Case Analysis 2

Introduction to management
Assignment
Critical case analysis
Mountain West Health Plans Inc.

“Be careful what you wish for,” thought Martin Quinn, senior vice president for service and
operations for the Denver-based health insurance company, Mountain West Health Plans, Inc.
When there was an opening for a new director of customer service last year due to Evelyn
Gustafson’s retirement, he’d seen it as the perfect opportunity to bring someone in to control
the ever-increasing costs of the labour-intensive department. He’d been certain he had found
just the person in Erik Rasmussen, a young man in his late twenties with a shiny new
bachelor’s degree in business administration.
A tall, unflappable woman, Evelyn Gustafson consistently showed warmth and concern
toward her mostly female, non-unionized employees as they sat in their noisy cubicles,
fielding call after call about Mountain West’s products, benefits, eligibility, and claims.
Because she had worked her way up from a customer service representative position herself,
she could look her subordinates right in the eye after they’d fielded a string of stressful calls
and tell them she knew exactly how they felt. She did her best to offset the low pay by
accommodating the women’s needs with flexible scheduling, giving them frequent breaks,
and offering plenty of training opportunities that kept them up-to-date in the health
company’s changing products and in the latest problem-solving and customer service
techniques.
Her motto was: “Always put yourself in the subscriber’s shoes.” She urged representatives to
take the time necessary to thoroughly understand the subscriber’s problem and do their best
to see that it was completely resolved by the call’s completion. Their job was important, she
told them. Subscribers counted on them to help them negotiate the often Byzantine
complexities of their coverage. Evelyn’s subordinates adored her, as demonstrated by the 10
percent turnover rate, compared to the typical 25 to 45 percent rate for customer service
representatives. Mountain West subscribers were generally satisfied, although Quinn did hear
some occasional grumbling about the length of time customers spent on hold.
However, whatever her virtues, Gustafson firmly resisted all attempts to increase efficiency
and lower costs in a department where salaries accounted for close to 70 percent of the
budget. That’s where Erik Rasmussen came in. Upper-level management charged him with
the task of bringing costs under control. Eager to do well in his first management position, the
hard-working, no-nonsense young man made increasing the number of calls per hour each
representative handled a priority. For the first time ever, the company measured the
representatives’ performance against statistical standards that emphasized speed, recorded the
customer service calls, and used software that generated automated work schedules based on
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historical information and projected need. Efficient, not flexible, scheduling was the goal. In
addition, the company cut back on training.
The results, Martin Quinn had to admit, were mixed. With more efficient scheduling and
clear performance standards in place, calls per hour increased dramatically, and subscribers
spent far less time on hold. The department’s costs were finally heading downwards, but
department morale was spiralling downwards as well, with the turnover rate currently at 30
percent and climbing. And Quinn was beginning to hear more complaints from subscribers
who’d received inaccurate information from inexperienced or representatives who sounded
rushed.
It was time for Rasmussen’s first performance review. Quinn knew the young manager was
about to walk into his office ready to proudly recite the facts and figures that documented the
department’s increased efficiency. What kind of an evaluation was he going to give
Rasmussen? Should he recommend some mid-course corrections?
Questions
1. How would you describe Evelyn Gustafson’s leadership style? What were its
strengths and weaknesses? What were the sources of her influence?
2. How would you describe Erik Rasmussen’s leadership style as he tried to effect
change? What are its strengths and weaknesses? What are the sources of his
influence?
3. If you were Martin Quinn, would you recommend modifications in Erik Rasmussen’s
leadership style that you would like him to adopt? Do you think it will be possible for
Rasmussen to make the necessary changes? If not, why not? If you do think change is
possible, how would you recommend the desired changes be facilitated?
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Introduction to management

Critical case analysis

Mountain West Health Plans Inc.

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