Walther Winning The Boards Approval To Get The Company Back On Track - 2200 Words

Walther Insurance Company: Winning the Board's Approval to get the Company Back on Track Case (Case Study Sample) Content: Walther Insurance Company: Winning the Board's Approval to get the Company Back on Track Case Abstract This case highlights the challenges of restructuring an organization and dealing with a board of directors. James Gardner, the newly appointed CEO of Walther Insurance, is faced with the challenge of trying to turn around a company in decline. To accomplish this, he had to make the tough decision to ask the board of directors to downsize and restructure the company. His proposal to downsize the company was deadlocked at the first board meeting. He then had to decide whether at the next board meeting to push his plan through or to compromise the plan to ensure that he got the votes that he needs from the board of directors to implement his plan. Learning Outcomes By the end of this case study, student should be able to: * To explain the importance of the managerial role of planning and coordinating. * To describe the role of a manager in promoting trust and mutual respect among firm stakeholders. * To define some of the key challenges that managers face in the decision-making process. * To describe and explain the role of the board of directors. Case Background On January 10, 2017, James Gardner, the General Manger of Walther Insurance Company entered his office with a slight headache, perhaps due to the explosive board meeting held the previous day where the board failed to reach a consensus over the future direction of the company. He had been the company's CEO for three months and was already in a position where he had to convince the board of directors to make drastic changes. James Wapet James is a 40-year-old manager who has had significant success at two reputable insurance companies before moving to Walther Insurance. After graduating college, he got his first job as a management assistant at Grange Insurance Company. His five years at Grange were quite prosperous; he was promoted three times and worked his way up to regional manager. He left Grange Insurance Company as the regional manager overseeing all operations in Alabama, Georgia, and Florida. During his tenure at Grange, he managed to help his region’s revenue and profits by over 80 percent. He was then recruited by Feingold Insurance to be vice president of operations. He worked as the vice president of Feingold Insurance Company for seven years before being promoted to be the company’s chief operating officer (COO). He served as Feingold’s COO for three years; as Feingold's COO, James saw the company’s revenue rise twofold and increased the company’s profitability by 90 percent. He had to make several radical management and operational changes to achieve that success. For instance, at one point, he was forced to restructure the company and lay off more than 200 employees. He also introduced compulsory training sessions for the company’s employees. Generally, James’s proactive approach of leadership and risk-taking ability helped the company change its public image and eventually helped it rise to be among the best insurance companies in the country. Because of his successful tenure as COO of Feindgold, he was recruited to become the CEO of Walther Insurance Company. He took over the helm of Kimble in Novem ber of 2016. Although relatively young to take over as CEO of a $400 million company, James moved into Walther with a great deal of experience under his belt. The situation at Walther Insurance Company James joined Walther Insurance Company in November of 2016. The company needed a CEO who would lead the company back to its glory days; at one point the company had generated over $800 million in revenue with strong profit margins and was perennially ranked as one of the best mid-size insurance companies in the country. However, the company had been on a steady decline for over five years and revenues were only $400 million in 2016 and the company had an operating loss of $20 million that year. In 2017, Walther Insurance Company employed over 700. It had branches in the 28 cities within the country and offered general home and auto insurance policies. The company served close to a million customers in 2017, which is drastically down from the 2 million they served in 2011. James Gardner's predecessor, William Brungart, led the company down a declining path from 2010-2016. In 2010 and 2011, Brungart had had a brief period of success. However, things steadily declined after that. Under his control, Walther revenue dropped by 50 percent and its customer base also reduced tremendously. Despite Brungart's efforts to salvage the situation, which in most instances took vast sums of capital, the company failed to get back on track. One of the most significant causes of the demise was rapid, uncontrolled growth; the company opened more than ten branches in different parts of the country within a few months. This led to an increase in the number of employees. As this happened, the company's expenses spiralled out of control. In addition, Brungart entered the company into a horrendous acquisition. He purchased an online insurance company for $150 million. The company he acquired was losing money, had a corporate culture that did not mesh well with Walther, and had products that were significantly different than the products offered by Walther. This recipe for disaster cooked up quickly and two years after the acquisition Walther was forced to sell the company they acquired for a $100 million loss. Walther's board fired Brungart and then went looking for a CEO who could repair the damage. That person was James Gardner. The situation was clearly laid out for Garndern, and he felt confident that he could get Walther back on track. Gardner's Plan After taking over at Walther, the first thing Gardner was analyze the situation. From his analysis, Gardner came to the conclusion that streamlining operations was going to be the key to get getting Walther back on track. His top priority was getting employee efficiency back in line with the industry benchmarks; Walther's top competitors produced twice as much revenues per employee. Thus, his plan focused on downsizing and increasing efficiency. The second main tenet of Gardner's plan was to shut down most of the branches and then rely on brokers to sell Walther’s products. His plan then called for most of the general and administration spending to focus on promotion and advertising. In his plan, he called for the introduction of sales and marketing teams to ramp up sales with brokers. His plan also introduced an online marketing unit, which was sorely needed as the company's online presence lagged behind the competition's online presence. Gardner spent dozens of hours putting together a succinct and well-laid out plan for the board of directors. He knew that his plan was contingent of getting the simple majority of the board to vote for his plan. Without this, he could not implement his plan and the company would be forced to stay on its current path. The Board Meeting Gardner laid out his proposal before the company’s board on January 9, 2017 and outlined his proposed strategies to get the company back on track. He made a cogent argument that failing to take drastic action would lead to continued annual operating losses in excess of $20 million. Gardner was anticipating some debate on his plan, but he was shocked by the vastly different views of the board members. According to three of the board members, downsizing and restructuring would harm the company's reputation. Those three board members also thought that the already established branches should not to be disposed of because t...