The overall performance of an organization gives potential customers an overview of its financial health before they can make their investment decisions. In the insurance and financial sectors, individuals will examine how a specific firm is committed to providing the relevant support and engaging in activities that resonate with their expectations. The purpose of this analysis is to give a detailed assessment and diagnosis of a leading insurance company using the STAR model. The identified organization for this examination is the American International Group (AIG). The presented insights could become powerful guidelines for encouraging more consumers of insurance policies to make better and informed decisions.
AIG is a leading insurance company that has been in the industry since the year 1919. It currently provides its services in around 80 jurisdictions and countries in different parts of the world. The available products are designed effectively to allow more individuals to achieve their life goals and pursue their business objectives. AIG’s mission is to provide the required safety that allows customers and companies to grow and achieve their aims (“About Us,” n.d.).
Its vision is to become a leading provider of high-quality, personalized, and efficient services that meet all customers’ demands. The primary goals include guiding individuals to learn and identify risks before they can happen, compensating victims after disasters occur, and empowering more clients to create their future experiences. Additionally, AIG remains committed to helping communities and different citizens to live in friendly environments and provide the best work arrangement for all employees to achieve their professional aims.
In terms of performance, AIG remains outstanding and capable of competing directly with some of the existing rivals. For instance, it recorded revenues amounting to 47.3 billion US dollars in 2018 (“About Us,” n.d.). However, AIG recorded a loss of around 0.006 billion US dollars during the same period (“About Us,” n.d.). Some of the outstanding obstacles include the emergence of more direct competitors, employees who are finding greener pastures elsewhere, and the increasing number of mortgage and financial services providers. The environment in which AIG operates has specific factors that continue to affect its performance.
First, it has to consider the political and legal aspects recorded in different regions (“About Us,” n.d.). Second, the economy has been affected negatively due to the ongoing coronavirus disease of the 2019 (COVID-19) pandemic (Dodd, 2020). Third, the social aspects of the insurance market are taking more potential customers closer to their goals by presenting additional solutions. Fourth, the rate at which AIG engages in corporate social responsibility (CSR) is an environmental factor that will dictate its ability to attract and serve more clients. The consideration of these issues would be essential if AIG is to maximize its performance and pursue its corporate goals efficiently.
Diagnosis Using the STAR Model
The STAR model remains one of the best frameworks for analyzing companies and guiding them to make valuable changes and propositions. With the emergence of divergent changes and forces in the market or industry, leaders could rely on such a concept to adjust the established strategy and consider the best structure that can eventually maximize performance. Every analysis needs to focus on the established business model as the driving force (Hollmer, 2020). The identified issues and possibilities could become the best guidelines for supporting the implementation of new processes and strategies. The application of the STAR framework to AIG could present evidence-based ideas and support the presentation of additional recommendations to achieve performance.
The first element of the selected model is that of strategy. At AIG, the leaders take the issue seriously by presenting a powerful vision and mission to all key stakeholders. For instance, the company’s website indicates clearly that it is planning to attract more customers and deliver high-quality and reliable home and car insurance to more clients (Hollmer, 2020). The present mission is to provide the best services that can empower more customers by minimizing risks while maximizing their financial capabilities (Hollmer, 2020).
The outstanding values include commitment, quality, convenience, and support. The primary goals include expanding its operations and meeting the demands of more customers in different regions. Through the power of these aspects, this organization has succeeded in outlining the best direction for delivering its services and meeting the demands of more global customers. These strategic elements are combined to introduce additional activities, identify new segments, and focus on the expectations of more stakeholders.
The second element of the STAR model is that of organizational structure. When designed and implemented effectively, it can guide all departments to complete their tasks effectively and focus on the overall experiences and outcomes of the targeted customers. The structure is capable of simplifying operations and ensuring that recovery and contingency actions are pursued much faster (see Fig. 1). The major departments include financial services, life insurance, general insurance, and asset management group (Lemus-Aguilar et al., 2019).
These sections are required to report directly to the company’s chief executive officer (CEO) and the board of directors. AIG has succeeded in decentralizing its operations to ensure that it achieves its goals much faster. The effort has reduced the hierarchy that was affecting coordination and performance in the past.
Every department has the right people who possess the relevant skills depending on the anticipated business aims. Each segment is characterized by leaders who coordinate operations and communicate the relevant information with the other key players. Individuals are required to respect their managers and collaborate to deliver the best experience and support to the targeted clients. The research and development (R&D) segment remain critical since it supports the company’s structure and strategy (Hollmer, 2020).
These professionals monitor the trends recorded in the regional and global market and present superior insights that make it possible for the company to expand its operations. However, the model permits a unique form of hierarchy to exist that forces different customers to wait for several days before receiving the right services or compensations.
Processes and Lateral Capability
At AIG, business operations are taken seriously to ensure the required aims are recorded promptly. Those in charge of different departments provide timely decisions and instructions that their followers need to take into consideration. Such an approach makes it possible for individuals to focus on specific tasks and achieve their activities within the stipulated period (Lemus-Aguilar et al., 2019).
Currently, information flows horizontally across all established departments. Employees are empowered to collaborate and present additional insights or practices that can result in improved organizational performance (American International Group, Inc., 2015). The financial department has been involved in budgeting and financial allocation to support the smooth running of the company. Since it operates in different countries across the globe, there are regional segments that collaborate to promote the implementation of the overall organizational model.
Vertical information flow is evident since departmental heads need to engage and guide their followers accordingly. Such leaders provide relevant insights depending on the goals of the specified segment. They also expect their subordinates to offer timely updates that are then relayed to the key organizational leaders. The company has gone further to promote a superior culture that ensures that the majority of the employees are willing to collaborate, communicate efficiently, and engage in decision-making processes (Hollmer, 2020). They focus on the primary goals and establish lateral relationships that make all key departments functional and capable of delivering the intended outcomes.
Currently, the established processes are founded on the nature of AIG’s business model whereby automated operations are pursued by competent employees who receive timely updates and instructions. These individuals are also monitored while being empowered to engage in actions that can result in positive organizational performance. With the consideration of such a model, chances are high that AIG will continue to perform positively, provide high-quality insurance services to the increasing number of potential clients, and overcome most of the obstacles that might emerge in the global financial and insurance sectors (American International Group, Inc., 2018). However, the introduction of specific improvements could change the current situation and maximize operational efficiency.
Successful organizations consider some of the best initiatives to empower and encourage their workers to be engaged and focus on the anticipated goals. When individuals feel honored and motivated, they find a reason to become more involved and apply their competencies efficiently to support organizational performance and eventually maximize the level of profitability. The leaders at AIG consider emerging ideas and models to make their followers more satisfied and capable of improving productivity. A powerful reward plan is in place whereby the company provides competitive salaries to employees. Additional compensations and bonuses are available to workers who perform exceptionally in their respective capacities and positions (American International Group, Inc., 2015).
Those who offer solutions to emerging problems have increased chances of being recognized and rewarded accordingly. Many employees enjoy free life insurance covers, better wages and salaries, paid leaves, longer maternal leaves, car allowances, and career progression plans. Such a reward system is outstanding since it is by the overall strategic direction.
The company has introduced a superior model for guiding and mentoring workers to focus on the best approaches to meet the emerging demands of more customers and improve organizational performance. Such employees will be rewarded depending on their contributions to streamline operations and take them closer to their career aims. The company’s leaders apply Abraham Maslow’s hierarchy of needs theory since the majority of the workers are usually satisfied with their positions, benefits, and perks from the company (Lemus-Aguilar et al., 2019).
However, there is a need for those in leadership positions to consider the importance of streamlining the process and introducing additional strategies to maximize overall employee satisfaction. Lemus-Aguilar et al. (2019) acknowledge that an improved reward system could become the best opportunity for empowering workers, encouraging them to become more practical, and making it easier for them to maximize performance.
This aspect of the STAR model is significant since it allows companies to recruit the right people, develop their skills, and align their competencies with the intended organizational aims. The leaders at AIG consider such an element to maximize overall performance and support workers’ career goals. The organization has an efficient human resource (HR) department whose primary role is to recruit and present skilled people depending on the anticipated tasks. The HR manager is always involved to monitor the process of recruitment to ensure that the identified workers possess the relevant competencies that resonate with the wider organizational structure. As of 2019, AGA had a total of around 49,600 workers across the globe (“About Us,” n.d.).
The HR department has been considering the best approaches to meet their demands and empower them to make a difference for the company. Such an approach has also guided them to formulate superior personal work ethics that can take them closer to their professional and personal objectives.
After hiring the right people, AIG uses its effective training program to equip them with the relevant competencies and inform them about the major operations undertaken at the company. The initiative presents additional opportunities for workers to expand their abilities and consider the best approaches to progress their careers. Promotions are offered depending on the overall performance and commitment of the workers (Hollmer, 2020).
Individuals are encouraged to work as teams and identify evidence-based procedures that can make them more productive. The existing leaders provide a sense of direction, solve all emerging challenges, and offer timely insights to ensure that the individuals can focus on the established organizational objectives.
AIG has included a code of ethics to guide and encourage workers to complete their roles diligently, identify more customers, and provide the required support. The standards compel all employees to treat all clients decently and respond to their queries professionally. Such a code supports the wider organizational culture to maximize coordination and performance. The leaders have introduced a disciplinary mechanism to address emerging disputes and compel employees to relate positively with one another (American International Group, Inc., 2018). This model has remained critical and capable of empowering more workers to complete their duties responsibly, solve their differences, promote the concept of teamwork, and engage in desirable actions. These attributes explain why AIG performs optimally in the global financial services and insurance sectors.
The above analysis has presented a broad picture of the unique strategic issues associated with many insurance companies across the globe. The average consumer of home and car insurance would be interested to learn more about the business models and procedures most of the organizations apply to meet their demands. From this case of AIG, it is evident that a powerful business model has been implemented that dictates the operations, decisions, and leadership issues.
However, the challenge of competition remains critical since it is presently affecting the overall profitability of this company. In 2018, it recorded losses of around 0.006 billion US dollars due to the predicaments that have defined the global insurance industry (“About Us,” n.d.). New strategies and procedures are essential if AIG is to transform its model, improve operational performance, attract more potential customers, and eventually become a market leader.
First, the leaders at AIG can expand the existing strategy by considering a new target and communicating it to the existing stakeholders and workers. For example, it can decide to increase its market share by around 5 percent within the next two years. This approach will result in more explicit statements and operations that can support the identification of new segments and activities. The employees will be aware of such a move and be involved accordingly (“Insurance for individuals,” n.d.).
The R&D department can be part of the process to introduce superior action plans and processes that can support the current model. The expansion of operations to untapped regions could increase its market portfolio, attract more customers, and eventually become profitable in the industry.
Second, the area of processes and lateral liability cold benefit from new adjustments that can reduce costs and maximize productivity. For instance, a lean concept whereby most of the operations are automated will allow AGF to identify and attract more customers from different parts of the world without incurring additional costs. The leaders can consider the importance of expediting compensations and responding efficiently to claims. Such a move will minimize some of the possible challenges that might be discouraging more customers from doing busing with this organization (“Insurance for individuals,” n.d.). However, the leading experts need to be involved to monitor the nature and quality of such operations to minimize challenges that could disorient overall performance.
Third, AIG’s HR department should consider the trends recorded in the job market and identify technologically savvy individuals, possess the right skills, and are capable of improving business performance. This approach should be merged with new products or services that resonate with the demands of the increasing number of customers (American International Group, Inc., 2018). New policies aimed at supporting organizational procedures should be introduced that can result in the attraction, empowerment, and development of freethinkers who can become part of the business model.
After considering these new proposals, the organizational leaders should ensure that the concept of continuous improvement becomes the guiding principle. Those involved in different sectors will monitor the changes in the international market, introduce superior practices at the company, and address challenges that might disorient overall performance. The company can reward the current workers efficiently to minimize cases of turnover and engage more customers by providing high-quality support (“Insurance for individuals,” n.d.). Decisions should also be made based on the anticipated goals and introduce additional practices that resonate with the emerging demands of different clients. The ultimate aim is to make AGF more profitable in the global insurance industry and overcome the current challenge of rivalry.
The above discussion has analyzed AIG’s performance, profitability, and strategy as one of the key players in the global insurance industry. The examination has identified some of the best practices, procedures, and initiatives that different managers at the corporation undertake to improve operational efficiency. However, there are specific gaps that are making AIG less profitable in the sector. The presented recommendations have the potential to guide the leaders to improve the unique aspects of the STAR model and take the corporation closer to its business goals. The expansion and identification of the current market can support such proposals and eventually AIG more profitable.
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Lemus-Aguilar, I., Morales-Alonso, G., Ramirez-Portilla, A., & Hidalgo, A. (2019). Sustainable business models through the lens of organizational design: A systematic literature review. Sustainability, 11(19), 5379-5398. Web.