Realgood Insurance

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were being reinforced to give out the claim money (up to $5,000) to close the claim and make the customers happy in order to obtain their employee bonus.

Further, employees were incentivized to only work on claims, and saw no monetary benefit of contributing to the database that held the costs of common claims. This meant that the employees who still considered cost, were now using an out-dated database that could mis-estimating the costs of claims.

The managers have been positively reinforced by the customer satisfaction ratings to continue the Pay for Performance program as it stands with little care for the costs.

Actionable Solutions:

First, RealGood should eliminate the absence policy which currently forces an employee to take a vacation day if they need to take a day off on a Monday or Friday, instead going back to the original policy of a set 18 days sick leave. This would increase productivity and decrease absenteeism.

Pay for performance is very popular, and maintained productivity levels, most likely because employees are on average seeing a $7,300 raise in pay. RealGood Insurance should keep pay for performance, but they should change the “performance” they pay for. To influence employees to minimize claim costs, maintain productivity, and inspire retention of customers, they should pay for a claims that are all of the following: under $2,000 (the average claim cost) and under 2 weeks (the average time to close claim). They should further get an even larger pay if they update the database with the information they gathered from closing the claims.