Mountain West Health Plans, Inc., a health insurance company based in Denver, is in the focus of the case study analyzed in this paper. Senior vice president for service and operations after the retirement of the head of the customer service department who applied leadership style “people first” were replaced by Erik Rasmussen, young manager who wished to demonstrate improved statistical results as quickly as possible. The Company faced new issues including increased rate of employees’ turnover, poor performance and increase in subscribers’ complaints as well as decline in the employees’ morale. This paper compares and describes two different leadership styles applied, analyzes their advantages and disadvantages and provides recommendations.
Problem Issues in the Customer Service Department
With a necessity to find a new director of customer service, Martin Quinn, as a senior vice president for service and operations, considers the possibility of cutting costs in the department where the expenses for salaries account for 70 percent of the total budget.
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Martin chose Erik Rasmussen young, ambitious and ready for the drastic changes manager. He was asked to review existing situation in the department and take control of costs. However, the implemented changes had mixed outcomes. Nonflexible schedule, decreased time for the solving of subscribers’ problems and thus increased number of calls per hour, applying statistical standards for effectiveness measurement improved overall performance of the department. At the same time, a sharp change in the working environment has reduced employee motivation and increased the percentage of employees’ turnover.
Leadership Styles of Evelyn Gustafson and Erik Rasmussen
According to Goleman, Boyatzis and McKee (2004) there are six main leadership styles that are common for the majority of business cases. These are visionary, coaching, affiliative, democratic, pacesetting and commanding leadership styles. Evelyn Gustafson’s leadership style is affiliative one. Affiliative style was shown in her desire to establish effective team work and create harmony in the employees’ interpersonal communications and relationships. The most part of the personnel were women. And as a woman, Gustafson tried to show by own example that although she shared their personal feelings in such stressful work, solving subscribers’ problems are set before any others. Moreover, Gustafson focused on improving individual performance of her subordinates through numerous trainings.
Rasmussen’s leadership style is characterized as pacesetting. According to Murray (2010) such a leader is very demanding to achieve high results in performance. Such a person strives to be the best both in the speed of tasks fulfillment and their quality and demands the same from its subordinates.
Strengths and Weaknesses of Pointed Leadership Styles
Strength of the Gustafson’s affirmative leadership style is keeping the morale of its employees high. Showing understanding and warmth to the employees, telling them that their work is important, and providing positive feedback created a united team where each employee followed the example of their leader. This is effective leadership style for stressful work and heavy workload. As Goleman, Boyatzis and McKee (2004) argue the weakness of this style is that employees are getting used to the fact that mediocrity is tolerated and numerous compromises reduce operating tone. It is ineffective during the times when the company needs implement changes and obtain visible business results.
The biggest advantage of Rasmussen’s leadership style is the ability to achieve business results quickly. The main weakness implies employees’ morale undercutting due to lack of understanding of such a sharp and rapid change and a sense of constant failures.
It should be emphasized that Martin Quinn’s great desire to obtain immediate results in cutting costs had controversial results. The biggest concern was combined with the decline in motivation. Moreover, as Pardey (2007) emphasized, drastic change implemented in any organization should be well-planned and conducted with the full involvement of company’s employees. Clear vision of the necessity of changes should be communicated to the employees with the aim they will share it.
Rasmussen had to communicate a clear message to the employees about the need of the transformation of the familiar to them working environment, explain the effect their support would have for the organization, demonstrate that they were still valuable for the company and their efforts were very essential to help the company to keep its competitive advantage at the market. Some cut in spending on trainings is possible during the time of company’s financial crisis. However, flexible scheduling has to be left unchanged, in order to show that in case the employee will record better results in the level of subscribers’ satisfaction and increased number of calls per hour then the company will make concessions.
Naturally the attitude that was demonstrated by Gustafson cannot be repeated, but it is very difficult for employees accustomed to it to adapt to a completely new way of working. No personal participation from the leader and nothing but strict requirements for a relatively low pay were the reasons why committed employees shifted to other companies.
Gustafson succeeded to keep the morale of the employees high compensating the low level of salaries through the flexible scheduling, providing professional development and being the leader who shows empathy and understanding. For more emotional female part of personnel it was rather important. Rasmussen failed to communicate the goal set before him to the employees to change their doubts and uncertainty, misunderstanding of the need for changes in the awareness, interest and support.
Rasmussen’s obsession to perform established task faster and better than his colleague Gustafson without paying attention to the employees’ morale and team spirit resulted in an increase in the subscriber’s complaints. In pursuit of the figures he forgot the human component. His pacesetting style of leadership is to be transferred to visionary leadership style. This style is best to apply when a company or its structural department needs a new direction. It is important to combine efforts in achieving better business results with the emphasis that employees understand the need and goals of implemented change.