The Improvement Initiatives of Geneva Construction and Risk Insurance Company

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The insurance market is increasingly becoming competitive not only on national levels, but also from a global perspective. More companies are joining and then leaving the industry every year. The quality, cost, and customer expectations are the key features that need to be considered before rolling out a product into the market. The Geneva Construction and Risk Insurance Company (GCR) has two improvement initiative options.

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They can either use the total quality management approach (TQM), or the six sigma initiative. However, the question of which initiative is ideal for the company’s operations requires an in-depth analysis to ascertain the possible technicalities that may arise. Having a clear understanding of the Six Sigma approach will assist the management team of GCR to make rational decisions that require employees to be trained, coached, or mentored. Additionally, the analysis of the total quality management approach will show how the company’s reputation determines its net returns. Therefore, this paper examines the benefits and challenges that the GCR Company is likely to face in the implementation of these aforesaid initiatives.

The Geneva Construction and Risk Insurance Company was established in early 1920s with an objective of providing an insurance cover for all the activities in the construction industry. In 1950s, the company had expanded into a large insurance firm both geographically and technically (Slack, Stuart, Robert, & Allan, 2009, p. 457). Since its acquisition by the Wichita Mutual Group, the company has elevated its status to a leading provider of insurance for construction projects.

This is because of its ability to customize insurance covers to fit the complexity and legality of certain projects. However, for effective provision of such insurance services, the company employed different specialists such as risk consultants, international legal representatives, engineers, among others. The company’s head office is based in Geneva where all major departments are situated. The GCR has four regional offices and 37 local offices across the world. The main goal of the company is to insure losses that may be incurred as a result of unintended delays or poor workmanship.

The Wichita Mutual Group proposed the adoption of the TQM initiative in order to enhance the performance of GCR. It specified the consultants and the methodology needed in the implementation. This imposition of the new structure of improvement by top managers to their subordinates lowered the efficiency and productivity. This is because everyone struggled to master the improvement techniques described in the handbook (Slack et al., 2009, p. 457).

These struggles led to the accumulation of work in all major departments. The evaluation of improvement suggestions became a daunting task to the quality committee. As a result of the committee’s inability to assess all the improvement ideas on time, each department was allocated an improvement budget after every three months as improvement investments expenditure. Barely four years after its inception, had the TQM initiative become unattractive and tiresome to the employees. They viewed it as an extra assignment added to their normal working. Out of the many local offices around the world, only a few managed to implement the TQM approach.

Eventually, it became a flop. In 2005, the GCR Company opted to use a different operations improvement approach. The head of claims in the company allowed his deputy to investigate the applicability of the Six Sigma approach to the company’s operations. The report was released outlining both the benefits and challenges for adopting the Six Sigma initiative by the company. The report had several recommendations that were to be implemented in phases (Slack et al., 2009, p. 458).

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The total quality management initiative focuses on maintaining or improving the existing quality standards. It is a traditional methodology that is normally employed when developing or maintaining an organizational system (Oakland, 2000). However, the GCR adoption of TQM initiative did not align quality to business strategy. The creation of a quality committee with representatives from all key departments was detrimental to the company’s performance.

This is because it interfered with the integration of other process executives in the improvement strategy. The autonomy of the team threatened the normal working of some departmental supervisors and middle level managers. Contrary to the TQM, the Six Sigma approach allows for the inclusiveness of operational managers and executives (Tennant, 2002). The collective responsibility enhances teamwork and enables all employees to contribute to the improvement of quality.

The total quality improvement initiative is primarily meant for stabilization of quality, not its improvement (Pheng & Teo, 2004). This explains why the GCR Company maintained their profits even after dedicating extra time on the implementation process. Therefore, it is different from the Six Sigma approach in which an organization can affect the continuous improvement and, at the same time, focus on the customer needs. This is because it is customer-driven and thus aims at achieving the greatest customer satisfaction and minimizing the inefficiencies. In addition, unlike other conventional cost reduction measures, the Six Sigma ensures that the value and quality of service is improved. Therefore, Six Sigma approach will help the GCR Company to improve its risk management processes.

From the discussion above, it is clearly shown that the Six Sigma initiative of improvement is the best approach of improvement for an insurance company. The adoption of the Six Sigma approach encourages outsourcing of the expertise (Tennant, 2002). Hence, the employees will not view it as an extra burden on their work. Thus, the initiative is likely to receive overwhelming support from local offices. The Six Sigma is an inclusive approach that allows every level of management to make a contribution. Therefore, the supervisors and middle level managers are not threatened on demotion or sacking as posed earlier by the TQM initiative. The Six Sigma methodology fits virtually in all scales and categories of business. This implies that the local offices will find it applicable and adaptable to their various business environments.

It is recommended that the GCR management implement the Six Sigma initiative on account of its benefits, especially in cost cutting and customer service improvement. However, the implementation of Six Sigma is very complex and is characterized by greater resource use. Moreover, the principles of the Six Sigma emphasize the items of a rigid framework that does not give innovation a chance (Starbird, 2002). On the other hand, the TQM initiative encourages innovation as workers are empowered when working in the quality improvement team. The rewarding of improvement team contributes not only to the raising of their morale, but also to the realization of meaningful changes of the company’s operations.

For that reason, it is worth noting that the implementation of the Six Sigma approach in its entirety will not be right. The implementation of this initiative across any given company requires that the company itself has attained maturity in terms of process management. The GCR has not yet reached that stage. Therefore, the management should put considerable efforts in ensuring that the relevant data, which form the foundation of the Six Sigma, is measured. Furthermore, it should consider conducting an internal pilot to ascertain its suitability and challenges.

References

Oakland, J. S. (2000). Total Quality Management: Text with Cases, Boston, USA: Butterworth-Heinemann.

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Pheng, L. & Teo, J. (2004) Implementation of Total Quality Management in Construction Firms. Journal of Management in Engineering, 1, 20.

Slack, N., Stuart, C., Robert, J., & Allan, B. (2009). Operations and Process Management: Principles and Practice for Strategic Impact. (2nd ed.). Edinburgh, UK: Pearson Education Limited.

Starbird, D., (2002). Business Excellence: Six Sigma as a Management System, ASQ’s 56th Annual Quality Congress Proceedings. pp. 47–55.

Tennant, G., (2002). Design for Six Sigma. London, UK: Gower Publishing Ltd.

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