I.

CASE BACKGROUND MOUNTAIN WEST HEALTH PLAN, INC.

Martin Quinn, senior vice president for service and operations for the Denverbased Mountain West Health Plan, Inc. is trying to look for opportunity to control costs
of the labor-intensive department. The former Director of Customer Service Evelyn
Gustafson retired and Martin Quinn saw this opportunity to bring in a game-changer in
the person of Erik Rasmussen, a young man in his late twenties with a new bachelors
degree in business administration. Gustafson, who worked herself up from being a
customer service representative easily related with the female dominated, nonunionized
employees. She compensated the stressful work with flexible scheduling, providing
frequent breaks, and plenty of training opportunities. Her motto Always put yourself in
the sub-scribers shoes earned respect from her subordinates which resulted to a
turnover rate of 10% as compared to the usual 25% to 45% range of the CSR industry.
Gustafson however resisted all attempts to increase efficiency and lower costs in
with salaries accounting to 70% of the budget. This is where Erik Rasmussen was
tapped to bring costs under control by increasing the number of calls per hour and
adopted statistical standards in measuring speed, recording of calls, and implemented
an auto-scheduler software based on historical information and projections. Training
was also cut back.
While Martin Quinn hailed the results because of the dramatic increase of calls
per hour, subscribers spent lesser time on hold, and lowering costs as a result, the
morale of the employees suffered. Turnover rate increased to 30% and quality
complaints were noted from inexperienced representatives.

II.

STATEMENT OF THE PROBLEM

Martin Quinn is now faces with a dilemma on how to conduct Erik Rasmussens
performance review given that facts and figures support an increase in efficiency within
the department but he can also not ignore the increase of the turnover rate, quality
problems due to inexperienced CSRs as a result of the cut back in training, and the low
morale felt by the affected employees. The main issues revolved around the high labor
cost and the low efficiency rate of customer service representatives.

III.

OBJECTIVES
1. To provide ways on how to increase efficiency and lower down labor cost.

2. To identify the strengths, weaknesses, and source of influences of Evelyn

Gustafson and Erik Rasmussen and how these characteristics affect the
kind of leader both are.
3. To differentiate the leadership styles between Evelyn Gustafson and Erik
Rasmussen and identify what would best work for Mountain West Health
Plans, Inc. given the problems identified in item number 1.
4. To come up with a recommendation on the modification needed on Erik
Rasmussens leadership style and how these can be facilitated.
IV.

ANALYSIS
The following are the pertinent insights that could lead to the decision-making:

INTERNAL ENVIRONMENT
Before we analyze on the kind of leaders Martin must place in the department, it
is but appropriate to look at the kind of industry the company is involved. Mountain West
Health Plan, Inc., a health insurance company, is a challenging industry. I know for sure
because I work as a financial advisor for Sun Life of Canada Philippines, Inc. offering
health insurances and investments to customers. The most difficult task of being a
customer service representative is actually on handling questions related to their health
which could sometimes require enough sensitivity, compassion, accurate information,
and patience. CSRs can also be the first point of contact of customers who are not
serviced by financial advisors. And so they are required also to memorize all the
products and services, including riders, information on contracts, beneficiaries, and
other important information for them to be able to gauge on what coverage or services
to avail. Sometimes the scope of work would also include explaining the benefits and
coverage of the availed plans, get pre-authorization for medical treatment options, ask
on providers covered, and data on premiums and payments.
The complexities involved in the coverage discussion, the calmness required
when confronted by irate customers who wanted to get information the soonest time
possible, and the difficulty in handling customers with individual health concerns can
take a toll on CSRs. In the case of Mountain West Health Plans, Inc., although the labor
costs comprised 70% of the departments budget, the salary is still considered as low

Page 2 of 9

pay hence former director of customer service Evelyn Gustafson made up for it by
allowing flexible scheduling, frequent breaks, and training opportunities. And with this,
the company enjoyed a low turnover rate despite the stressful working environment. But
with the entry of a new director and with the absence of the once enjoyed stress reliever
activities, the working environment decreased the tolerance of employees against stress
leading to higher attrition rate.
THE LEADERSHIP OF EVELYN GUSTAFSON
Leadership as defined is the ability to influence people toward the attainment of
goals (Daft, 2012). Evelyn Gustafson who rose from the ranks from customer
representative to director earned her role by means of experience and characteristics.
She displays interactive leadership to her subordinates. Interactive leadership is
common as womens style of leading and is a type of Level 5 or the topmost Executive
level in the hierarchy of leadership which builds enduring greatness through a
paradoxical blend of personal humility and professional will (Daft, 2012). By showing
warmth and concern, motivating workers that their jobs are important, and
understanding their plights after stressful calls, Evelyn shows this type of leadership
which endeared her more to her subordinates.
Ms. Gustafson also showed people-oriented behavior by being supportive of
her subordinates and being mindful of their situations. She also displayed Country
Club Management (See Fig. 1 Blake and Mouton Leadership Grid) as she is thoughtful
on the needs of people for satisfying relationships which lead to comfortable and
friendly organization atmosphere and work tempo. In other words, she ensures that
primary emphasis is given to people to ensure that they are comfortable in their jobs
over productivity. By encouraging her subordinates to put themselves in the subscribers
shoes, urging them to take time to have a thorough understanding of the concerns, and
making them feel important also prove that Evelyn is a charismatic leader. The fact
that her subordinates adore her supports this claim.
ON HER STRENGTHS
Page 3 of 9

Evelyns strength lies in her being considerate given that she has experienced
the same difficulties personally. Relating her previous stint as customer service
representative enabled her to understand the struggles of her subordinates prompting
her to be considerate and motivational by giving them what they need like continuous
personal development through trainings, break when needed to avoid burnout, flexible
schedules to maintain work-life balance, and a work environment with good
interpersonal relationship from employees to upper management.
ON HER WEAKNESSES
Meanwhile, Evelyns weaknesses include her being too flexible providing an
environment prone to abuse and lesser control particularly on cost. Focusing more on
employee welfare led to higher labor cost which has become a concern of Martin Quinn.
Evelyns resistance to increasing efficiency also becomes her weakness as she had
boxed herself in the status quo without thinking of possible improvements in the current
processes.
ON HER SOURCES OF INFLUENCE
As George Ambler put it in his article Leadership is Not Title or Position, a leader
should strive to establish a shared vision, to facilitate buy-in, and to motivate and inspire
others. Therefore, effective leaders must establish power and influence beyond their
position, authority or titles at work. Evelyns source of influence primarily stems from her
efforts to create a favorable relationship with her followers. Using personal power, she
made people like her by showing consideration, respect, fair treatment and trust.
Respect begets respect as the rule of reciprocity says. Evelyn gained the approval of
her team by providing them emotional support by assuring them that she understood
how they felt after series of stressful calls. Evelyn also used rational persuasion with
the use of her motto in putting oneself into the subscribers shoes. She also develop
allies by understanding their concerns and needs and by devising means to address
them.
THE LEADERSHIP OF ERIK RASMUSSEN
Page 4 of 9

As Jim Collins stated, good-to-great transformations do not happen overnight or

in one big leap. And by scrutinizing the background of Erik Rasmussen as being a
young and energetic individual and who just earned his business administration degree,
we can conclude that he lacks enough experience in a leadership role. He is also a jobcentered leader which favors meeting schedules, keeping costs low, and achieving
production efficiency. He also displays an Authority-compliance management style
which is high in task production but low in people leadership style (refer to Fig. 1 Blake
and Mouton Leadership Grid) citing efficiency in dominance in operations results.
ON HIS STRENGTHS
Erik brings in the table a fresh perspective. He is goal oriented with definite
objectives, has focus on organizational efficiency, high productivity, and is willing to
innovate to align the organization to the goals of the company which is primarily to lower
costs. He shows much promise by being hardworking, rational, and practical by
implementing automation and statistical standards.
ON HIS WEAKNESSES
Mr. Rasmussen put too much emphasis on the goal that he forgot to check on
first on the current work environment including its culture and dynamics. The job was
stressful and implementing immediate mitigation steps to achieve goals could have a
negative impact on the employees. Proper analysis should have been initiated first to
gather as much pertinent information that could aide him in implementing the most
immediate and applicable solutions. Changes shouldnt be drastic and instead
incremental to check on the possible effects on people and process. Erik forgot to get
the pulse of the employees through participatory approach that could have helped him
identify perennial problems and gave an avenue for internal sharing and understanding
of the changes that could have been vital in the decision making process. His decision
to cut training could have also a negative impact as employees would feel neglected
with regards to their personal growth.
ON HIS SOURCES OF INFLUENCE
Page 5 of 9

Eriks main source of influence is from his legitimate power or from the position
that he currently assume. With this employees are expected to follow him solely based
on the authority granted to him by the company.

Evelyn

Erik

Fig. 1 Blake and Mouton Leadership Grid

V.

ALTERNATIVE COURSES OF ACTION

Using the above analysis can aide Martin Quinn to decide on the following
alternative courses of actions:
Alternative 1. Balance Human Resource Strategy, Efficiency and Cost
Strategies
Erik for his part, should study thoroughly the human resource of the company
and to come up with a short-term and long-term strategies to improve efficiency and
minimize turnover. Performance-wise, Erik have acted based on his mandate which
is to improve efficiency and decrease labor costs. Erik, being young and new is a
job-centered leader.
Martin can discuss about this during his performance review. The review
should start by discussing first the strengths and positive performance aspect of the
Erik. He can stress how Erik have shown dedication in addressing the current
Page 6 of 9

problems of the company. Martin, can then exhibit his leadership characteristics by
using rational persuasion in discussing the areas for improvement including the fact
that while the figures are conforming to the goals of the company on improving
efficiency and lowering labor costs, it has created a negative impact on attrition rate
and customer quality. He can suggest after that Erik could try shifting to an
employee-centered approach and look after for the needs of his subordinates to
ensure job commitment to improve retention.
From Blake and McCanses Leadership Grid, work accomplishment is
achieved from committed people and that interdependence through a common stake
in organization purpose leads to relationships of mutual trust and respect. He can
change from an Authority-compliance management to Team Management style.
Rasmussen must use the interpersonal influence tactics to his advantage including
use of rational persuasion, making people like him, developing allies, relying on the
rule of reciprocity, and rewarding the behavior of subordinates he wants. He should
also try to be as honest, straightforward, knowledgeable, credible and trustworthy so
that he doesnt need to impose this authority over them.
As a business administration graduate, Erik has background on human
resource and he should try to incorporate these knowledge in his current job. As the
Contingency Theory states that leadership traits and behavior varies depending on
the working environment that the leader deals with. The organizational situation
influences the appropriate leadership style to use. And humans, as main assets of
the organization, should be treated not as instruments but as individuals who can
create the competitive edge for the company.
Alternative 2. Motivate Erik Rasmussen to try job enrichment strategy.
Martin Quinn, as a leader should also be the source of motivation for Erik
Rasmussen and the rest of the employees. And being an experienced leader, he can
provide insights based on the effects of the changes implemented by Erik. The
current set-up puts the control most to the leader and Martin can try to implement
another strategy which is job enrichment. This strategy gives employees control over
the resource necessary for performing tasks, make decisions on how to do the work,
experience personal growth, and set their own work pace (Daft, 2012). Enriched job
enables people to have greater sense of involvement, commitment, and motivation,

Page 7 of 9

which in turn contributes to higher morale, lower turnover, and stronger

organizational performance.
Most of the changes applied by Rasmussen are deemed effective only on
production environment and not on services which require more human interaction
thus, making room for higher variability. Employee efficiency unlike machine
efficiency is made up of components of attitudes:

cognitions (thoughts), affect

(feelings), and behavior. And such attitudes influence how well a person perform on
the job. Leaders should strive to develop and reinforce positive attitudes because
happy, positive people are healthier, more effective, and more productive.
Alternative 3. Accept that Erik Rasmussen is still learning the ropes on
leadership.
It was emphasized in the case that Erik is still young and while there are
leadership traits that are innate to individuals, we cannot discount the fact that
leadership is still a work in progress. People gain insights through meaningful
experiences. Martin has the choice to let the situation pass given that it is Eriks first
leadership assignment and he was hired in the first place to provide a new
perspective. Martin on his part probably also underwent the same situation and
making mistakes is part of the job so giving Erik another chance maybe is
acceptable for the moment. What he saw was the short term effects of the changes
and there might probably be long term effects which can be good like shifting the
culture to strict compliance of employee behavior like controlled breaks, adherence
to schedule, and goal driven to achieve the required efficiency and cost. He saw
some potential in Erik and he must follow that instinct.
Alternative 4. Create a decentralized team communication channel
A decentralized team communication channel is an effective way to
communicate the goals of the organization to employees. Subordinates must be
given the opportunity to air their views on certain changes that may affect their jobs.
With complex problems like efficiency and labor cost increase, decentralized
communication network would enable faster exchange of ideas. A pooling of
information through widespread communications will provide greater input into the
decision.

Page 8 of 9

VI.

RECOMMENDATION
After careful consideration in order to meet the objectives, the following
alternatives are to be implemented:
As Peter Drucker said, All the effective leaders I have encountered both
those I worked with and those I merely watched knew four simple things: a leader
is someone who has followers; popularity is not leadership, results are; leaders are
highly visible, they set examples; leadership is not rank, privilege, titles or money, it
is responsibility.
Martin Quinn, as a leader himself, can greatly influence Erik to align his
leadership style to the kind of working environment Mountain West Health Plans,
Inc. has. Alternative 1. Balance Human Resource Strategy, Efficiency and Cost
Strategies best describes this shifting of leadership style. Based on assessment
and given that Rasmussen is still young and hardworking, he can make necessary
adjustments and changes. After all, it will also be a test of character for him to show
his flexibility in adapting to changes, which is by the way an important trait for a
leader.
Although there is also a possibility that Erik will not adopt to changes right
away given his idealistic view of things and with lack of experience. So
REFERENCES
Ambler, George (2013) Leadership is Not Title or Position. Retrieved 2 July 2016
from http://www.georgeambler.com/leadership-is-not-title-or-position/
Daft, R. (2010). Management (9th Ed.). Mason, OH: Cengage Learning.
Leadership Grid [Photo]. Retrieved 2 July 2016 from
http://www.progressivedairy.com/topics/management/evolving-the-authorityobedience-management-philosophy
[Photo]. Retrieved 2 July 2016 from https://www.pinterest.com/explore/matt-bomer/

Page 9 of 9