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Contents

Objective 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 ...........................................................................................................................13 HR 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

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 world‘s 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 customer’s need and to bring quality service, insurance companies are increasing emphasis on training and other developmental programs.

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 yesterday’s market conditions may be ill suited to tomorrow’s 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 one’s 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 agents
The 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

4. Suggestions on compensation product, service, and/or agent training problems 5. Targets met –any 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 (RnR –Rewards 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.

Step 2 Step 1 A person evaluates how he or she is being treated by the firm. 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.

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.

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 company’s 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 one’s 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.

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, rolerelated 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 salesperson’s 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 manager’s 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 manager’s 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);

b) are conscientious, because it frees up the manager’s time, allows the manager to delegate ore responsibility to them, and they require less supervision; c) exhibit sportsmanship, because a manager’s 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 manager’s 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 conflictmanagement 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 one’s own interests, thus enhancing a sense of loyalty and commitment to the organisation.

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 manager’s 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 manager’s 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.

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 India’s ICICI bank and UK’s Prudential Inc. The total Capital infusion of Rs. 47.80 billion, with ICICI Bank holding of 74% and Prudential 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

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 employee’s 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

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.

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 businessfocused 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 individual’s degree of customer orientation – the principal trait needed in the banking

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

 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. WCF’s key requirements in an automated performance management system were:     Ease of use—user 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 selfappraisal 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 Pro—most 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

computer terminals. All hardware, application, security, maintenance and technical support for Performance Pro are completely handled by HRN.  Customer Benefit Summary

“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.”

“That’s what we wanted - the ability to customize and implement specific to our needs.”

QUOTABLE QUOTES

“The entire program is well thought out, easy to use and very efficient.”

“Because the process is centrally administered, there are no reviews that fall through the cracks.”

HDFC Company Overview

HDFC
Company Overview

Housing Development Finance Corporation Ltd. (HDFC), India’s 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 NRI’s and PIO’s 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.

 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 shouldn’t 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.

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-onrevised-norms

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