Do we need a new system? A Case of Halflah Insurance Company Pvt. Ltd.

This case was written by Khurram Shahzad Malik 1, student of Ph.D. (Human Resource Management), Mohammad Ali Jinnah University, and Assistant Professor Riphah International University, Islamabad, Pakistan. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.

kshahzad78@yahoo.com

Do we need a new system? A Case of Halflah Insurance Company Pvt. Ltd. __________________________________________________
It was 11 O clock in the morning and Mr. Khalid Salman, CEO of Halflah Insurance Company Pvt. Ltd. (HIC) was looking outside the window of his office with a cup of coffee in his hand. What a bright sunny day it is! he said to himself. He was reevaluating his recent decision of implementing a new information system in his organization and seemed little worried about the aftermath. A while ago he had received a telephone call from Manager Services & Support of his company. The manager informed him about telephone calls that he had received in last one hour from different clients of the company. The subject of all the calls was the same. The clients were having great problems in filing insurance claims through their newly installed web based claim processing system. The reasons for these problems were little computer literacy and unavailability of computer for each employee of client organization. It was not only the clients who were the victims of the new system but the employees were also very much disturbed by this system. He recalled the words of Claim Processing Officer of his company who said, After all why do we need this new system? It has made our life a great misery. I dont see any benefits out of it till now and its already one and a half month since its implementation. Not only are we suffering from it but more importantly our clients are loosing confidence on us. Background Halflah Insurance Company Pvt. Ltd. is a local insurance company which provides medical insurance services to employees of its client organizations. Its major clients include local companies and multinationals operating in the country. The company was incorporated in 1995, with offices in three different locations in the country and head office in federal capital. It has about 100 employees. The company has good financial health because of little competition in its target market.

In the middle of 2006, the CEO announced to change the claim filing and claim processing systems. The existing manual systems were replaced by a highly automated solution. The employees were used to working manually since start of the company. There was little involvement of computers in company operations. The operations of the company were divided in two categories; first receiving claims from its clients and second processing claims and making payments against these claims. On company prescribed manual claim form the employees of client organization used to file claims at the end of every month. These claim forms were available to them at Accounts Office of their organizations. These claims were then sent to HIC for reimbursement. The claims were then processed by claim processing officers of HIC under the terms of agreement with the client organization. Then these claims were sent to head office for approval and cheques were issued to the client. The movement of claims from client to company and then to head office and back to company and client was through traditional postal system. The entire process normally took 20 to 25 days and payments were made to client at the end of next month. The Decision Khalid took charge of the company as CEO in December 2005. He was previously working with a reputable local company which was a Hi-Tech organization. He was very surprised to see every thing being done manually. He could not find reasons for not carrying out all the company operations through a sophisticated information system. So he decided to automate the entire process of claim filing on clients end and claim processing on companys end. He went for an Off-The-Shelf solution which was pretty good and could easily have catered all the needs of the company on clients as well as employees end. The new information system was a web based solution and could be accessed by clients through internet.

The decision was purely based on Khalids personal experiences of success with information technologies. He did not involve neither employees nor clients in his this decision. He believed that this new system could give substantial benefits to the company and clients equally. Khalid called a meeting before the implementation of the new system. All the employees of claim processing department and representatives of all the clients were present there. He said, Under the new system our clients will be required to log on to companys web site to access electronic claim filing form. They will fill and file claims online. The employees will also process the claims online. The head office people will also have online access to the processed claims. This will not only help us in doing our work more efficiently and effectively but will also reduce the client payment time from 25 to just 5 days, thus increasing customer satisfaction. The Problem In July 2006 when new system went online and clients and employees were asked to give away the manual processes, it created a cry all around. Every one was having great difficulty in working with new system. Employees were not given formal training but the implementation team helped them in using this new system on day to day basis for first 15 days. This although greatly helped in reducing errors done by employees but still employees were having few problems. Another reason for employee resistance towards new system was expected future job slashing. Under new system a claim could be processed in 10 minutes while it took 30 minutes under old system, so organization will be requiring less number of claim processing officers in future. On this apprehension employees resisted the change. The real issues lied on clients end. Because when they started filing claims through this new system, there was no one who could guide them. The error rate was extremely high and queries for guidance and support were beyond the processing capability of services and support officers. They asked for a person who could actually go with them to their

organization at the end of every month to file claims on their behalf. This was simply out of question for the company. Khalid was still in his office thinking what could have been done when the door of his office opened. Manager Services & Support along with Manager Operations entered his office to report the current situation. As Khalid had expected situation was the same rather had been getting worse. What should we do now, asked Manager Services & Support. Discussion Questions 1. How do you analyze Khalids decision of computerization when every thing was being done smoothly in manual form? 2. Do you think Khalid had implemented too much change at once? 3. How Khalids change initiative can be mapped with Levins change management model of unfreezing, changing and refreezing the situation? 4. What are the real reasons of problems faced by employees and clients? 5. What could have been done differently to better implement the change?