constructive suggestions for improving unit performance (civic virtue) to the

extent that they are actually helpful.

Citizenship behaviours may also improve the efficiency of a sales managers unit by

a) reducing the need to devote scarce resources to purely maintenance functions and

b) helping to coordinate the activities of sales teams and other workgroups.

A natural by-product of helping behaviour is that it enhances team spirit, morale, and

cohesiveness, thus reducing the need for group members (or managers) to spend more energy

and time on group maintenance functions. Likewise not creating problems for others (exhibiting

courtesy) reduces intergroup conflict and diminishes the need to spend time on conflict-

management activities. The coordination of activities among group members and between

workgroups may also be enhanced when sales personnel voluntarily attend and actively

participate in work unit meetings (civic virtue) and/or touch base with other team members

or members of other groups to avoid creating problems for them (courtesy).Many of the best employees and job candidates enjoy working in a positive environment with a

closely-knit group of co-workers. Helping behaviours may directly contribute to such an

environment by enhancing morale and fostering group cohesiveness and a sense of belonging

to a team, thus making the unit a more attractive place to work. Related to this, when

employees exhibit sportsmanship by being willing to roll with punches and refrain from

complaining about trivial matters, it sets an example of putting the interests of the work unit or

group ahead of ones own interests, thus enhancing a sense of loyalty and commitment to theorganisation.


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Performance indicators of sales managers

The following are the performance measurement indicators adopted by many insurance

companies in India for sales managers.

1. Increase in commission income

2. Number of new insurance agents groomed

3. Number of calls attended with the agents

4. Number of HNI clients added

5. Number of trainings taken for agents and peers

6. Insurance sales expense reduced/increased

7. Any suggestions made to products and process

8. Process efficiency improvements

9. Competitor tracking exercises

10.Knowledge database building documenting best practices

This data has been obtained after studying the 21 life insurance companies in India and

observing a sales managers job which is mostly people management and being vigilant about

the changes in environment (social, political and economic)

As we have already seen in the above section that a sales managers intervention is important

when there is a conflict or lack of cooperation in his team. Sales manager has to educate the

agents regularly on the new products released, their positioning and the target segment.

Without this information there might be conflicts between agents and the company. Since

agents are the first point of contact for any customer communication about the product should

be correct, appropriate and also in time. Agents should be educated about the tax laws of the

country, any important clause in the policy that should be communicated to the customer as

that could be an important decision criterion for the customer.

Sales managers should attend calls with agents till they are capable enough to convert a call.

This exercise can be repeated regularly to check the efficiency of the agent as well identify

his/her training needs. In this way sales managers can also make sure that the product

information is conveyed correctly to the customer and the positioning of the product is

appropriate depending upon the profile of the customer.


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Sales managers should also be shrewd to identify the motivational needs of an agent. Some

may be interested in perquisites, some prefer social status and some may be interested in

promotions. Identifying the correct need of any person would make the agents loyal to the

company and boost insurance sales.

Maslow's hierarchy of needs

Let us see more case studies of 3 Life insurance companies in India in detail. The performance

management process in each of these companies is given in detail in the following sections.

ICICI Prudential

ICICI Prudential Life Insurance Company is a joint venture between Indias ICICI bank and UKs

Prudential Inc. The total Capital infusion of Rs. 47.80 billion, with ICICI Bank holding of 74% andPrudential holding of 26%. It started its operation in 2000 after receiving approval from

Insurance Regulatory Development Authority (IRDA). Today, our nation-wide reach includes

over 1,900 branches (inclusive of 1,074 micro-offices), over 210,000 advisors; and 7


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bancassurance partners. At the end of March 2009, the total workforce of ICICI prudential was

stood at 25,000.

Performance Management at ICICI Prudential

Employee retention strategies for Management Trainees

They believe that the traditional job retention tool compensation is only one factor and that

differs from function to function. For them, job challenge and stretch are the two biggest

drivers of retention.

Retention strategies include focused trainings, both domestic and international depending on

the employees role and need leadership development initiatives, where individuals get a very

detailed personal development plan, and their seniors support to put it in place.

Another driver is their reward and recognition schemes, opportunities of being a participant or

leader of a cross-functional critical organizational project, other interventions such as specific

invites for critical company functions and meetings. A big driver, irrespective of the level, is the

pride all their employees have of working with the market leader.

Training and Development Programs (MDPs)

ICICI Prudential believes in adding value to its human capital through various programs, viz.

induction program, product training, e-learning modules and other functional training

programs. The aim of these trainings is to enhance the skills and enable them to carry their

roles most efficiently.

They send employees, irrespective of levels, for training. Sending employees abroad for training

is more need-based and depends on whether a resource needs to get trained on something

that is not available in India. They have domestic externals as well as international externals,

which are insurance- focused international programs.

Training Program for Advisors

Advisors are the people who are not the employees of the ICICI prudential, but works as

commission agents. Becoming an advisor is a part time job offer which can be taken up by any

person above the age of 18 years and who has passed 12th or higher secondary, wherein the


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person can utilize his/her contacts for making a different high source of income. They can be

associated either full time or part time as per their requirements. There are unlimited career

paths and opportunities for income & growth for deserving candidates. The training program is

conducted at all the branches of the company. Each batch consists of minimum of 12 17

candidates. The training program consists of following components:

(i)Career orientation Program 4 hrs.

The candidates are provided with information about prospects for Indian economy,

insurance industry in general and ICICI Prudential in particular. They are also briefed on

prospects and career growth of an advisor.

(ii) Advisor Induction Program (AIP) 4 days

The candidates are imparted with product knowledge, process knowledge and about the

company.

(iii) Refresher Training

I.R.D.A training of 50 hours duration (i.e., 7 hours per day for 7 days period) is mandatory. The

course comprises of different modules which are detailed below:

(iv) Evaluation Test

The student has to undergo a test at the end of the program. On successful completion of the

test, the student will become an IRDA (Insurance Regulatory and Development Authority)

Certified Insurance Agent. The advisors are also advised to complete Financial Markets

Beginners Module of NCFM (National Stock Exchange Certification) examination since the

company is now offering ULIPS or Unit Linked Investment Plans which offer both life cover as

well as scope for savings or investments options as the customer desires.

General career path for a management trainee

The career path for management trainees varies from function to function. It is a relatively flat

organization. To them, designations at times mean nothing. Growth is through larger and more

challenging roles. As a person outgrows a role, he is assigned another role.


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They are also making sure that their MTs have the ability to do cross-functional work. They

move people into various functions to ensure that they not only grow in their own verticals, but

also become managers. At the end of the day, they would like them to take more business-

focused loads.

Since they are a rapidly growing company, they do not face the problem of how to help their

employees grow. In an intra-organizational Gallup survey, for instance, growth and learning

were rated very highly (75 percentile). All their employees will have many opportunities to

grow, learn and get into different roles. By next year, they may also have an open posting,

where a person can choose roles from those available within the organization.

Performance Appraisal

Performance appraisal is carried out twice a year. It serves as an opportunity for two-way

discussion between managers and employees as well as a chance to review accomplishments

and set business objectives and goals.

Increments and promotions are given based on the performance and other parameters of

appraisal at the sole discretion of the management. Performance appraisal is conducted after

the training and contract period.

HR policies, and work environment in the company

A common characteristic associated with ICICI prudential is that it is a very aggressive

organization. For them, being aggressive has a positive connotation. It is connected to the pride

of being number one.

They are fairly open and transparent in their processes. There are no qualms in speaking their

minds, whether it is to an outsider or an internal person. They are not threatened about anyone

questioning their functions because they see it as a wake-up call. The mindset is that they need

to win and their purpose is to achieve their goals. They value integrity highly. Pride and

belongingness to the organization is very high.

The recruitment process has been fine-tuned through specially devised processes that identify

an individuals degree of customer orientation the principal trait needed in the banking


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business. New recruits have been provided training in skill upgradation and team building and

development of an appropriate mindset for better conduct of banking business.

Training programs of shorter duration were designed for the existing staff, with specific focus

on product information, customer service, cross selling of products and operational excellence.

The promotion process has been designed on the principles of openness and transparency.

Career progression is based on performance of employees being above an acceptable level with

emphasize on those with high business drive and potential. These exercises are carried out by

the Career Development Centre, which offers a comprehensive competency building program.

This process has been followed for the last 5 years and has been perceived as being fair and

credible by the employees.

A high level of performance is rewarded by a system of performance bonus. The ratio of

variable bonus to fixed salary is fairly high to attract and retain the best talent in the Bank.

Further, to ensure that the Bank does not lose high performers and to increase the motivation

levels and instil a feeling of ownership, the Bank has introduced an Employee Stock Option

Scheme (the Scheme).

Competitor Analysis

Bajaj Allianz

Company Overview

Bajaj Allianz Life Insurance Co Ltd is a unique joint venture among the global giants Allianz

Group (AG) and Bajaj Auto. Allianz AG's world ranking establishes it among the top insurance

companies in the world. Bajaj is the biggest two and three wheeler manufacturer in the world.

Bajaj Allianz Life Insurance Company boasts of a nationwide presence with over 4 million

satisfied customers and more than 1,200 branches across country and deals in primarily

unitlinked, traditional, health, child and pension policies.

Performance Management at Bajaj Allianz Life Insurance


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Needs Assessment: Bajaj Allianz implemented a performance evaluation template that ran

on standard Windows software. The tool worked well but was time consuming for

managers to complete and for HR staff to administer. Some appraisals were hand written,

others were entered on the computer. There was no consistency and quite often comment

fields were left blank. It was hard for managers to get past the blank page syndrome. The

HR staff spent hours and weeks of time copying, recopying, filing and routing appraisals for

review, revision and approval.

Bajaj Allianz began to consider automated software solutions for employee performance

management.

WCFs key requirements in an automated performance management system were:

Ease of useuser friendly

Technologically sound and secure

Readily customizable

Affordably priced

Consistency and Communication: Bajaj Allianz conducts a two-part performance appraisal

program. In the fall employees meet with their manager for a mid-year update and evaluate

progress against their performance plan. In the spring the final performance appraisals are

documented and goals are set for the following review period. Implementing the self-

appraisal function will make the program complete by allowing all employees to be a part of

the process.

Key benefit - time savings: Allianz has realized significant operational benefits attributable

to Performance Promost notably, time savings, ease of use and increased efficiency for

both managers and HR administrators. Because the process is centrally administered, there

are no reviews that fall through the cracks. The reports show where they stand and who has

and has not completed their appraisals. The entire program is well thought out, easy to use

and very efficient.

Exceptional Customer Support: Further bolstering the overall Performance Pro value

proposition is expert and knowledgeable customer support at no additional cost. Because

Performance Pro is a hosted solution, WCF commits no IT resources beyond access to


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computer terminals. All hardware, application, security, maintenance and technical support

for Performance Pro are completely handled by HRN.

Customer Benefit Summary

QUOTABLE QUOTES

Our managers loved

Performance Pro from the very

beginning because it is so easy to

use and because of all the helpful

and time saving tools that come

loaded with the system.

Thats what we wanted- the

ability to customize and

implement specific to our needs.

The entire program is wellthought out, easy to use and

very efficient.

Because the process is

centrally administered, there

are no reviews that fall through

the cracks.


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HDFC

Company Overview

HDFC

Company Overview

Housing Development Finance Corporation Ltd. (HDFC), Indias premier housing finance

institution has assisted more than 3.3 million families own a home, since in inception in 1977

across 2400 cities and town through its network over 250 offices. It has international offices in

Dubai, London and Singapore service associates in Saudi Arabia, Qatar, Kuwait and Oman to

assist NRIs and PIOs to own a home back in India. As of December 2008, the total asset size

has crossed more than Rs. 95,000 cores including mortgage loan assets of more than Rs. 83,800

cores. The corporation has a deposit base of Rs. 17,551 cores, earning the trust of more than 9,

00,000 depositors. Customer Service and satisfaction has been the mainstay of the

organization. HDFC has set benchmarks for the Indian housing finance industry. Recognition for

the servi9ce to the sector has come from several national and international entities including

the World Bank that has lauded HDFC as a model housing finance company for the developing

countries. HDFC has undertaken a lot of consultancies abroad assisting different countries

including Egypt, Maldives, and Bangladesh in the setting up of housing g finance companies.

Characteristics of current Performance Appraisal Management of HDFC Standard Life

It has been found that most of the employees think that the performance appraisal is

essential and they think it is used as a tool to improve performance, to determine

organization needs, and to basis for pay increase, promotions, and transfer.

The appraisal system facilitates growth & learning of employees and it is used to

distinguish performers.

The existing appraisal system helps the management to identify potentiality of

employees as well as useful for maintaining efficiency of the individual & organization.

Some employees do not know which basis their performance is appraised and most of

the employees feel that it help them discover their potential and enables to know their

short coming.


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Organization provides training & development programs to overcome the short comings

identified in performance appraisal.

When the employees had their promotions match with their future contributions then

new performance appraisal technique are adopted in the organization and any short

comings are informed.

The performance appraisal supports to experiment with new ideas as basis for

promotion

Improvement Suggested by the management

The performance appraisal system should facilitate career growth & learning of

employees

The short coming of employees should be informed to them after performance

appraisal

Promotion should be based on performance rather than seniority or any 69 other

factors

Performance appraisal should be appraised by granting awards/ merit certificate

New performance appraisal techniques such as 360 degree performance appraisal

system should be used

The performance appraisal should not be assessed by biased mind and personal grudge

Feedback should not be given to the employees more frequently

The extent of communication with the top & middle level management

The feedback to performance appraisal shouldnt only be given to those employees who

are rated below average but also to all the employees as is would motivate the

employees to perform even better.


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References

1. DAVID R. KLOCX AND T.W.BONHAM (1973). Life Insurance Agents and Executives: A Test of

incongruent Perceptions. Journal of Risk and Insurance

2. Scott B.Mackenzie, Philip M. Podsakoff, Julie Beth Paine (1999). Do Citizenship Behaviours

Matter More for Mangers Than for Salespeople? . Journal of Academy of Marketing Science.Volume 27, No.4, pages 396-410

3. http://www.oppapers.com/subjects/hdfc-standard-life-insurance-literature-review-page3.html

4. http://indiaonline.in/Profile/Economy/Sectors/Tertiary-Sector.aspx

5. http://www.iciciprulife.com/public/About-us/

6. Arvey, R. D., & Murphy, K. R. (1998). Performance evaluation in work settings. Annual Review of

Psychology, 49, 141-168.

7. Austin, J. T. (1992). The Criterion problem: 1917 - 1992. Journal of Applied Psychology, 77(6), 836-874

8. http://www.lifeinscouncil.org/media-centre/latest-news/487-insurers-expect-workforce-to-shrink-20-on-

revised-norms

9. http://www.thehindubusinessline.com/2007/09/22/stories/2007092251710600.htm

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