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MBA 5213- Chapter 15 Case Study: Transact Insurance Corporation

Sep 7, 2023

Chapter 15 Case Study

Questions can be found on page 565 using the Transact Insurance Corporation. case study. See the criteria under the Start Here section.

Case Synopsis

TransAct Insurance Corporation (TIC) provides automobile insurance throughout the southeastern United States. Jim Leon was hired as vice president of Claims and immediately began a series of changes. He decided to make morale and supervisory leadership his top priority. One of Leon’s most pronounced symbols of change was the “Claims Management Credo” outlining the philosophy that every claims manager would follow. After the credo was “approved” by claims managers, Leon announced plans to follow up with an annual survey to evaluate each claims manager’s performance. One year later, a survey of claims center employees was held. Claims managers didn’t believe that Leon would really conduct the survey. The survey had a high response rate, with most managers receiving moderate or poor ratings on the ten credo items. The survey results, including every comment made by employees at that claims center, were shown to employees. Claims center managers were shocked. Discussion meetings with employees were attended by the regional director to control or avoid confrontations. Soon after these meetings, some claims managers quit or asked for transfers into non-management jobs.

Epilogue. Shortly after the first survey, the newsletter was suspended. Jim had many more meetings with his managers and directors. Jim eventually concluded that too many of his managers were “technical experts” in insurance and lacked the people skills necessary for management To resolve this problem, managers were asked to compete for revised positions with a greater emphasis on management ability rather than technical prowess. A few new managers were brought in but most of the successful candidates were selected from the existing roster of managers. Employee surveys stopped after four years. Jim left and went into semi-retirement

  1. What symptom(s) ex in this case to suggest that something has gone wrong?
  2. What are the root causes that have led to these symptoms?
  3. What actions should the company take to correct these problems?

Chapter 15 Case Study: Transact Insurance Corporation

Discussion Question 1 Answer: Symptoms to suggest something is wrong

Jim Leon tried to improve the existing process in Transact Insurance Corporation by making some significant changes in the management process and client handling which would lead to more competitiveness of the organization in the industry. The change failed majorly because of the lack of employees’ commitment. The major symptom has been employees’ doubt that Jim would bring all these changes as announced, as they hardly anticipated the same (MacShane & Von Glinow, 2015). The claim management credo philosophy also failed due to this lack of commitment. The resistance from the employees has been unbreakable as they remained committed to the old routine as they apprehended they would hardly fit into the new process. Another symptom of failed change management would be the annual survey which resulted in a poor to an average score.

Sharing the review or the result of the survey with the employees and managers has been another symptom that should have been done confidentially. The managers and employees were upset as their comments and excerpts were also shared publicly. This was a mistake made by Jim as he shared all such details that led to a loss of reputation for many managers and employees who have been serving the company for the long term (Dzwigol et al., 2019). This also destroyed the relationship, accountability, and trust among other employees in Transact Insurance Corporation. The next symptom is one of the most crucial as employees felt a loss of reputation and started leaving the job. Sharing the detailed reports of the survey must have affected their career project and profile. They understood that being loyal to Transact Insurance Corporation would not pay off their commitment and dedication. Even their demotion to technical positions affected their career which again led to more turnovers (Cohen, 2019). Sharing the comments made by claim managers and employees could have been stopped if the probable consequence had been anticipated which worked as the biggest trigger and symptom for the employees to leave.

Discussion Question 2 Answer: Root causes leading to the symptoms

The major root cause leading to these symptoms was an authoritative leadership approach with only a top-down chain of command. This kind of leadership structure hardly helps in establishing or maintaining a healthy relationship among the employees regardless of position. Even the claim managers were not happy with the change and when the survey was brought into reality, they were taken aback a little (MacShane & Von Glinow, 2015). Employees also felt the same way as they were not agreeing to let this legitimate power, which was coercive for them, disrupt their way of working. Even the open-door policy as implemented by Jim could not help in this scenario. Along with this, the change in leadership approach curtailed the power and authority of the claim managers and other managers which also led to a certain loss of motivation for the managers. As the decision was taken by Jim only, other people felt left out of the process. The authoritative leadership might have led to dissatisfaction among employees, but the open-door policy led to a factor of demotivation for the managers.

Along with this, the change of layout in the workplace also worked as a root cause of such symptoms, as employees and managers were separated and managers were allocated to cubicle offices. This obstructed the communication between the employees and managers. Dealing with the claim adjusters required direct communication between the claim managers and employees, whereas a cubicle approach disrupted this process (Dzwigol et al., 2019). Another root cause of symptoms was the ineffective execution of the survey conducted by Jim. Although he promised that this survey result would be confidential and used to improve the company’s competitiveness, he shared all the details. Especially, the comments made by managers and employees to each other were also disclosed, leading to huge disappointments, embarrassment, and loss of reputation for the managers (Cohen, 2019). Jim might have tried his best to make a successful change, but the execution was wrong.

Discussion Question 3 Answer: Actions to correct these problems

Transact Insurance Corporation needs to know that company competitiveness can be improved by focusing on the employees more. A supportive culture in the organization is required first which would be a reflection of the mission and vision of the organization. Every employee needs to see the vision of the company so that they can make their own professional vision. This would lead to having shared goals, and a tendency or motivation to cooperate and coordinate with other employees including the managers. A major aspect of this case has been employee resistance which led to the absolute failure of the change process (MacShane & Von Glinow, 2015). Therefore, major action needs to be taken to deal with employee resistance. Employees and claim managers need to interact well before bringing or even proposing any change. This would require a participatory leadership approach where communication among the internal stakeholders would matter the most regarding change decisions (Dzwigol et al., 2019). The decision taken in this process would be the vision for the company for the next few years. Through this, all the employees would know what the organization expects from them. Another major problem here is the employees’ work overload. Employees have been complaining of such workload issues which also affect their health and well-being. This workload needs to be normalized with the intervention of the right management approach. In addition, claim adjusters are a great part of the business. Therefore, they need to be housed in a better environment. One of the most important actions would be to keep the employees’ data, comments, and other affairs confidential until and unless they violate any rules (Cohen, 2019).


Cohen, H. (2019). The change management fallacies. SAM Advanced Management Journal7497075(84), 1.

Dzwigol, H., Shcherbak, S., Semikina, M., Vinichenko, O., & Vasiuta, V. (2019). Formation of strategic change management system at an enterprise. Academy of Strategic Management Journal18, 1-8.

MacShane, S. L., & Von Glinow, M. A. Y. (2015). Organizational Behavior: Emerging Knowledge, Global Reality. McGraw-Hill Education.

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