Case Study: People's Insurance Company

Paper Summary:

This paper explains that problems began at People's Insurance Company of Canada (PICC) when its originally organic and non-hierarchical organizational structure was integrated into the more traditional hierarchical structure of People's Bank, resulting in a highly mechanistic structure at the insurance company. The author of the paper recommends that, given the biases of the bank and the insurance company, the problems regarding the decision-making process must be evaluated by an outside, independent auditor/consultant. The paper stresses that one of the key ironies of downsizing as a cost saving strategy is that, while costs obviously may be reduced by downsizing a company's labor force, in general, downsized companies do not meet either their productivity or profitability goals.

From the Paper:

"In the case of PICC, this is a particular issue with respect to friction between the insurance company and the bank, as various bank staff have noted that people occupying comparable levels in the insurance company are rewarded with company cars and other perks while they themselves are not. The PICC management have defended these differences on the grounds that higher salary levels etc. were necessary to attract skilled employees within the insurance industry. As a start-up instead of an established institution, this need to attract and motivate staff with perks is a prime concern."

Sample of Sources Used:

• Karakowsky, Len. The Nature and Management of Organizations: Challenges in the Canadian Context. Toronto: Captus Press, 2002.

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