Aal Case Analysis

AAL – Case Analysis

Overview

The case-study dwells on the process of planning and implementing organized changes within Aid Association for Lutherans (AAL), a market-leading fraternal financial services provider. In 1985, a change in top management set the wheels in motion for transforming the organization. With the aim of preventing organizational inertia and being prepared for future market demand, the change at changing from a traditional organizational structure to a leaner and more highly-involved model. During the diagnosis stage, the organization identified gaps in aspiration-performance discrepancies and sought to remove them.

Issues

The reading, in particular, analyses the changes implemented in AAL’s Insurance Product Services (IPS) department. The change leadership team sought to implement a customer-centric model. While the change was largely successful in this regard, it also led to unanticipated lowering of employee morale. The transformation led to job enlargement, team re-assignment and change in compensation model. As many people naturally have a low tolerance for change, they would naturally be negatively affected from fearing of the uncertain future. The lack of adequate advance support systems, such as for trainings and counselling, could also have led people into the DADA syndrome where employees can experience emotional lows for a prolonged time. Perhaps, not being involved at the vision setting stage caused employees to not be able to connect emotionally and commit to the change.

Theory Application and Recommendations

• Speed of Change: AAL adopted a drawn-out approach to implementing the organizational change within the IPS team. This was due to the fact that the change was on the account of future market demand rather than poor current performance. However, this had a negative impact as the employees ultimately felt fatigued by the change.

Suggestion: AAL could have implemented the transition phase at a faster pace.

• High-Involvement Management: At the organization-wide level, AAL had adopted a more highly-involved approach. Diagnosis was done by various surveys and interviews while the vision was set after seeking the input of various AAL managers. However, IPS did not adopt a similar high-involvement approach as the vision statement was set by just the change leadership team.

Suggestions: It may have been better if they had included the managers and associates while making such decisions initially. This would help get the employees more committed to the change.

• Support Systems (Training & Feedback): While the company did emphasize a lot on communication on the change, it did not provide enough support systems to meet employee needs. During the “transforming” stage, the firm did not provide enough training to enable the employees to take on the enlarged roles. There were also inadequate systems in place to provide feedback which is very important during the transforming phase.

Suggestions: Implement trainings systems to help employees cope in new roles. Feedback mechanisms required to enable associates to gauge their performance.

• Managing Passive Resistance: Few employees could innately have a low tolerance for change and may have been adversely affected when told that they would have to adjust to a new team and the “self-managed” set-up. The IPS organization should intervene by making the employees feel more comfortable in the new environment by holding team-building activities.

There may also have been a difference in the way the employees assessed the new compensation plan based on team efforts and higher percentage of variable pay. The IPS organization should have made more appropriate communication to allay the fears of the employees. They could have also adopted a more participatory style of decision making when formulating the new compensation scheme.