Maa Durga

Customer Satisfaction in General insurance industry - A step towardds Competetiveness

CUSTOMER SATISFACTION IN GENERAL INSURANCE INDUSTRY- -A STEP TOWARDS COMPETITIVENESS
Govind Johri
Associate Professor & Chief Manager
National Insurance Academy Pune

Customer service management is a multi faceted area on any public service business. Customer satisfaction is most important criterion, which encompasses quality product and value addition through value evidence of what was implied to provide ultimate customer satisfaction. Customer (dis) satisfaction is cascading inn nature and requires building relationship of confidence and trust with utmost commitment, internal accountability and a sense of care of customer. The insurer must try to get closure to customer through 6 C concept and by implementing customer experience management by understanding customer’s value propositions through all his interactions and give Weightage to more focussed methodology. The final issue for any business in the competitive environment is of knowing profit opportunities in managing services through tangibilisation, empathy and reinstatement of ones presence and performance by overcoming inconsistencies in customer service management in the organisation.


“You pay money and you take your chances”; “Let the buyer (customer) beware,” the age-old caveat emptor dicta initially akin to products, is still the buzzword in “Insurance Sector”. If it is general insurance, more so. If the public sector general insurance companies have to keep their stakes in the business and allow them not to be swept away by the entry of private players, with more responsive and convenient attitudes, the only shortcut is ‘quality service’. Insured, if not satisfied, is bound to test competitors. The new millennium in Insurance Industry has thrown the biggest challenge of handling ‘Customer Satisfaction’ & in turn ‘Customer Concerns’.

Customer Satisfaction in insurance means the use of a Policy product purchased for a cost, to the ultimate satisfaction of the buyer, when a claim is paid. The satisfaction is not fully achieved only when a product so purchased gives its full use, but it also stipulates that the product bought by the buyer will give him the expected fruit i.e., peace of mind during the product cycle when it is in use by the customer.

1.1 VALUE EVIDENCE

The present day customer buys his ultimate satisfaction, not the product (Kodak claims to sell.) Today’s customer is an active seeker of Value-Evidence (Certificate, Policy, Prompt Service/ Full value.) He dwells more on promise of satisfaction made by agents/ brokers/ company advertisements/ assertions by Company/Industry/Regulator/ Legislature. The judgement of customer service is mainly on the basis of ‘what was asserted or implied’ about the policy product. Operational staff delivers this assertion done by marketing personnel at the beginning by issuing documents promptly, their behaviour at the time the consumer prefers a claim or seeks assurance of his service in any other manner. Therefore, any lapse on the part of operating office turns proactive rather than preventive, and it affects the sustainability of relationship between the insurer and the insured customer.

1.1.1 (DIS) SATISFACTION A CASCADING EFFECT

It may affect renewals and consequent loss of client, image of the company, and finally the profitability i.e., bottom line of the company. One dissatisfied customer tells his perception/experience/grievance to eleven others who in turn happen to tell yet to another 5 each. One can imagine the ‘cascading effect’ of these ripples spreading dissatisfaction to sixty seven+. We need to save this adverse publicity through word of mouth and avoid incurring manifold increase in expenses, which is an additional cost incurred by the business, by loosing so many customers and than trying to replace them with new clients. The saving on one lost customer needs to be looked in the light of acquisition cost of sixty seven + potential customers who have been alienated forever due to one adverse perception, even though these were not on the insurers books. As per a US market study, a prospective customer costs 6 times more, than retaining one existing customer. The cascading effect of dissatisfaction is therefore 402+ times. Another study claims that 5% increase in retention of customers may save up to 18% cost. Therefore, all our efforts must be put in to retain a customer to achieve reduction in expenses of management.

1.2 BUILDING RELATIONSHIP OF CONFIDENCE AND TRUST

The satisfaction of Insured customer requires building relationship of confidence and trust between the buyer and seller. It is essential to build trust so that the intentions of both the parties are clearly understood by each other e.g. if an insured has paid premium against a proposal, mere issue of receipt without any narration (cover note/ Certificate of insurance) as to the specifications of the product intended to be sold, would not render satisfaction, prompt issue of the policy document and quick and adequate settlement of claim, would only create confidence in buyer about the product bought by him.

1.2.1 COMMITMENT

The building of confidence also requires that one should build up the reputation, that whatever is once said, is not unilaterally withdrawn in the garb of official red-tapism or other unforeseen constrains developing due to change in environment. The rules are always meant for internal consumption until they are not detrimental to the mutual interest of either.

The insurer must be held fully accountable for his promises made to public, more so when the insurer has already given a commitment through Cover note or a public commitment through Citizen Charter or industry commitment given by the Insurance Regulator by way of regulation of Protection of Policy Holders Interest & promulgating code of conduct on intermediaries (agents/ brokers) or facilitators like Surveyours & Loss assessors.

1.2.2 INTERNAL ACCOUNTABILITY

The natural corollary of building confidence to external customer requires that each internal customer (employee) must accept accountability for all the actions done by them or done on their behalf, whether it is improper treatment, breach of mandatory provisions, non-inclusion of warranties or conditions, charging wrong premium or overstatement by intermediaries at the time of pre sales and post sales both.

1.2.3 SENSE OF CARE

Moreover, confidence would be generated only if insurance companies’ are quick to serve. Undue delay is an important reason of losing confidence by the insured in the words spoken by the insurer or his representative. The customer is the most wanted person on the insurers premises. Each employee of the insurance company from sub-staff to Chairman exists in the company on the simple premise “to serve the customer, in whatsoever role has been assigned to any one”. Therefore, attending to potential, prospective, insured is the prime duty of each employee. The customer at no cost should go back unattended. We in Insurance business proclaim our selves to be a part of a family, which clearly insists that if one family member is absent, another or whosoever is present, should attend to his best of ability and see that the customer returns with the clear notion that “He was adequately cared”. The sense of care is a vital tool in achieving customer satisfaction. An unattended or frustrated visit could bring discord and a feeling of repulsion, which may in turn rupture the thin cord of mutual relations developed due to the insurer-insured relationship.

The insurers role pre-envisages the instinct of sense of care, building of confidence & trust. The claimants’ morale is already low due to economic or personal loss sustained and happening of a fortuitous event. The insurer is, therefore, under greater degree of duty to assuage insured’s hurt feelings and attend to his needs promptly, efficiently, actively and courteously.

Good human relations can be built up when we keep in mind the motives and desire of other people as given here under:

a) To be treated courteously: we must respect human dignity whether the customer is Managing Director of a corporate group or merely a cattle owner.
b) The customer must get a suitable environment to accomplish the job for which he has come at our doorstep.

A sense of care, concern, trust and confidence must be present on the insurers premises. There should not be any display of complacency and lack of sensitivity in the employees towards Customers. The customer needs to be served promptly, efficiently and effectively. As a Public Sector Insurer we should not lose sight of our “ goal of social service, spreading of insurance to every nook and corner of our vast country and to help distribution of economic wealth to one and all”. Our job exists to serve the customer at the right time, to serve him with courtesy, magnanimity and sincerity.

In our industry, it is sell, sell, sell. and-oh-yeah give good service, too. But that is as an after thought only. Does this not point to our failure, to properly define and reinforce the service role of employees? The result we see today is, “Growth with lot of question marks on service”, though motto1 is: “SERVICE GATEWAY TO GROWTH”.

1.3 GETTING CLOSER TO CUSTOMERS

A common assumption is that “the front line personnel understand their customer priorities by virtue of regular customer contact. Our front line contact persons are mainly agents, Brokers, Companies Sales officers, underwriting/claim assistants, cashiers in office, besides sub-staff and other executives etc. This front line staff interacts 90% of time with the customers, mainly interacting outside any direct supervision. These ‘moments of opportunities’ (the time to perform) for our organisation are in reality (Richard Norman’s high impact interactions at Scandinavian Airlines) ‘moments of truth’, for the customer to feel the service. This desires full accountability of the front line staff present for interaction on behalf of the insurer. The Insurance Company has to provide a proactive response towards their customers in day-to-day actions while extending services, for being considered as having given effective and efficient service.

1.3.1 CORPORATE CULTURE – CONCEPT OF 6 “C”

The author feels that an Insurance service company’s corporate culture should be based on 6 “C” – Communication, Cooperation, Cheerfulness, Credibility, Challenge and Continuity. The Company must welcome the insured to speak on the basis on these 6 “C” to the employee who has been serving him, if he is not happy with the service provided by him or any of the company’s agents or associates or any other matters that they are not satisfied with. Only after availing the response the customer should be directed to use formal mechanism. The customer interactions with a company form a critical part of value of customers perceive.

1.3.2 CUSTOMER EXPERIENCE MANAGEMENT

Theoretically, ‘Customer Experience Management’ appears disarmingly similar to ‘Customer Relationship Management’, which should be a business strategy to improve long-term loyalty. CRM nevertheless, in practice is an information-driven approach to customer analysis and process automation, while CEM concentrates on the customer value proposition and includes all interactions, not just those that can be automated. The focus, therefore, must shift to understanding gap between the experiences customer are receiving vs. those insurance companies think they are delivering, if we want to address the roots of customer satisfaction. With quantitative data from two CRM guru surveys on CEM it has been concluded that managing experiences well can, indeed, boost business performance. Companies that lead in CEM effectiveness as measured by CRM Gurus 25 question assessment generally also achieve double-digit revenue and profit growth.

1.3.2.1 METHODOLOGY FOR IMPLEMENTING CEM

The objective of bringing employee and customer together is to build a positive attitude and empathy amongst employees, towards customer and to create effective and prompt response towards customers. The way out for employees to achieve this is by “getting closer to customers”. The insurance companies must give Weightage to following aspects:

Ø ‘Listen to customers’ viewpoint at every stage from end to end.
Ø ‘Obtain customer feedback’ through employees-customers meets. Exposing employees to have first hand experience of client by arranging visits along with field staff.
Ø ‘Identify and fulfil unarticulated needs’ of the customer to provide excellence in service.
Ø ‘Understand of psychological needs’ which cause mismatch between the perception of the customer and the employee.

A concerted action should be initiated to minimise the gaps by increasing tangibilisation of services, in lieu of intangible promises doled out by the insurance policy. The insurance customer needs:

1. Prompt and accurate issue of document.
2. Prompt and fair settlement of claim.
3. Good listening mechanism
4. Better problem solving approach
5. Reliable manner of service
6. Meet customer’s requirement on time every time.

If each one starts striving for customer satisfaction, as a step towards competitiveness, we shall soon be identifying ourselves with creating Customer Delight rather than mere customer satisfaction. Customer Satisfaction is a key factor in the formation of an effective and vibrant organisation, with caring, committed and empowered people. This new thrust & innovativeness, is key to competitiveness.

1.4 PROFIT OPPORTUNITIES IN MANAGING SERVICES

Winston Churchill once said, “one must always look ahead, but it is difficult to look further than one can see”. In the current liberalisation era we have little option but to strive for customer satisfaction and competitiveness for bare survival. Professor M. L. Agarwal of IIM-Lucknow in his studies on ‘Customer Relationship Management’ has identified five profit opportunities in managing services:
1. Greater intangibilisation
2. Customer co-production
3. Pace based services
4. Cyber services
5. Mass customised services

The emerging need of insurance customer is ample evidence of changing customer profile and their expectations. The competitive advantage can be achieved through net-based delivery channels. The Insurance Regulator has amply demonstrated by implementing the licensing of agents/brokers/companies through web. One PSU has issued an e-sugar Policy to Sugar Stock Exchange, being serviced on Web Technology based competition, with cyber-based services. The interactive response system is an important tool in emerging scenario to achieve competitive advantage in the organisational effort to sustain. The insurance mall.com has opened up true competition among insurance companies whether private or public, in product quality and price vis-a-vis availability at the doorstep of the consumer.

The insurance industries business is so enormous that the negative effects of technological competition are considerably nullified, if the Public Sector Insurers start relying on the strength of their core competencies viz., a) existing employees b) huge network of offices, c) loyalty of customers and d) strong bond between customers and employees e) approach to problem solving as against dispute resolution.

The competition has been tougher in the last 5 years and more of the same is expected in the next 5 years. Competitiveness requires special emphasis in two areas while achieving customer satisfaction.

1.4.1 TANGIBILISATION OF SERVICES.

How to work with customers & attend to queries i.e. tangibilisation & empathy should be given priority. The dress, manner of speaking by employees, writing and issue documents also enhances tangibilisation process.

· Phone call attending: It should be done courteously instead of saying that so-and- so is on leave or is away from his seat. We must find the reply from the concerned person and it should be complete and ensure calling back by appropriate person.
· Visit of client: The client needs to be attended like a friend giving him a seat and a glass of water. One must empathise with the client in his moments of distress caused due to his sustaining loss. Do we not expect the same treatment for ourselves? We must also ensure that he is not made to visit office for the same reason again & again and that his interest is attended to on top priority. How many clients do we receive every day? With all knowledge and tag of highly paid educated employees can’t we attend a visitor adequately?
· All enquiries need to be attended promptly.
· Any complaint must be handled with fairness and we should not try to hide behind legality & technicality, which in any case the consumer is not aware of.
· The customer also needs to be understood by listening him properly. We can create an Appellate mechanism as in Income Tax department to review the decisions of our operating offices. Second step to appeals is to go to legal department for initiating appropriate steps governed by protecting the interest and image of the company. Grievance in itself has a negative connotation and unless extraordinary precaution are taken results in disputes fought in court of law resulting in total alienation of the customer for ever, as he looses trust in the insurers ability to protect the interest of the customer.

Good service is vital; however, at times other factors tend to be ignores at customers expense. These are things such as the ergonomics of the environment, the hygiene and even the general aesthetics. Physical infrastructure that caters for people for special needs for example is overlooked area. Facilities for customers (external or internal) who have to wait a longer time such as heaters/air conditioning, comfortable seating. In Insurance presentation and getup of Cover note, Policy document is important to customer besides the treatment he receives during his visit to office.

1.4.2 REINSTATEMENT OF PRESENCE AND PERFORMANCE:
The insurers have shown scant regards to insured’s woes. In the current competitive scenario Insurance companies must be proactive in providing risk management and claims counselling services to live the dictum of “pay if you can and repudiate if a must”. The customer Services departments must be transformed into customer counselling departments to reinstate the presence and performance.

The vision report titled ‘2016’: the Future Value Chain” published in 2006 by the Global Commerce Initiatives, Cape Gemini and Intel describes the trends & developments that will impact the consumer products and retail industry over the next 10 years, with consumer behaviour being a key driver of these changes. In the new report of Cap Gemini’s “Future Consumer” the opportunities areas identified in “2016” study need to be anticipated as number of dimensions. The main hypothesis stemming from 2016 report includes following:

1. Health & wellness being the key factors influencing the consumer behaviour, if companies can address this need they are bound to make profit.
2. Sustainability aspect shall be given more consideration in the buying decisions of consumer. This will be an input for public opinion & personal judgement.
3. Entering into true dialogue by consumer with readiness to provide relevant information i.e., value personalisation. This will be possible through customised communication and 2-way dialogue by value personalisation.
4. Online channels to grow increasing demand for home delivery. This will require service provider to generate personalised products and be able to deliver, by extending distributional channels to consumers home. The provider will have to consider new integrated approach, and be open to new ways of working driven by consumers by involving consumers in R7D and innovation of products. This will lead to changes in key roles in marketing and communication and pretensions to influence purchase decisions

The insurance policy is an intangible promise to pay in time of happening of an event but it also promises reliability, trust, assurance, competence, empathy, responsiveness and tangibility.

Ø RELIABILITY Ability to perform promised services.
Ø TRUST About quality of product.
Ø ASSUTRANCE Capability of delivering the promise with accuracy, adequacy i.e., ability to inspire trust and confidence in customer.
Ø COMPETENCE Knowledge of product.
Ø EMPATHY Courtesy by employees towards customer i.e., (how do they wish to be treated themselves)
Ø RESPONSIVENESS Willingness to help / provide prompt services and
Ø TANGIBILITY Appearances of facilities, personnel, communication material etc.

The gaps in the perception of these perceived service quality between employees and consumer gives rise to customer dissatisfaction. It affects quality of service / image of insurance company & its employees and in finality affects ultimate business prospects i.e. profitability.

A survey by General Insurance Corporation of India (holding company of 4 PSU’s in 1994-95 based on over 20,00 feedback from employees and customers, had identified following service quality gaps causing customer dissatisfaction:

1. Responsiveness & Empathy (lack of inter group empathy).
2. Reliability & Assurance (lack of sense of belongingness) Trust.
3. Tangibility (lack of empowerment).

The survey has clearly revealed perception gaps in the area of:

1. Visual appeal of document and office.
2. Product knowledge and adherence to promises.
3. Responsiveness and dependability.
4. Error free records and empathy.

Service standards are customer’s expectations stated in a way that is meaningful to employees. Only these “service standards” can bring a customer focus into employee’s day-to-day work reality, the real work situation of service delivery, leading to customer satisfaction.

1.4.3 INCONSISTENCY IN SERVICE

One of the biggest complaints in the area of service is ‘inconsistency’. Particularly in Public Sectors like banking & insurance, the views of the customers vary significantly because one customer’s experience differs generally from the next. This inconsistency is usually nothing more than attitude of the service provider, lack of management of their employees moods, discrimination and choosing to favour certain customers over others, and generally, aspects of service that can be managed by demonstrating a positive attitude. Inconsistencies may be a result of different service experiences from the same staff complement. It could also be inconsistency among staff where service by the Field Officers does not match with the service received when one gets to the insurers office.


No pretentious proportions will lead to bountiful benefits. The reliability in its great people is an organisations greatest asset. Therefore the first and foremost point is to invest in getting the ‘right people for right job’ and thereby, minimise costs and risks the company entails by sending them on endless training courses that will simply not work. Insurance organisations tend to talk wildly about complaints procedure(s) they have and the fact that the door is open for customers to voice their complaints. The redressal of Public Grievance Rules 1998 permitted the Companies to avail exemption from the applicability of the mechanism, if they can demonstrate to have a viable grievance redressal system. It’s disheartening to note that not one PSU has sought the exemption in past 10 years. Often the complaints are of the same type. The endeavour should be that if a complaint has happened once it should not repeat again. It is desirable to manage the customers experience from the beginning. The vision statement must be more than a wall hanging. It should be visible and a working policy of any company. Whether the Company and its each employee live up to the vision statement? If a company in its performance can’t match the vision, there is no reason why the company should display vision as a public document.

If a company has a Vision statement or Citizens charter or industry regulation like Protection of policy holders Interest regulations, applicable to insures, each one in the company must make sure that it is delivered by each employee of the company irrespective of the capacity in which one works. Half the battle in the service industry is in ensuring that the staff are informed and are the right fit and are monitored regularly. The other half is what incentives the Insurance companies tend to provide to facilitate the service providers, managing the service delivery? Most of all is there a battle at all or are we sitting and waiting for the other side to sort themselves out? Are there any real challenges in customer service management?

A Critical look at grievance redressal

By Govind Johri
God provided a great model for communication
when He gave us two ears and one mouth.

The paper attempts a comprehensive view of grievance redressal system currently in vogue, in General Insurance Industry. An effort has been made to vent the aspirations of Insurance Customer by recognising his right to be heard (separate from the right of redressal) for making the industry respond with greater care & concern in containing the dissatisfaction. This, the author suggests, may be attempted by using ‘alternative dispute resolution’ mechanisms, which is available, and being supported by legislation and judicial system. This will be, hopefully, a speedy, efficient and inexpensive mechanism. Further, the author has also reviewed the Law Commissions’ recommendations and KPN Committee Report in regard to grievance redressal machinery. The paper also looks at the proposed mechanism vis- a- vis continuation of existing mechanism and need to have an independent redressal system, exclusively for the insurance industry.

Insurance industry is essentially a service industry where in the present context the customer expectations are ever rising and dissatisfaction from the standard of services rendered is ever present. Despite there being continuous product innovation and significant improvement in the level of customer services with the use of modern technology, the industry suffers badly in terms of customer dissatisfaction and poor image. Alive to this situation the Government and the Regulator have taken a number of initiatives. These initiatives include institution of Insurance Ombudsman1, in 1998 and Protection of Policy Holders Interests in 20022. In this context, it is worth noting that the KPN Committee in 2005 has recommended for continuation of the institution of Insurance Ombudsman3. However, the Law Commission has recommended for establishment of ‘Grievance Redressal Authority’ (GRA) by replacing the Insurance Ombudsman4 and transfer of all disputes pending with the Consumer Redressal Agencies5. The Law commission has further recommended that an ‘Insurance Appellate Tribunal’ (IAT) be constituted to hear the appeals against the decisions/ awards delivered by the Grievance Redressal Authority and the Insurance Adjudicators appointed by the Insurance Regulatory and Development Authority (IRDA) whose appeals will also be heard by IAT.

Despite the fact that insurance industry has got a lot of legislations, rules, regulations, for formal grievance redressal, the mechanism is not satisfactory and effective enough to cope up with ever increasing volume of grievances turning into complaints, and finally in fully blown up legal disputes. The flow chart I & II illustrate the existing redressal mechanism and suggested redressal mechanism for the insurance Industry.

CURRENT SYSTEM OF REDRESASAL


Arbitration 4.3
RIGHT TO REDRESSAL 3.0
IN-HOUSE REDRESSAL 1.0
COMPLAINT 3.1
INDUSTRY SELF REGULATION
CIVIL COURT
CONSUMER COURT
IRDA Complaint Cell
VIP REF
GRIEVANCE
INSURANCE OMBUDSMAN
DPG
RIGHT TO LITIGATION
CONSUMER DISPUTE
Customer Dissatisfaction
SUPREME COURT


Flow chart no. I

1. Lack of credible ‘In-house grievance redressal machinery’

If the Central government is satisfied that an insurance company has already ‘grievance redressal machinery,’ which fulfills the requirements of the RPG rules, it may grant exemption to the Insurance Company from the notification6. (See Flow Chart II) It is really surprising that no Insurance Company has so far come forward to avail exemption, demonstrating their genuine concern for resolving grievances in cost effective, efficient and impartial manner even for individual insured7. The corporate insured, intermediaries or peer concerns have, in any case, been left to fend for themselves, even by the Regulator, The industry has left them at the mercy of courts, on a bizarre note that corporate world has the knowledge and can afford litigation.


SUGGESTED SYSTEM OF REDRESASAL

INTERNAL EXTERNAL

RIGHT TO BE HEARD 2.2
RIGHT TO REDRESSAL 3.0

SETTLEMENT COMMISSION 5.4
ARBITR ATION 4.3
GRIEVANCE REDRESSAL AUTHORITY 5.2.1
A D R 5.3.3

MEDIATION
CONCILIATION
4.1 & 4.2
DPG
VIP REF
IRDA Complaint Cell
A
D
R

In-house redressal 1.0
Complaint/Dispute 3.1&3.2

GRIEVANCE
Insurance Company
To Listen
2.0
INSURANCE APPEALATE AUTHORITY 5.3




Flow chart no. II


1.1 Difference of opinions

As a matter of fact, even before any difference of opinion between the insurer & insured graduates into grievances to be resolved by ‘In-house Grievance Redressal Machinery’, the organization is required to provide credible arrangement for expeditious hearing of such difference of opinion and address the issues through negotiations promptly and impartially.

The term ‘difference’ means ‘dissimilarity; a contention or quarrel’. Senior Officers may have mandate, to take rational commercial decision, in order to reiterate their commitment to listening the voice of their customers with due care and concern.

2. Are we listening organisation?

As soon as a ‘difference’ of opinion arises with the insured due to a decision taken by any authority, will it not be fair that the very first assurance of redressal must come from the insurer it self? The insurers must be concerned about their customers and be ready to look into their genuine problems. At this point, the intention of the Insured is to amicably negotiate with the insurer to sort out its differences. Any attempt by insurer to perceive him as complainant is the first step towards straining the relationship of insured and insurer.

The listening organisation must have, at its heart, following vital beliefs8:

2.1.1 Respect: Being basically financial service providers, the insurers must recognise and respect the opinions and aspirations of their customers, rather than pushing them into the category of Complainants or Aggrieved person or Respondents. The insurer must deal with them on the basis of an adult-to-adult relationship, not talking down to them, as has been the case so far.

2.1.2 Trust: The insurers that cannot gain or retain the trust of customers cannot hope to win and retain them as loyal customer. The loyalty of the customer is fundamental to any insurance company.

2.1.3 Mutuality: The Insurers who balance their needs with those of their customers will succeed when the knowledge and information based insurance service has strengthened their customer service mechanism including customers concerns.

2.1.4 Personalisation/ Contextualization: Personalised approach must exist and increase gradually whether it is core products or the need across the customer’s lifecycle. There must be proper contextualisation in the insurers approach.

This is a moment of opportunity, when an insurer can convey to its insured that they protect their legal ‘right to be heard’ and that they are concerned about it.

2.2 Right to be heard

The right to be heard includes the right to be assured that consumer interests will receive due consideration at appropriate forum. The Insurance Company has genuine concern for its Customer’s opinions and aspirations. The Company wishes the insured to remain its Customer and not to be alienated as an aggrieved person or a complainant or a respondent.

The insurer must develop innovative ways of delivering the right mixture of policy, product and claims servicing. The Insurers, who truly put the Customer-first in their vision of service, are bound to benefit themselves in the long run.

‘The insurers must allay customers’ anxieties first…’9 aptly describes the concept of making insurance companies a listening organisation, which is fundamental to customer satisfaction.

3. Right to seek grievance redressal

The right to seek redressal includes right to be protected from the unfair trade practices or unscrupulous exploitation of consumers10. Once an insurer has not agreed to accept the insured’s contentions, the Insured may be given another opportunity to approach independent ‘In-house Grievance Redressal Machinery’ of the insurer to resolve the grievance without classifying it as a complaint. The ‘complaint’ may be defined as a grievance, which could be resolved internally within the organisation.

“The word complaint is used loosely as a grievance connotes ‘the conflict of interest, between two parties, to be resolved with the assistance of a third party out side the organisation’. The moment the out side the organisation resolution is carried out legally it is termed as dispute to be resolved with the sanction of law”. (See flow chart no. II)

Therefore, it is incumbent on insurers on continuous basis to place independent & transparent ‘In-house Grievance Redressal Machinery’ to resolve ‘grievance’ in conformity with Redressal of Public Grievances Rules.

If in-house grievance redressal mechanism fails to resolve the ‘grievance’ amicably or fails to respond to the insured within 30 days, the aggrieved insured has a right to make complaint for amicable resolution at industry level through ‘Insurance Ombudsman’ so as to get rid of ‘conflict of interest’ between insured & insurer.

3.1 Complaint of “Conflict of Interest”

The Insurance Ombudsman acts as a mediator (by sending recommendations to both the parties) or acts as conciliator (providing alternate solutions for the resolution of conflict) by passing a speaking award with detailed reasoning, which he thinks fair, in view of the facts and circumstances of a claim11. The insured has been permitted option to accept or reject such decision/award of ‘Insurance Ombudsman’ 12.

3.2 Consumer Dispute

The insured may also concurrently seek legal recourse in Civil Courts for dissatisfaction in respect of contractual agreement or he may approach Consumer Redressal Agencies for bad faith repudiation or arbitrary handling of insurance related matters. But the customers may decide all these things when he is left dissatisfied with in-house grievance redressal machinery. With this process the number of complaints going to formal courts will reduce substantially.

When a conflict becomes a dispute it enters into courtrooms. The insured has discretion to avail Arbitration process as provided in the general condition in all Policies. This is to avoid alienation of the customer due to non-acceptance of the award of the Insurance Ombudsman, pushing the insured to invoke ultimate legal step towards resolution of the dispute.

In order to save both parties from expensive & time-consuming litigation the idea of alternatives to litigation is constantly gaining ground. ADR is to be perceived as an important machinery, to be used before going for full-scale litigation. Legislatures and Courts have reinforced the idea from time to time.

4. Alternate Redressal Machinery an alternatives to litigation

The Alternate Dispute Resolution is a speedy mechanism, in terms of time taken, economical one in terms of costs involved and still, in a way it is an in camera mechanism where the apprehensions and misunderstanding of either party are kept close. The alternative dispute resolution enables the Insurance Companies to retain the relationship with the Insured and save its public image. The ADR has emerged in India in the middle of nineties as a response to inordinate delays in disposal of cases resulting in docket explosion. The most commonly used methods of ADR are negotiation, mediation, conciliation and arbitration. The ADR methods are non-litigative dispute resolution strategies for resolving disputes outside the usual court process.

4.1 Mediation an appropriate redressal technique

Mediation is voluntary but structured negotiation process. It pre-supposes the willingness of both sides to resolve its differences. The mediation is used for resolving difference of opinion in order to facilitate either party to see reason, in the presence of mediator who is generally an expert from the same business fully conversant with the nuances of the trade. Mediation focuses on long-term interest, shows parties’ weaknesses, not just the strength of their case and makes them examine their alternatives to a negotiated settlement. The mediator is not an advisor, as his role is to assist the sides for a mutually acceptable solution. The mediation may not work in cases involving moral turpitude or where criminal law is invoked. According to section 35 of the Arbitration & Conciliation Act, 1996, the agreement becomes final and binding, when both sides along with the mediator sign the agreement for resolution. The mediation agreement can be enforced under Civil Procedure Code, 1908 as if it were a decree of the court, and the same can be challenged too. The mediation is flagship of the ADR movement, which is not merely an alternative but appropriate dispute resolution mechanism (see flow chart no. II).

The aggrieved person may also explore quasi-judicial forum of Conciliation within the ambit of provisions of the Act, which has the force of award and may be questioned only in case of fraud or malafide intentions or where legal points are to be adjudicated13.

4.2 Conciliation

‘Conciliation’ is a process similar to ‘mediation’ but often it is not a voluntary process. Conciliation process is initiated by consent of both parties, as per section 52 of ‘Arbitration and Conciliation Act, 1996, but sec 89(2) d of Civil Procedure code, 1908 permits the courts to refer a dispute for conciliation even when parties do not consent, provided the court thinks that the case is fit for conciliation. Conciliation is a system where disputes are settled by mutual concession of the parties through good offices of conciliator (see flow chart no. II). The conciliator may request each party to submit him a brief written statement describing the general nature of dispute and the points at issue and supplementary statements if any. As per sec 67(4) 14 the conciliator may at any stage, make proposals for settlement of a dispute without giving any statement of reason. Conciliator can formulate terms of a possible settlement and re formulate the terms after receiving observations of the parties under sec 73(1) 15. Under our law and the United Nations Commission on International Trade Law (UNCITRAL) model law, the role of mediator is not proactive and somewhat less than the role of a conciliator. The role of conciliator is guided as per sec 67 (2) 16 by the principles of objectivity, fairness and justice, giving consideration, among other things, to the rights & obligations of the parties, the usage of trade concerned and the circumstances surrounding dispute, including any previous business practices between the parties.

4.3 Arbitration

Arbitration is also a consensual forum. Section 30 in Part 1 of ‘Arbitration and Conciliation Act, 1996 provides that an arbitral tribunal may try to have the conflict settled by use of ‘mediation’ or ‘conciliation’ for the purpose of reaching settlement. Sec 89 of the Civil Procedure code 1908 and Order 10 Rules 1A, 1B, 1C also speak of ‘conciliation’ and ‘mediation’ as different concepts. Today arbitration is more popular method of alternative dispute resolution and mediation/ conciliation is limited to disputes between governmental agencies and undertakings and to labour disputes.

The Civil Procedure Code casts duty upon courts to make efforts for settlements on suits, against Government and Public Offices17 (See flow chart no. II). In case of Motor Vehicles accidents, the court sends the cases to concerned insurance companies for comments. The insurance company is required to study the claim and intimate Motor Accident Claims Tribunals the amount offered. The MACT hears both parties and tries to bring out an amicable settlement through such consensual adjudication.

4.4 Consensual Adjudication

Where litigation is pending in a court and parties try to resolve their disputes parallel to court proceedings, the contesting parties may record their settlement agreement by alternate dispute resolution mechanism as an award or order in court proceedings. Even if no proceedings are pending in court, it may be in some circumstances possible for parties for his purpose of settlement negotiations, to initiate proceedings so that their agreement can be made an order of the court by consent.

5. New Initiatives and suggestions

The Arbitration process is very sparingly used in the Insurance industry while mediation & conciliation mechanisms have been hardly used. The ‘Insurance Ombudsman’ has shown little impact on the working of insurers, despite mandated to make annual review of the quality of services rendered by insurer and make recommendations to improve these services18. The provision of allowing total discretion to aggrieved person for acceptance of award, lack of binding force in the awards of Insurance Ombudsman and narrow jurisdiction limited to complaints of personal lines only, have also undermined the efficacy of the system.

5.1 The KPN Committees reports Para 7.19 (i) provides that “it is not established in statistical terms that consumer courts are so overburdened that they can not handle the additional burden imposed by the insured approaching them for grievance redressal’ ……and ‘issues relating to access to the dispute redressal mechanism” 19… needs to be re-looked but this contention of the committee for effective & speedy mechanism of Grievance Redressal due to following reasons:

5.1.1 The Consumer Dispute Redressal Mechanism under Consumer Protection Act, 1986 appears not to be effective, in its avowed aim of delivering quick and inexpensive justice to common man given the large number of cases, as the cases are pending for decision for 3 to 5 years instead of the prescribed time limit of 90 days for the forums. Further, the contention of KPN committee of overburdening consumer courts cannot be accepted, as it is found in several cases that Forums are not equipped with infrastructure to deal with complexities of cases including quantum and administration20. These are strictly redressal forums in respect of wrongs done only.

5.1.2 The Consumer Protection Act 1986 does not consider generally the scope of Insurance Contracts for the purpose of assessing adequate quantum nor goes into the aspect of determining liability in terms of insurance Contracts. The Forums orders are passed on ‘efficiency in performance of service’ and are not in tune with Policy contract. The awards are not governed by the basic principles of insurance & Law of contract. The decisions on disputes are generally based on prima-facie evidence of deficiency of service, instead of legality of performance of Insurance contract. Thereby, Consumer Protection Act indirectly provides extension of legal guarantee for the performance of insurers, without caring for the terms and conditions of Insurance contracts.

5.1.3 Further the suggestion of KPN Committee “to induct an additional member in the Consumer Redressal Agency (7.20) who is well versed with insurance matters, as a measure to hasten the process of disposal and to provide expert counsel to such Forums” 21….. is going to make little impact since Consumer Redressal Agencies have limited jurisdiction to adjudicate only deficiency in quality, nature and manner of performance of service; loss or damage suffered by or restrictive unfair trade practices adopted 22. It is not authorised to adjudicate complex cases and matters having an element of fraud besides it has no machinery to assess and decide quantum of loss and admissibility under the insurance Policy contract.

5.2 The suggestion to continue with the system of Ombudsman is also fraught with serious ambiguities.

5.2.1 The Insurance Ombudsman permits the aggrieved party to accept or reject the verdict of Ombudsman though the Insurer is barred to appeal against the award renders the Insurance Ombudsman’s decisions contrary to the principles of natural justice and equity. Further the institution does not envisage any contrary judgment for frivolous and vexatious complaints and thus serves as adversarial to insurers in some cases.

The scope of institution of Ombudsman is restricted in view of financial constrains and lack of review mechanism for insures and also lack of provision for binding award.

Therefore, it is essential to establish a statutory, comprehensive, effective, independent quasi-judicial Grievance Redressal Authority, which can provide justice to all the Insured’s, Insurers’ and Intermediaries of Insurance Industry. GRA may be given comprehensive jurisdiction to cover complaints from all type of insured regardless of any financial limit and not only individual customer.)

5.3 Insurance Grievance Redressal Authority’ & Insurance Appellate Tribunal

The proposal of Law Commission in the consultation paper for establishment of ‘Grievance Redressal Authority’ & ‘Insurance Appellate Tribunal’ is most appropriate and will go a long way in strengthening the insurance Industries credentials as caring, concerned and consumer friendly organisation. This setup will enhance credibility of Insurance Industry & its various stake holders by insulating the industry from the unnecessary public gaze and provide justifiable decisions in the mutual interest of customer & service providers.

5.3.1 Need for comprehensive scope of GRA

The scope of ‘Grievance Redressal Authority’ [Law Commission Recommendations Chapter 4.3.8 (IV)] to adjudicate ‘only personal lines disputes’ lacks logic. The complaints of all stake holders irregardless of any specific segment of Insured’s, (not only the existing insured customer but prospective customers) insurer’s, and intermediaries need be brought under the ambit of the IGRA to make it truly Insurance Grievance Redressal Authority’ (See flow chart no. II).

5.3.2 Separate representation for life & non-life

The Authority must have atleast two Technical Members each, from Life & non-Life streams, while there may be only one Judicial Member.

5.3.3 Directives for mandatory use of alternative dispute resolution

At present the insured can avail any of the three alternatives namely, the Insurance Ombudsman, Consumer Redressal Agencies and the Civil Courts without resorting to the process of Mediation, Conciliation or Arbitration already existing as alternative dispute resolution machinery. The introduction of IGRA will replace three mechanisms with limited scope of each by one Comprehensive mechanism.

The Insurance Grievance Redressal Authority may be asked to explore both complainant and respondent to make sincere and serious efforts through In-house grievance redressal machinery and other available alternative dispute resolution mechanism for resolving their complaints before invoking the jurisdiction of Insurance Grievance Redressal Authority.

The Insurance Companies may also be advised by IRDA to make use of alternative dispute redressal mechanism viz. Mediation, Conciliation or Arbitration before taking the dispute to any statutory mechanism. It is heartening to note that the IRDA has constituted a ‘Grievance Committee’ in 2006 to review grievance redressal system in Insurance Industry. This committee may be asked to consider the legislature’s intentions clarified u/s 89 of Civil Procedure Code and Supreme Court’s directives in Salem Bar Association vs. Union of India directing the High Courts to make use of ADR’s consciously by framing necessary rules & procedures as making reference to mediation, conciliation and arbitration are mandatory for Courts.

The Law commission may think of legally empowering ‘Insurance Grievance Redressal Authority’, by including a provision to explore Mediation, Conciliation & Arbitration process (See flow chart no. II).

Further as per Sec 77 of Arbitration & Conciliation Act 1996 once Conciliation is in progress Insurance Grievance Redressal Authority must also provide for barring the parties to approach Arbitration or any other additional redressal machinery.

5.3.4 Settlement Commission

The idea of replacing the institution of ‘Insurance Ombudsman’ and transfer of all pending cases in Consumer Courts to a statutory mechanism provided for in the insurance Act 1938 itself. Taking a step further, the appeals emanating from IAT must go to a Settlement Commission instead of resting with Supreme Court, which has again limitations of monetary limits and disputes on legal points only meeting the Supreme Courts Jurisdiction. This system is akin to Central Board of Direct Taxes where the finality of decision rests with the Settlement commission being manned by the officers of the department with judicial background (See flow chart no. II).

5.4 Consumers’ Pre Grievance Help Bench

The suggestion of IRDA Chairman, for a dispersed non-judicial mechanism administered as Consumers’ Pre Grievance Help Bench, akin to establishing a Call Centre, is a positive step to improve the image of the industry as a responsive industry. The pre grievance help bench can be constituted in the form of AVRU (audio visual response unit) viz. interactive voice response system or establishing kiosks or direct reply from regulator towards frequently asked questions by the insured to avail services. (See flow chart no. II)

6. Some more Suggestions to protect the interest of Policyholder

IRDA (Protection of Policy Holders Interests) Regulations 2002 are prescriptive in nature in regard to procedures to be followed by various stakeholders of industry. The stipulation for initiating action has not been put forward in the form of penalties leaving the regulations merely advisory. The Adjudicating Officers proposed by Law Commission for IRDA to enforce Act provisions, rules, regulations, may include guidelines for penal action to induce transparency in working of the regulator.

Clause 9 relating to Claim Procedures in respect of General Insurance Policies of the IRDA’s Regulations on (Protection of Policy Holders Interest) 2002 may be given a place in regulations for ‘file & use’.

The insured cannot be held responsible for non-compliance of regulations given under IRDA (Protection of Policy Holders Interest) Regulations 2002. He is under an obligation to comply Policy terms and conditions forming part of the insurance contract only.

As regard to prescription given for Policyholders in Regulations 21 IRDA may direct Insurance Companies to include the provisions of the clause 9 (2 & 3) in the Policy Contract to create obligation on the part of insured to comply.

Similarly Clause 7 in respect of matters to be stated in General Insurance Policy may be made part of “file and use” system for its proper implementation by Insurers22.

6.1 Creating awareness for the redressal machinery

As regards to creating awareness about various redressal machinery by communication of information, the provision must be made on the face of the policy for additional dispute resolution machinery available for review /in-house redressal/mediation/conciliation & arbitration with explicit specification of time limits.

6.2 Need for promulgation of Insurance Business Laws

As the setting up of Insurance Grievance Redressal Authority would entail amendment to various supplementary Laws, the ‘Grievance Review Committee’ formed by IRDA must also suggest for enacting “Insurance Business Laws” which will reduce ambiguity in understanding insurance contracts, rules & regulations, definitions by clarifying application of insurance principles evolved over past two centuries of judicial interpretations in addition to Law of contract. This step will reduce customer dissatisfaction and will make the insurance business more transparent.



Bibliography
Governing body of Insurance Council, formed under Rule 6 (1) Redressal of Public Grievances Rule of 1998
IRDA (Protection of Policy Holders’ Interests) (Amendment) Regulations 2002.
Report of the KPN Committee “to study the report of the law commission and make recommendations” dated 26th July 2005
Law Commission report vide letter D. No.6 (3)(75)/2002-LC (LS addressed by the Chairman of the Law Commission to the Union Minister for Law & Justice on June 1, 2004
Consumer Protection Act 1986 as amended
Rule 2 of Redressal of Public Grievances Rule of 1998
Same as above
David Jackson, Introducing the Chief Listening Officer http://www.crmguru.com/
Yagnapriya Bharath of IRDA ‘A stitch in time ……(IRDA Journal June 2005 p.21)
Consumer Protection Act 1986 (Act no.68 of 1986)
Rule 15 Redressal of Public Grievances Rule of 1998
Sub Rule (5) of rule 16 ibid
Consumer Protection Act 1986
Arbitration & Conciliation Act, 1996
ibid
ibid
Order 27 Rule 5B Code of Civil Procedure 1908
Rule 20 Redressal of Public Grievances Rule of 1998
KPN Committee “to study the report of the law commission and make recommendations” dated 26th July 2005
Consumer Protection Act 1986 (Act no.68 of 1986)
KPN Committee “to study the report of the law commission and make recommendations” dated 26th July 2005
IRDA (Protection of Policy Holders’ Interests) (Amendment) Regulations 2002.
ibid
Other references:
Justice M. Jagannadha Rao on ‘Conditions of conciliation and mediation and their differences’ & would Conciliation & Mediation succeed in our courts? http://www.lawfirms.com/
1. Prof Krishna Deva Rao ADR and Personal Injury Compensations p1 to 5 http://www.aplegalservices.com/
2. Dr. Nageshwara Rao Conciliation Proceedings under Indian Arbitration Conciliation Act of 1996 and CPC- An Overview
3. Paper on Conference sponsored by the Law Commission of India on ADR/Mediation – New Delhi 3,4 May 2003
4. Consultation paper on ADR and mediation Rules – Draft model rules for Alternative Dispute resolution (ADR) and also draft rules for mediation under section 89(2) (d) Code of Civil Procedure 1908
5. General Insurance Claims through Arbitration Chapter 1 Arbitration and Insurance Contracts
6. Salem Bar Association vs. Union of India
7. P. Sreevalsan Menon; Breaking Barriers Business p59-60
The author Mr. Govind Johri is Ex Chief Regional Manager, Bhopal Region, United India Insurance Company, currently on deputation as Associate Professor at National Insurance Academy Pune.

EMPOWERED EMPLOYEE

GOVIND JOHRI

The transition from a protectionist regime in Public Sector to opening up of Insurance Sector to Private players is a paradigm shift that requires strategic planning and its meticulous execution in a time bound manner. In the emerging scenario the importance of 3 C's Cost Effectiveness, Computerisation and Customer Centricity on the part of insurance companies can not be over emphasised.

Researchers have identified four characteristics of empowered people, defined in terms of fundamental beliefs and personal orientation.

1 SENSE OF DETERMINATION: Employees’ freedom to choose their own methods of work or accomplishing the assigned tasks.

2. SENSE OF MEANING: Feeling by the employees in general that their work is important and they do care about what they are doing.

3. SENSE OF COMPETENCE: Confidence in the employees about their ability to perform their work well.

4. SENSE OF IMPACT: Employees beliefs that they have influence over the work unit or team and others listen to their ideas.

Employees in any organization reflect above personal beliefs in their work and conduct. Any attempt by an organization to influence the behavioural pattern of employees must address these aspects. Employees' expectations of freedom at work place and giving due importance to employee's suggestions, will undoubtedly, go a long way in making them truly empowered.

Empowerment is a mind set, a proactive approach towards making the roles rather than taking it. The employees feel that they can play an important role in their organizations. Any design of empowerment programme must therefore, reinforce these beliefs in order to succeed in an organization’s attempt to have an empowered workforce.

The process of empowerment is certainly worth the efforts, if a company wants and needs its employees to be more effective, innovative and transformational. The basic steps for empowerment constitute sharing of information, developing teams, imparting training and knowledge and a transparent rewards system.

Sharing of Information It is to facilitate employees to know, how are they and their company performing and to what extent and in what manner their actions are making a difference in the over all performance of their company. This impinges on their sense of meaning and gives a sense of pride and belongingness to the organisation.

Developing Autonomous Work Groups or Teams The front line personnel at the point of interface with the customers must possess adequate authority and initiative to take decisions. They must have a definite say in the decision making process. Our Field personnel (distribution channels) are primarily front line personnel that has to assure the customers about positive consideration of their claims in the event of claims arising and not merely collection of premium. Therefore, distribution channels must have a definite role in claims settling process, if any worthwhile customer service is expected through them. This will prompt distribution channels for adherence to good underwriting practices, since this will make them accountable for the promises made while soliciting business. The current mind set of our distribution channels that their job is merely to procure premium, needs to be changed by empowering them to have a say in fulfillment of the terms of policy contract and ultimately the pricing quotes for the customers and commissions for the distributional channels will be affected if fraudulent or exaggerated claims are paid.

Training and knowledge It is essential to learn how to work collaboratively. The employee must possess tools and techniques of problem solving. This will enforce their sense of competence i.e. their confidence in their ability to work.

Importance of rewards The rewards relate to adequate compensation to employees for increased responsibility and accountability. World-over profit sharing, granting stock options, making their employees millionaires are used to enthuse sense of partnership in the employees.

The Public Sector approach is bureaucratic, encompassing multiple layers of hierarchy. The prevailing rewards system in the industry favours status quo and is found discriminatory. Incentive schemes for Development Officers do not provide adequate motivation to perform. The inadequacy is in terms of a lower ceiling fixed on pecuniary reward and that the back up team is not considered to play any worthwhile role in the efforts of Development Officers in procuring business. Here it must be appreciated that the renewal will come only if the performance of backup teams is found satisfactory. The meaninglessness felt by the employees that their work is not important has made them careless and unconcerned.

The current performance appraisal system has given way to prevalence of peers level conflicts due to pitting of one against another. This has resulted in employees perceiving a hostile environment. Consequently each employee wants to protect himself first, rather than do what is right for the organization.

No matter how much the top management is convinced of the need for employee empowerment as the much-desired intervention, the only message reaching to them has been to "CONFORM, DON'T ROCK THE BOAT". This has caused the well-structured insurers into slow moving Ocean Liners who customarily don't change their course quite often.

Any worthwhile empowerment programme must be directed towards employees so that they may see their role as partners in the business, who have influence over their work units and that all others are receptive to their feedback consciously. Further, empowerment demands willingness of the Senior Executives at the operational units and top executives to exercise faith in their employees and embrace risk taking and committing mistakes.

Empowerment is not merely delegating authority. It is delegating decision making authority within the given framework and performance parameters so that the ultimate customer is benefited. Empowerment generally starts from the top. It is nearly impossible for un-empowered personnel to empower others. The change in the attitude of top management will aptly demonstrate the commitment of organization. It is therefore, quite important that the top management exhibits this change instead of merely depending on structured training programme for creating the empowered workforce in the organization. It is because howsoever well designed and delivered a training programme may be, it will fail to create desired impact in the absence of top-level commitment. It is also essential for the top management to continuously monitor the following areas that are:

1. Whether they are themselves working towards providing the strategic direction to the employees;

2. Whether they are themselves striving for participation and involvement of employees in the vital management processes;

3. Whether they are themselves clarifying the goals, tasks and lines of authority continuously; and

4. Whether they are themselves working towards resolving the inter-personal conflicts of employees.

When the top executives of the organization become conscious of the above aspects, they will succeed in installing the process of empowerment in the organization.

Every leader must ask the following questions:

1 To what extent do I have a sense of impact, influence and power and what can I do to increase.
2 To what extent do I have a sense of meaning and task alignment and what can I do to increase it.
3 To what extent do I have competence and confidence to execute my work and what can I do to increase them.
4 To what extent do I have self-determination and choice?

Senior executives in the industry are usually observed, displaying the sense of insecurity and feeling of being powerlessness. The employees around them continually struggle. Empowerment is a set of managerial practices for making a cascading effect to lower levels of the organization. These executives must take personal risk, have trust and take initiatives to empower employees. The employee empowerment will need execution of following steps:

Clarifying the mission, vision and values of the organisation to employees.

Clearly specifying tasks, roles and rewards to employees;

Delegating responsibilities with appropriate boundaries to give freedom/autonomy to work and use discretion;

Prescribe qualitative and quantitative parameters of performance, and

Finally, holding them accountable for the results.

When top executives take the aforesaid steps, the empowerment percolates up to middle level executives only, who are key persons to convey the message to employees at the lowest level. In this sequence of performance there are bound to be some employees committing mistakes whilst acting as entrepreneurs or risk takers. They may also be found indulging in creating conflicts, constantly challenging each other for proving their ability to perform their work well.

Thus, empowerment is much beyond delegating power and ability of decision- making within the set boundaries. It is also trusting the employees and condoning their imperfections and bonafide mistakes. To achieve this holistic view of empowerment, the following bottom up approach is needed to be simultaneously implemented:

1 Understanding the needs of employees;

2 Understanding model empowered behaviour of employees by operational level executives;

3 Building teams to encourage co-operative behaviour by creating high performance teams;

4 Encouraging intelligent risk taking;

5 Trusting them to embrace complete empowerment as an integrated approach by top executives questioning themselves continuously and communicating downwards through assimilation at various levels to create trust in the minds of all.

The lower rungs of executives allow the much needed "space" for employees who trust them more than any circular or structured training and encourage them as a member of their team, who wants to perform.
Leaders of industry must prepare themselves to confront these different implicit assumptions and related perspectives to see the emergence of the empowered employee to achieve a much needed cutting edge.

Finally the empowered employee must also be prepared to understand the top management’s sense of strategic vision. The employee must feel that he is part of the Corporate Culture that explains the value of human potential in an organization. The mission statement must give due emphasis to this value of openness and teamwork. It must be simple and clear to be understood by the lowest of the staff. It may read as here under:

"We want our people to feel respected, treated fairly, listened to and involved. We want to be a company that our people are proud of and committed to, where all the employees have an opportunity to contribute, learn grow and advance in his career".

This type of mission statement would prompt openness and teamwork through active participation in the organization's decisions making process by each employee. This will give a feeling in the employees that their ideas are valued and taken seriously by the organisation and that they can work together to solve the problems.

The empowered employees must exercise discipline and control. The employee must be made fully aware of limits to autonomy. The employee must be clarified situations allowing use of discretion. The most important of all is that the employee must believe that their superiors, peers and subordinates will support them as they learn and grow.

A room service operator committed his chain of Hotels to Lufthansa Air lines to detain its flight until their customer boarded the aircraft. The customer cancelled his room service order and asked to leave hotel.. The room service operator decided to find out the reason for cancellation of order when she learnt that the customer's mother was on deathbed. The operator checked for flight, booked the ticket, and helped the customer in his packing and committed her chain of hotels to detain the aircraft knowing that it may cost heavily to the employer in liability suits. It would have costed millions of dollars but the hotel chose to reward the operator for her human approach and asked her if she wanted to work in any other position in the Hotel. She revealed her desire to work as Banquet -In-Charge. She was rewarded with her desire and hotel took the trouble to find another job for Banquet In-charge too."

No insurance policy will save the industry of the company if it fails; nevertheless people will be willing to accept that responsibility if they truly experience a sense of empowerment in an environment that values and supports risk, taking trust, and initiative.