Zurich North America (ZNA) is a leading enterprise risk management and commercial insurance firm, the regional affiliate of the international insurance conglomerate Zurich Insurance Group Ltd. As a company of such scale, Zurich North America employs over 10,000 people and seeks to create a professional, diverse, and inclusive environment. Human resources are at the core of the company’s operations, and they are largely what makes the enterprise highly successful. However, as with any industry, innovation keeps pushing forward technology and elements of human resource management (HRM). This report will examine Zurich North America in detail and provide HRM recommendations for the advancement of the firm’s strategy and operations. While the company is considered one of the top employers due to outstanding HRM practices, there are some areas of improvement that can enhance the company’s performance.
Company Overview: History
ZNA is part of Zurich Insurance Group, a leader in multi-line coverage for both global and local markets. Zurich offers many property, casualty, and life insurance products, and services in over 215 countries and territories and does so through its’ nearly fifty-five thousand employees. Zurich customers are small businesses, mid-sized companies, large enterprises, and multinational corporations. The Group is headquartered out of Zurich, Switzerland. Zurich Insurance Group was founded in 1872 (Zurich Insurance Group, 2021). Throughout the 20th century, Zurich was an ever-present force in the global insurance industry, being a vital insurer throughout both World Wars, economic crises, natural disasters, and the construction of major infrastructure projects.
Zurich North America was established on the continent in 1912. ZNA is a leader in commercial property-casualty insurance solutions and services for businesses ranging from small to multinational corporations. It also offers specialty products and program sectors insurance. The company operates insurance for more than 25 industries, including agriculture, construction, technology, manufacturing, and real estate (Zurich, n.d.). Zurich North America includes business in both the United States and Canada. ZNA offers a wide array of insurance products and services to businesses of all sizes and industries, including automotive, agriculture, construction, manufacturing, and many others. A primary focus of ZNA is large companies. While this focus is changing and evolving, ZNA does insure 95% of Fortune 500 Companies in North America (Zurich Insurance Company, 2021).
ZNA’s mission statement is “We are in business to help our customers understand and protect themselves from risk” (Comparably, n.d.). The company’s strategy seeks to position it for long-term success and solid financial standing with a trusted brand and balanced portfolio. ZNA utilizes a three-pillar strategy of focus on customers, simplification, and innovation. With a focus on customers, the company seeks to become as customer-centric and approachable as possible, with a platform that is welcoming and transparent. With simplification, the firm seeks to take complex insurance products and services and make them understandable and accessible to any type of consumer. This also allows for efficient use of resources and ease of communication. Finally, innovation allows the company to remain flexible and future-oriented, bringing in technology, new services, or forecasting to meet and exceed consumer standards (Zurich, 2020).
Considering Porter’s model of generic strategies, the ZNA selected the strategy of differentiation. Porter (2008) describes four generic strategies that help to gain competitive advantage, including cost focus, cost leadership, differentiation focus, and differentiation. The model is visualized in Figure 1 below. According to the model, companies that select differentiation as their generic strategy is usually recognized for the distinct quality, uniqueness, of personality (Porter, 2008). Additionally, such companies do not have a specific niche and compete in the entire market. ZNA has a wide variety of products tailors individually for all the clients (Zurich, 2021). Additionally, the company provides services to numerous companies in different industries (Zurich, 2021). The company is valued for customer centricity and outstanding quality of service and products (Zurich, 2021). These factors demonstrate that ZNA uses differentiation as the key strategy.
ZNA and its parent company are known for their reputation as leading, trustworthy, and respectable commercial insurer. The firm has remained solid throughout crises, has always honored its commitments, and protected its consumers. The company utilizes its financial strength, a talented workforce, and a recognized high-value brand to be a leader in the industry. Zurich is the number 1 commercial insurer on the continent, with annual revenue of $59 billion in 2020. Even though the company experienced a significant decrease in revenues in comparison with 2019 ($71,792 million), the company remained profitable during the pandemic (Zurich, 2021). The company’s net profit decreased by 7.2% during the pandemic, from $4,384 million in 2019 to $4,071 million in 2020 (Zurich, 2021). Thus, the company retained a strong market position during the COVID-19 pandemic despite the significant decline in the growth of the global economy.
The global insurance market is expected to grow by 13% in 2021, reaching $5.5 trillion (Statista, 2021). Such fast growth is explained by the recovery from the COVID-19 crisis. The market is expected to keep growing for the following five years at a slower rate, reaching $6.4 trillion in 2025. The expected growth of the market is visualized in Figure 2 below.
While the industry is expected to recover due to the overall recovery of the market, there are several trends in the insurance industry that should be acknowledged. First, the pandemic allowed insurers to revise their cost structure and reduce expenses (Deloitte, 2021). However, “rather than cutting costs across the board, most insurers are likely delaying or scaling back pre-pandemic investments in part to free up capital for higher priority projects and talent that can help them adapt sooner rather than later” (Deloitte, 2021, para. 2). Second, digitization is another growing trend in the industry to enhance virtual operations (Deloitte, 2021). Finally, the change in the industry is driven by enhanced global connectivity, which allows more efficient control and development of global operations (Deloitte, 2021).
Key Positions in the Organization
Table 1 below provides an overview of four compensation packages of the key positions in ZNA.
Table 1. Compensation packages
|Inbound, Claims Care Representative||~$42,000 annually|| || |
|General Liability Claims Specialist I||~$59,000 annually|| || |
|Regional Finance Executive||~$140,000 annually|| || |
|Senior Insurance Program Administrator Manager||~$84,000 annually|| |
– Various bonuses and incentives
HR Work Processes
Current HR Work Processes
Human resource managers are responsible for a wide variety of processes, including HR planning, recruitment, selection, hiring, onboarding, training, employee relations, performance appraisal, benefits administration, performance management, and offboarding. In general, HR processes are understood as fundamental strategies implemented by HR leaders that ensure efficient, effective, and functional employee lifecycles (López-Cabrales & Valle-Cabrera, 2019). There is significant evidence that the company has implemented successful strategic HR practices. The overall voluntary turnover in the company is 4.7%, and the average employee tenure is ten years (Zurich, 2021). Several factors contributed to achieving such high retention. First, the company puts its employees first by implementing a wide variety of well-being-centric practices to enable business continuity during a crisis (Zurich, 2021). This was crucial due to the instability and health threat associated with the pandemic (Zurich, 2021). Second, the employee’s satisfaction with compensation and benefits is very high, according to the analysis of employee reviews from Glassdoor (n.d.).
Third, internal mobility, training, and coaching are well-developed in the company, which also increases employee satisfaction due to the ability to grow inside the company (Zurich, 2021). Fourth, the company utilizes automated quantitative assessment of employee KPIs using the latest technology along with the qualitative assessment of employees by their managers. Finally, ZNA adapted to the pandemic and promoted virtual onboarding, which is currently included as an option for the employees (Zurich, 2021). The company currently uses a virtual environment for interviewing as well.
The are several flaws associated with ZNA’s HR processes. First, the company’s recruitment and hiring process take too much time. The analysis revealed that the hiring time might take up to six weeks, which is associated with an increased possibility of losing talent and valuable employees. Second, the company relies on hiring experienced personnel, which may be costly. Finally, the company’s female representation in the leadership team remains low at 27.1% (Zurich, 2021). Thus, these are the major areas of improvement for the company’s HR processes.
Desired HR Processes
The company aims at improving its current HR processes in three dimensions listed below.
- Decrease in the time between the first contact and initial training to ten days.
- Put increased emphasis on technology-based HR processes, including professional training, hiring, on-boarding, and internal talent exchange;
- Develop youth talent acquisition;
- Set diversification of leadership team as a priority.
Knowledge, Skills, and Abilities
In order to achieve the organizational objectives, the HRM team needs to possess a certain pool of knowledge, skills, and abilities (KSAs). The required KSAs are listed below:
- Best practices of the hiring process, youth talent acquisition, technology use, and leadership diversification;
- Culture of different countries in North America that may affect the hiring process, youth talent acquisition, technology use, and leadership diversification;
- Regulatory frameworks of different countries in North America that may affect the hiring process, youth talent acquisition, technology use, and leadership diversification;
- All aspects of workplace culture in different outlets may affect the hiring process, youth talent acquisition, technology use, and leadership diversification.
- Intercultural sensitivity and language skills to drive change (Jayatilleke & Lai, 2018);
- Technology-use skills relevant to the identified processes (Ptitsyna et al., 2019);
- The best teamworking skills (López-Cabrales & Valle-Cabrera, 2019);
- Evidence-driven analysis (López-Cabrales & Valle-Cabrera, 2019);
- Ability to communicate effectively verbally and in writing (Jayatilleke & Lai, 2018);
- Ability to align processes with the organizational goal López-Cabrales & Valle-Cabrera, 2019).
Technology has become a critical part of any modern organization. The performance of companies depends strongly on their adoption of innovative technological solutions and adaptability in the digital world. Technology changes constantly and can vary significantly depending on activities and operations, but measures can be taken to keep the company updated with the latest reliable software and hardware (Ptitsyna et al., 2019). Zurich North America takes into consideration the role of technology for organizational success and improvement across divisions. Recent years have seen ever-increasing automation and digitization of operations. However, there is also significant potential on how technology can improve various HRM practices at ZNA.
Technology is used for staff-associated activities. First, it arises at recruitment as companies use a range of digital platforms to seek out candidates, receive applications, and sort out job seekers based on qualifications and positions. Some forward-thinking companies even utilize artificial intelligence at the initial stages of screening to eliminate bias. Technology contributes to enhancing employer branding and creating efficiency for both applicants and HR recruiters while simultaneously being highly cost-saving for the company (Abdul, Wang, & Li, 2020). For employed staff, technology aids in distributing workload and ensuring that employees are accountable for their actions. Technology helps in gathering data on performance statistics, identifying the most productive staff with specialized systems to ensure the appraisal is fair and transparent. Internal technological systems can track everything from attendance to daily tasks to effectiveness in accomplishing the workload. Integration of technology into office spaces (or remote workstations) is critical for management to be aware of the latest KPIs and identify gaps in the workforce or service delivery. In turn, management can work with HR to hire new employees if gaps are missing, address issues with struggling employees, or make internal moves for optimized performance results.
Employee training is a key aspect that can be greatly enhanced by technology. Technological systems are able to offer equitable and reliable training, providing up-to-date company information. For ZNA, training is critical, as the insurance industry consists of multiple moving parts, so every department is ranging from claims processing to underwriting and program development to auditing. Simulations and training are helpful in bolstering SKUs and improving productivity across the workforce. These technological systems should be managed by managers that can implement them for training purposes appropriate for the organization and overseen by specialists with information technology experience to ensure smooth implementation (Bakotic & Krnic, 2017).
Technology should seek to boost all stakeholders in an organization, working more efficiently and collaboratively to achieve common goals and profitability. At ZNA, many positions require continuous communication and collaboration with other teams and departments. Modern communication technology is vital to achieve that level of synchronous work necessary for complex modern organizations (Mastilo, 2017). Furthermore, technology should be accessible for employees, being something that is easily understood and functional so that it does not affect productivity or morale. Training on utilizing technology should be available for those that may be struggling. The technology used within an organization should be kept updated to maintain innovation as well as ensuring safety with the latest security patches.
The labor market in North America and the US, in particular, is going through extraordinary times due to the COVD-19 pandemic. Bureau of Labor Statistics (2020) reports that the labor market is currently recovering after a shock of April 2020. The unemployment rate decreased from 15% in April 2020 to 4.8% in September 2021 (Bureau of Labor Statistics, 2020). However, it has not yet reached the pre-pandemic level of 3.5% (Bureau of Labor Statistics, 2020). The number of employees in the finance and insurance sector remained relatively stable for the past four months at the level of approximately 6.5 million people. The overview of the unemployment rate change in the US is provided in Figure 3 below.
An analysis of recent changes in the labor market defined four tendencies (Levanon, 2021):
- The trend to remote work persists, as more employers state that remote option is available in the job postings. As a result, employers start to expand their employment pool to new geographic areas;
- Even though the job growth is high, unemployment has not reached the pre-pandemic level;
- Labor shortages are high despite high unemployment. However, the situation may change in nearest future, as the unemployment benefits expired in September 2021. The companies reacted with a higher emphasis on automation and a decrease in skill requirements for jobs.
- The wages are growing at a record speed due to inflation.
Additionally, ZNA needs to change to adhere to the new regulation in the US labor market. In particular, recent legislation focused on much-needed pandemic-related changes. These changes include creating or expanding paid leave benefits, which are crucial during the pandemic, as many people get infected (Sholinsky et al., 2021). Additionally, the legislation packages that became effective in 2021 changed the rules concerning pay equity, anti-discrimination rules, and criminal background checks. Thus, ZNA is obliged to change its HRM practices to align with the new regulations.
The analysis provided in the previous sections demonstrated that there are several improvements that should be made to improve the current HRM practices. The recommendations are listed below.
- Develop, test, and implement a new recruitment policy with decreased time between first contact and initial training based using the latest technology. This change is consistent with the trend of increased use of technology and HR, and it will help the company to avoid the possible labor shortage described by Levanon (2021).
- The HR department needs to focus on increasing demand for remote work options, which implies that more employees need to have the ability to work from home. Remote work had no negative effect on productivity, which implies that there are no significant threats associated with remote work. Additionally, such innovation will help to widen the hiring pool for the company, which can be a proactive measure for preventing labor shortages.
- ZNA is recommended to develop a five-year plan for diversification of the workforce and leadership team in particular. This will help to adhere to the new legislation concerning discrimination and the desired HRM processes of the company.
- The company needs to conduct an ongoing review of its current practices to adhere to the local laws and legislations in different states of the US and abroad. The present paper provides only a brief overview of the new legislation enacted in 2021. The HR department is required to conduct a thorough review of current laws and legislations that will soon be enacted.
Table 2 below provides a list of deliverables for the provided recommendations.
Table 2. Recommendation-associated deliverables
|Deliverable||Associated recommendation number||Accountable person||Deadline|
|New recruitment policy concept||1||Laura Rock |
(Chief Human Resources (HR) Officer for Zurich North America)
|November 30, 2021|
|New recruitment policy implementation plan||1||Laura Rock||December 31, 2021|
|Systematic review of possibilities for remote work in all the positions||2||Laura Rock||December 31, 2021|
|Five-year workforce diversification plan||3||Kathleen Savio (Chief Transformation Officer)||November 30, 2021|
|Systematic review of current and planned legislation affecting HRM practices||4||Laura J. Lazarczyk (Chief Legal Officer)||October 31, 2021|
|A draft of new changes in HRM practices according to new legal framework.||4||Laura Rock||November 30, 2021|
Other HRM Issues
There are two issues that have not been mentioned in the main body of the report but still require attention. While the current compensation practices are a source of low employee turnover and satisfaction, close control over wages is required. The problem is that the growth of new-hire wages caused by inflation can negatively affect retention (Levanon, 2021). Thus, it is crucial that the compensation of new employees does not affect the motivation of employees that have been with the company for a while. Another issue associated with the HRM practices has been given the name of the “donut effect” (Levanon, 2021). Due to the economic crisis, many people moved from city centers to less costly apartments. Additionally, remote working options also allowed employees to move to less densely populated areas (Levanon, 2021). Thus, it is crucial to consider this tendency when planning the recruitment strategy.
ZNA has a long history of successful HR practices that allowed the company to become the leader in the insurance industry. Its focus on employees allowed the company to increase retention during the pandemic despite the economic crisis. However, there are several changes in the HRM practices that can help the company to maintain its status as the industry leader. First, the company needs to reduce the time spent on the recruitment process. Second, ZNA is recommended to provide remote work options to more employees. Third, the company should make a commitment to workforce diversification. Finally, a review of laws needs to be provided to ensure adherence to recent legal changes.
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