Question

Reliable Underwriters is a risk management firm that provides insurance services to large organizations. Part of its operation is a claims-processing center that employs 156 clerical workers. These workers interact with clients to answer questions and provide information about the status of claims. Reliable has a corporate objective of obtaining the highest possible customer satisfaction ratings. However, recent customer satisfaction surveys suggest that some of the clerical workers are not adequately meeting clients' needs.

As part of an initiative to increase customer satisfaction, the management team of the claims processing center has decided to change the performance appraisal process. In the past, ratings have been made on a 5-point scale. A score of 5 represented outstanding performance, a score of 1 represented unacceptable performance, and a score of 3 represented average performance. Last year, 135 employees received a score of 4. Only 3 received a score of 5, and only 2 received the lowest rating. Since almost everyone receives the same rating, employees in the claims-processing center have little concern about being evaluated. For the most part, they see performance appraisal simply as a nuisance. However, the newly proposed process will create major changes.

The main change will be the use of a forced distribution. Each supervisor must rate at least 20 percent of employees as outstanding and at least 10 percent as unacceptable. This forced distribution is expected to clearly identify top performers. Low performers will also be identified and encouraged to either improve or seek employment elsewhere.

Questions:

Do you predict that the forced distribution will increase customer satisfaction? Why or why not?

Which clerical workers do you think will most strongly oppose the change?

How do you think supervisors will react to the proposed change?

What problems with contamination and deficiency could occur with the forced distribution ratings?

Answer 1

Question Oneà Do you predict that the forced distribution will increase customer satisfaction? Why or why not?

            Yes, I predict that forced distribution will increase customer satisfaction. First, we are looking at a company that cares solely on their customer satisfaction. Their whole operation is claims processing, meaning they are going to be talking/ developing a relationship with the customer. Second, we are looking at a company with a differentiation type of strategy. That means the workers would be assigned sets of similar tasks so they can specialize in doing certain things very well. This company wants its best employees so their customers are happy. Forced distribution is most suitable for organizations pursuing differentiation. Forced distribution encourages competition and brings out the best employees. When you have the best employees working, customer satisfaction goes up.

Question Twoà Which Clerical workers do you think will most strongly oppose the change?

            The clerical workers that will strongly oppose the change would be the workers who scored four or less. (The low to average performers). The low to average performers won’t be happy with the change to a more merit-based strategy because it involves being competitive. That means the outstanding performers are going to get noticed and awarded while the low performers are booted. This shows the committed expert or free agent are outperforming all of the other workers.

Question Threeà How do you think supervisors will react to the proposed change?

            I believe the supervisors giving the new forced distribution ratings will feel uncomfortable at the beginning. I feel like they will feel uncomfortable just because they were the ones giving everyone the same scores throughout the company. The supervisors were most likely uncomfortable with giving bad news to employees who weren’t doing well, so they basically worked with the parity strategy. The Parity strategy they worked with meant they gave everyone the same score, just to be fair. As the supervisors get more comfortable with providing positive and negative feedback to their employees they will become more comfortable with the merit strategy. Where they can weed out the top performers and the low performers without having to worry about feeling bad in delivering bad news. When the supervisors get more comfortable to the proposed change they will help the company achieve its best employees in order to increase customer satisfaction!