Executive Summary

Insurance is one of the most significant financial institutions in the sense that besides covering
losses of individual policy holders for death and accidents or damages of properties, it serves as a
vital national purpose of channeling the savings of the general mass or special group of people to
investment.
The aim of this report is to examine the HR issues & problems, approaches and upcoming
challenges in insurance sector of Bangladesh. Insurance Industry in Bangladesh passed through a
century long history of evolution, yet struggling to attain its mature stage. Considering what is
happening in outside world, especially in other similar or neighboring countries, our insurance
industry still need to go a long way. Human Resource has been considered as one of the most
important factors today in managing all material facts of an organization. Efficiency,
productivity of any organization is dependent on the human capital. But in Insurance Industry the
quality of manpower is quite poor and no major investment or focus was put in for their
development. Majority of Bangladeshi insurance companies dont have separate Human resource
department. Insurance is a very labor intensive industry. There is a need of man power
plans/Human resource approaches to identify the efficient human resources in order to
implement the objectives and gain strategic competitive advantage of insurance industry. HR is
being involved in every area of the organization in 21st century and it has resulted in many
positive developments but also has left many concerns for HR managers. So todays HR is not
based on the traditional functions of HR as like as before. Now HR of insurance sector have to
face lots of challenges such as globalization, diverse workforce etc.
To achieve strategic competitive advantage, organizations in insurance sector ought to lay
greater emphasis on human resource management practices. To bring the competence in
economy, every company in insurance industry needs proper manpower planning, recruitment,
training, proper placement of performance appraisals, cultural change for employees.

Insurance Industry in Bangladesh

Introduction
In legal terms, insurance is a contract of uberrima fidei, i.e. a contract of utmost god faith.
Insurance is one of the most important financial institutions in the sense that besides covering
losses of individual policy holders for death and accidents or damages of properties, it serves as
an important national purpose of channeling the savings of the general mass or special group of
people to investment.

History of the Industry:

After the emergence of the Peoples Republic of Bangladesh in 1971, the government
nationalized the insurance industry along with the banks in 1972 by Presidential Order No. 95.By
virtue of this order, all companies and organization transacting all types of insurance business in
Bangladesh came under this nationalization order. Through the enactment of Insurance
Corporation act VI, 1973 two corporations, namely the SadharanBima Corporation for general
insurance, and the JibanBima Corporation for life insurance in Bangladesh were established on
14th May, 1973. Thereafter SBC was acting as the sole insurer of general Insurance till 1984.The
government allowed the private sector to conduct business in all areas of insurance for the first
time in 1984. The insurance market now consists of 62 companies, which are: two state owned
companies (JibanBima Corporation for life insurance, and SadharanBima Corporation for
general insurance), 43 general insurance and 17 life insurance companies in the private sector.
Thus the insurance sector in Bangladesh has grown up substantially and deepened remarkably
with number of companies in both life and general segments. With the expansion of size of the
insurance market, the volume of assets of the industry has also increased substantially. The Act
of 1984 made it a requirement for the private sector insurance companies to obtain 100%
reinsurance protection from the Sadharan Bima Corporation.

Present Position of the Industry:

Insurance industry in Bangladesh passed through a century long history of evolution, yet
struggling to achieve its mature stage. Considering what is happening in outside world,
2

especially in other similar or neighboring countries, our insurance industry still need to go a long
way. Governance model is weak, product base is shallow, risk taking ability is low due to low
capital base and premium income is low with low market penetration. There are instances of
major corruption with regard to premium collection, reinsurance, claim settlement and etc. There
are also instances of insider trading, director's manipulation and lack of control. The quality of
manpower is quite poor and no major investment or focus was put in for their development. The
preliminary review by the regulatory agency revealed horrendous pictures. Few company bosses
even tried to harass the regulators under the coverage of few political masters since they were not
dancing according to their tunes. The intelligence agency reports also found massive
irregularities in the major life and non-life insurance companies. A large section of population,
non-resident workers/remittance earners, agriculture are still outside the insurance coverage.
Their asset-liability management is quite poor and there is rampant interference by the board in
day to day affairs of the companies. In terms of Human resource issue-Majority of Bangladeshi
insurance companies dont have separate Human resource department. Some insurance
companies have simply changed their name Administration or personnel department to Human
Resource Department, they dont use Human resource Mechanism fully. Training plans and
module should be planned properly and appropriately and both need the efficient and effective
human resources. Insurance companies also need to help their employees to career development
like job rotation, counseling &guidance etc. Insurance companies in Bangladesh dont follow
any kind of systematic approach for performance appraisals. Similarly performance feedback and
counseling is absent in the industry. Some do it in a limited and scattered way.

Product and Services:

In Insurance industry, life and non life insurance-both types of companies provide different type
of lots of products/schemes and services. Only major products services are given below:

i.

Home

ii.

Health

iii.

Disability

iv.

Casualty

v.

Life

vi.

Property
3

vii.
viii.

Liability
Credit

ix.

Marriage Endowment

x.

Child Protection

xi.

Pension Policy

xii.

Insurance financing vehicles

xiii.

Re- insurance Service

xiv.

Risk Improvement Services

xv.

Industrial Development through Equity participation etc.

Market Share:
Insurance market in Bangladesh remains fragmented and extremely competitive due to existence
and operation of a large number of companies, incommensurate with the size of the market. The
life insurance segment recorded a significant review-period CAGR of 16.4%, driven by the
country's large population, robust economic growth, increased promotional efforts by private
insurance companies, rising disposable income levels and increased awareness of the need for
insurance. Life insurance led the Bangladeshi insurance industry during the review period,
accounting for a 76.9% share of gross written premiums in 2012. The market share of the largest
non-life insurance company is 13.59%. The top 7 private sector insurers collectively account for
a market share of 46.54% in the non-life sector.

Objectives:
1. HRM problems and issues facing Insurance Industry in Bangladesh.
2. HRM approaches need to be taken to ensure ongoing Strategic Competitive Advantage.
3. HRM challenges will face Insurance Industry in Bangladesh in 21st century

HRM Problems and Issues Facing Insurance Industry in Bangladesh

Human Resource has been considered as one of the most important factors today in managing all
material facts of an organization. Efficiency, productivity of any organization is dependent on
the human capital. The organization must hire the right persons who can translate the
organizational opportunities into productivity. Organizational capability relates to hiring and
retaining competent employees and developing competencies through effective human resource
4

management practices (Ulrich & Lake 1991). Indeed, developing a talented workforce is
essential to sustainable competitive advantage (Kundu&Vora 2004).Human resource
measurement is about valuing the contribution people make to the success of an organization,
and the term human capital describes the contribution made by human skills and knowledge to
the production of goods and services (Becker, 1993). From these definitions, it is clear that
efficient HRM practices are inevitable factor in determining the growth and prospects of any
organization.
Insurance is a knowledge based Industry and this is not needed raw materials and machineries. It is
the Human being; the use of which needs to be needs to be planned, coordinated and financially
controlled. To bring the competence in economy, every organization needs proper manpower
planning, recruitment, training, proper placement of performance appraisals, career development
program for employees. The responsibility, the management of the effective utilization of human
resources lies with the management. In order to perform this responsibility the management of
insurance organization should be proficient using it human resource properly. Human capital
development is important for sales force and desk employees to attain and grind their capabilities.
As an important financial institution under the financial system, Insurance Industry has not yet been
providing full range of financial services to the people because It has a number of limitations, one of
them is low capable of human resources. For this, the insurance sector has not gained much
popularity and yet not developed so much. Some of the important matters like manpower planning,
career planning, job enrichment plans are absent. Very few companies have training departments and
when training is arranged, funds are not enough for the sessions. Training institution are not working
on present need of training and do any kind of research. In universities, Insurance is not taught as
specialized discipline. Senior executives of the insurance companies are not professionally qualified
and not trained enough. After a long age of operations, the insurance sector had not been recognized
as one of the trusted financial institution like bank. The entrepreneur of insurance business has to
take steps to change it by hiring the efficient people and retaining them. People can change its
environment and increase trust to the public.
Problems & Issues Facing Insurance Industry in Bangladesh are given bellow:

i.

Education/Training:

The Scope of Insurance education is limited in Bangladesh.

Lack of proper training institutions or planned or structured training programs.

5

ii.

Manpower:

Companies have serious shortage of professional manpower (lack of knowledge

worker).

Lack of effective executives who are needed to make the management effective.

Systematic Job analysis process not utilized.Recruitment is done on pick and choose
basis.

Lack of motivational tools

HRM approaches need to be taken to ensure ongoing Strategic

Competitive Advantage
The impact of human resource management (HRM) policies and practices on firm performance
is an important topic in the fields of human resource management, industrial relations, and
industrial and organizational psychology (Boudreau, 1991; Jones & Wright, 1992; Kleiner,
1990), An increasing body of work contains the argument that the use of High Performance
Work Practices, including comprehensive employee recruitment and selection procedures,
incentive compensation and performance management systems, and extensive employee
involvement and training, can improve the knowledge, skills, and abilities of a firm's current and
potential employees, increase their motivation, reduce shirking, and enhance retention of quality
employees while encouraging nonperformers to leave the firm (Jones & Wright, 1992; U.S.
Department of Labor, 1993). Most corporate annual reports boldly state that the firm's people are
its most important asset. However, despite these widely-held beliefs and all-too-frequent
statements, many organizational decisions suggest a relative low priority on both the human
resources of the firm and the Human Resource (HR) department. For example, when
organizations require cost cutting, they look first to investments in the firm's people such as
training, wages, and headcounts.
Bailey(1993) noted that the contribution of even a highly skilled and motivated workforce will
be limited if jobs are structured, or programmed, in such a way that employees, who presumably
know their work better than anyone else, do not have the opportunity to use their skills and
abilities to design new and better ways of performing their roles. Cross-functional teams and job
rotation are all examples of such structures.
6

It is most important for organization to recruit right person in right place to perform well. Insurance
Industry is a service industry. A definition given by John. M. Rothwellso seems suitable, Goods are
produced, Services are performed. Customer

can feel the performance of insurance companies

when the promise is fulfilled through prompt settlement claims either at maturity or earlier case of
life insurance or on the happening of accidental loss resulting from perils insured in the case of
general insurance. The manpower planning starts by analyzing the companies mission and vision
and that should be rendered into demand of human resource. Recruitment policy of insurance
industry may formulate to recruit young people.
After selecting the right person through competitive examination from pool of candidates, then
employee should

give foundation through training.A insurance company professionalism reflect

through its training and educational program. These help to mould the employees behavior, develop
skills and knowledge and help new employees to recognize the corporate culture. Lack of efficient
HRM practices reduces employees satisfaction towards their organization and ultimately that affects
their commitment to the organization. Training programs need to be given higher weight than normal
interviews. how well training is held depends on the considerable degree of management perspective
of top administration.

The Resource Based View of Competitive Advantage

This view focuses on firm resources that can be sources of competitive advantage within the
industry (Barney, 1995). Three basic types of resources can provide competitive advantage
(Barney, 1991). Physical capital resources include such things as the firm's plant, equipment, and
finances. Organizational capital resources consist of such things as the firm's structure, planning,
controlling, coordinating and HR systems. Finally, human capital resources include such things
as the skills, judgment, and intelligence of the firm's employees. With this in mind, we propose
that to identify the value of a Insurance companies human resources as well as the proper role of
the HR function in managing the Insurance Companies human resources to achieve competitive
advantage in the Insurance Industry. One needs to ask four questions. These questions include
the questions of Value, Rareness, Imitability, and Organization, or what is referred to as the
VRIO framework (Barney, 1995).
I.

The Question of Value: Firms create value through either decreasing product/service
costs or differentiating the product/service in a way that allows the firm to charge a

premium price. Thus, the ultimate goal of any HR executive is to create value through the
human resource function.
II.

The Question of Rareness: An HR executive must examine how to develop and exploit
rare characteristics of the firm's human resources to gain competitive advantage.

III.

The Question of Imitability: If other firms can imitate these characteristics, then over
time the characteristics will provide no more than competitive parity. Thus, the HR
executive must attempt to develop and nurture characteristics of the firm's human
resources that cannot easily be imitated by competitors.

IV.

The Question of Organization: The firm must be organized to exploit the resource.
Organization requires having in place the systems and practices that allow human
resources characteristics to bear the fruit of their potential advantages.

Competitive Advantage Stems from HR Systems more than from Single HR

Practices.
Much of the writing on Strategic Human Resource Management has focused on human resource
practices as a source of competitive advantage (e.g., Schuler & MacMillan, 1984). The
assumption is that firms that engage in the best human resource practices, i.e., have the best
selection system, or best training program, or best reward system, etc., will have a competitive
advantage over firms that fail to use this practice. Both the recent work on Utility Analysis of HR
programs (c.f., Boudreau, 1991; Cascio, 1987; Jones & Wright, 1993; Steffy & Maurer, 1991)
and empirical work on the relationship between HR practices and performance (e.g., Terpstra &
Rozelle, 1993) has demonstrated that HR practices do provide value to the firm. Needless to say,
sophisticated technologies and innovative manufacturing practices alone can do very little to
enhance operational performance unless the requisite human resource management (HRM)
practices are in place to form a consistent socio-technical system. For better functioning of
insurance sector and for a suitable growth of this sector there, HR plays a vital role in managing
manpower with the consistence to the goal of the corporation. For this reason, insurance
organizations need to carefully evaluate their existing HRM practices and modify them, if
needed, so that employees can effectively contribute to operational performance improvement.

 Understand the value of people in the firm and their role in competitive
advantage
Knowing the economic value of the firms human resources is a necessary precondition before
any HR executive can begin to manage the function strategically. People of any organization are
fundamental assets who transform from material assets to productive resources in order to satisfy
the social needs of the country. They reach the organization into success and do sustainable
development within the organization. Reichheld (1996) notes that people contribute to firms in
terms of efficiency, customer selection, customer retention, customer referral, and employee
referral. Jeffrey Pfeffer (1994) issued sixteen types of practices to gain competitive advantage
through people:
1. Employment Security: Security of employment signals a long-standing commitment by
the organization to its workforce
2. Incentive Pay: People are motivated by more than money -- things like recognition,
security, and fair treatment matter a great deal.
3. Participation and Empowerment: A broader participation by workers and allows
employees influence in controlling their own work process.
4. Symbolic Egalitarianism: One important barrier to decentralizing decision making, using
self-managed teams, and eliciting employee commitment and cooperation is symbols that
separate people from each other. Consequently, it is not surprising that many of the firms
that are known for achieving competitive advantage through people have various forms
of symbolic egalitarianism.
5. Long term Perspective: The time required to implement HRM practices and start seeing
results means that a long-term perspective is needed.
6. Selectivity in recruitment: It means that one must be careful to choose the right people,
in the right way.
7. Employee Ownership: Employees with ownership interests in the organizations for
which they work have less conflict between capital and labor - they are both capital and
labor. Its investment policies, and who are less likely to support hostile takeovers,
leveraged buyouts.

8. Teams and Job redesign: Positive results from group influences are more likely when
there are rewards for group efforts, when groups have some autonomy and control over
the work environment, and when they are taken seriously and become the fabric of the
organization. In Insurance Industry every employee need to act as team player.
9. Wage Compression: Teamwork is fostered by the sense of a common fate, and that sense
is enhanced when people are rewarded comparably.
10. Measurement of Practices: it indicates how well the organization is implementing various
policies.

11. Cross Utilization and Cross Training: The most obvious is that doing more things can
make work more interesting. Variety in jobs permits a change in pace, a change in
activity, and potentially even a change in the people with whom one comes in contact,
and each of these forms of variety can make work life more challenging.
12. High Wage: High wages tend to attract more applicants, permitting the organization to be
more selective in finding people who are trainable and who will be committed to the
organization. Paying more makes turnover less which is important for insurance industry
Bangladesh.
13. Information Sharing: Employees demand and receive more consultation about
operations and much more information about productivity and profitability.
14. Training and Skill Development: An integral part of most new work systems is a greater
commitment to training and skill development.
15. Promotion within:. It facilitates decentralization, participation, and delegation because it
helps promote trust across hierarchical levels--supervisors are responsible for
coordinating the efforts of people whom they probably know quite well.
16. Overarching Philosophy:

It provides a way of connecting the various individual

practices into a coherent whole and also enables people in the organization to persist and
experiment when things don't work out immediately.
To gain Strategic Competitive Advantage, service organizations ought to lay greater emphasis on
human resource management practices.

10

HRM challenges will face Insurance Industry in Bangladesh in 21st

century
A constant tension exists in the trade-offs between focusing decision making and resource
allocation on the short and long term in most organizations. This conflict also exists within the
HR function. Many HR functions are struggling so hard with meeting current needs that they
have little time to explore long term organizational plans. However, this tendency must be
broken if HR executives want to play the role of strategic partner. It is really a huge challenge to
understand the psychology of workforce, retain the best talents of the insurance industry,
motivate them to perform better and handle diversity while maintaining unity simultaneously.
So todays HR is not based on the traditional functions of HR as like as before. Under the role of
strategic business partner, HR assures their involvement in every decision making areas. Its a
great opportunity of HR professionals to be involved in all areas of any organization. As HR is
responsible for individual performance as well as organizational excellence, HR should involve
in all areas of the organization. It helps HR to perform in a better way. So in summery we can
have the conclusion that the outline of HR in 21st century beyond the traditional functions of
HR. Now HR involves in assisting of Marketing, Accounting, Operations, Finance, Customer
Service, Production, every department of any organization.

Going Global:
Going global is the HRM challenge for insurance industry Bangladesh. The current
challenges caused by the globalization pressures in the realm of economics behoves work
communities to review their personnel training and management practices (Pitkanen
2007). Companies must develop a customer-oriented workforce to deliver service quality,
which is met through training (Kundu 2000). Training must be viewed as an important
investment for future success (Zeithmal and Bitner 2004).Companies need to provide
comprehensive training to the agents in the ways to narrow the gap between clients and
agents i. e. trust building training (Law, Wong, and Theresa 2005). Long-term basis
training has a systematic influence on the improvement of management techniques (Zadel
2006).

11

 Workforce Diversity:
Diverse workforce (diversity) refers to the co-existence of people from various sociocultural backgrounds within the company (Kundu 2004). A growing diverse workforce
(Kundu 2003), increased competition for businesses (Jain and Verma 1996), growing
number of mergers and acquisitions, and increased emphasis on globalization (Terrisse
2001) require an understanding and appreciation of a diverse set of cultures for having
the best people for an organization (Lillevik 2007). Dynamic companies look for people
who are different from us because the diverse workforce may bring different talents,
interests, and viewpoints (Simmons 1996). The companies can succeed at diversity with
full support from the top management (Hayes 1999). The work communities as a whole
should be helped to deal with increasing cultural diversity (Pitkanen 2007). Thus, HR of
insurance sector needs to be mindful and may employ a Think Global, Act Local
approach in most circumstances now.

Talent Acquisition:
The biggest challenge for HR managers of insurance industry today is talent acquisition
and employee engagement. The new knowledge and competency requirements that HR
people will need to embrace. There is lack of standardization in education, especially in a
global context. As businesses expand and hire beyond borders, the need for HR to
scrutinize job qualifications carefully becomes ever more important. Talent Acquisition'
describes identifying the sources of talent pool by assigning job to HR consultant,
headhunters, process of selection through newspaper advertisement, online selection and
through conference recruitment. It involves all these processes and also includes finding
attractive and highly talented experienced individual into the organization. The employee
of insurance industry have to experienced at structural design, process management and
project management as well as a range of skills with respect to facilitating learning and
change.

The Pace of Technological Change:

One of the most critical issues that Insurance Industry of Bangladesh face in the 21st
century is that technology is currently outstripping our ability to use it. If the people in
the insurance industry can figure out ways to take advantage of the technology better and
12

quicker, then they can create a sustainable competitive advantage. The insurance
companies need to create the ability to continually figure out ways to use the technology
more successfully. .Therefore, upgrading the computer technology can help the local
insurers more sound and sustainable. So, as the technology changes, people continually
figure out ways to take advantage.

Information & Knowledge age :

Insurance sector effectiveness will increasingly depend on attracting, utilizing and
retaining people who can use their knowledge to solve problems, create services, develop
new work processes and satisfy customer needs. The information and knowledge age will
reduce costs and time and, second, for the more analytical decision support. Insurance
business is completely driven by knowledge .The business

of selling

insurance

products requires assessing the profile of the customer and designing the right
policy. The process is facilitated by data base and data warehousing. The emergence of
information and communication technology can capture and disseminate large
quantities of data and information for managerial judgment in insurance and
learning about customer needs and behavior.

Retaining & Engaging A Changing Workforce:

As the demographic composition of the workforce changes, their motivations
and expectations evolve too. It is imperative that HR of insurance industry understands
what is most valued by these workers. Is it compensation, or prestige, or perhaps
autonomy at work? In many cases, HR will have to adapt their incentives, benefits
policies, and retention strategies for workers that are not just driven by financial
compensation. It is not enough simply to recruit able staff. Companies have to make sure
that their people are committed, productive, and do not leave after a short period,
incurring substantial turnover costs and wasting all previous training invested in them.
Retaining employees is a major challenge and HR will have to explore varied retention
techniques, adapted to the preferences of the relevant individual.

Conclusions
Insurance is a vast Industry and very labor intensive. People are the actual resources of an
organization. There is needed to man power plans to identify the needed human resources in
13

order to implement the objectives of insurance industry. Considering what is happening in

outside world, Bangladesh insurance industry still need to go a long way. Governance model is
weak, product base is shallow, risk taking ability is low due to low capital base and premium
income is low with low market penetration. In terms of Human resource issue-Majority of
Bangladeshi insurance companies dont have separate Human resource department. Good part is,
the present IDRA seniors do have respectable understanding about what is going around. They
did put up a laundry list too. We all should hope and pray, they are being allowed to work
properly and provided with adequate support from all stakeholders. They should also bring in
more competition into this opportunity space, allow more internationally recognized operators to
join the journey towards excellence and thereby build up a respectable insurance sector in
Bangladesh.

Recommendation
Insurance Related education should be included in academic syllabus
Ensure training timely, planned and appropriately structured and evaluated.
Number of qualified professionals should be increased.
Need to improve Job Structure, Design and Environment
Need bring change in the corporate culture and values
Different Kind of motivational tools should be introduced.

Implementations
Insurance related education should be included in academic syllabus
Insurance Industry in Bangladesh

is on the doorstep of the key changes. New

insurance act

2010 is implemented. The Insurance Development and Regulatory Authority hasbeen formed.
Approximately 60000 desk employees supported by 1million field force are working in the
industry . The ultimate need is train the existing employees and field force to bring the functional
and cultural changes to match the changing dimension of working in a competitive environment.
With the increased competition in the insurance sector, there is a need for more different kind
of insurance education and training in Bangladesh. It is a fact that Insurance education , training
and research is the part of business school all over the world. But in Bangladesh only few
14

universities have started Insurance and Risk Management course recently. There are no
specific specialized insurance degree and courses for the Bangladeshi students. It is mandatory
to start insurance issues related courses in Universities. Field Studies

on Insurance policies

should be conducted in Bangladesh in collaboration with Universities and Training Institutions.

Extension training
It is noticed that Insurance Company Only Focus on Sales and Marketing Skills. Underwriting
and claims are also focused for some cases. There are many issues insurance companies dont
focus at all. More accentuate should be given to training and professional development of agents
and employer agents.The agents and marketing employees need proper training and orientation
with the companys code of conduct so that they can avoid miscommunication with the clients
regarding policy benefits and claim realization.Bangladesh Insurance Academy only one public
Institution hardly

accomplishes the requirements of insurance Sector. Only three private

insurance companies have full pledge training Institutions, The curriculum and training program
should be set in accordance to the present need of the industry such as including premium
forecasting, policy innovations, loss assessment techniques, underwriting skills and management
acumen. There should be more Training institutions in private and public sectors. Insurance
Companies need to ensure training timely, planned and appropriately structured and evaluated.
Providing formal and informal training experiences, such as basic skills training, on-the-job
experience, coaching, mentoring, and management development, can further influence
employees' development.

Increased number of qualified professionals

It is the best time for Insurance Industry compose an effort to attract many young brilliant
graduates and post graduates In the Industry by providing attractive

packages and career

opportunities ,Incentive scheme whatever the forms and content ought to be required edifice
expertise professionals. The insurance industry need to start internal training system as
continuous process to carry out skill improvement, adaptability and cultural Change. If the
workforce in the industry is more knowledgeable, has specialized education on insurance and can
rightly communicate the business benefits to customers.
15

Improvement in Job Structure, Design and Environment

The job structure and design in the insurance

sector is not fully supportive to motivate the

employees in full extent and increasing their performances. So they need to create an
environment where dissatisfies factors should be improved and satisfying factors should be
further developed. Insurance company should ensure an environment where executives of all
levels can play their role and utilize full potentials, it is possible by participative decision
making. Modernization of information and communication technology should be given high
priority to improve the productivity of employees. Equity and fairness in recruitment, promotion
and other types incentives always maintained.

Bringing change in the corporate culture and values

Change in the corporate culture and Values are essential to organizational success and
sustainable development. Gone are the days when experience was the basis for deciding
seniority, which in turn was the basis for deciding compensation. Age and experience is no bar,
gender is no bar, and above all culture is no bar. A correctly selected and well socialized
employee can be expected to exhibit organizational citizenship behavior which leads to more
commitment towards the organization, better retention, lower absenteeism and hence increased
productivity. Lee and Petersons (2000) research reveals that a culture with a strong
entrepreneurial orientation is important to global competitiveness.

Different Kind of motivational tools

Compensation is all forms of financial returns and tangible services and benefits employees
receive as part of an employment relationship (Milkovich and Newman 1999). An effective set
of choices about compensation systems plays a major role in determining firm performance
(Dreher and Dougherty 2005).The employees were highly dissatisfied in the insurance industry
for lack of poor motivational tools. Attractive compensation package should be given to the
employees. There should have an appraisal system. On the basis of the appraisal, motivation
should be provided.

16

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