Essay: MPI Brokers

Introduction
This informational document is intended for the use of the new general manager in order to gain a general knowledge of MPI Brokers.
A Description of the Purpose and Goals of MPI Brokers
Michael Pettifer Insurance Brokers Ltd. (known as MPI Brokers) is a travel insurance broker which specialises in skiing and snowboarding related insurance. MPI Brokers was founded by its managing director, Michael Pettifer, in 2002. The company is based in Haslemere, Surrey, and employs nine staff (four full-time and five half-time). MPI Brokers is authorised and regulated by the Financial Conduct Authority (FCA).
MPI Brokers is a limited company operating in the private sector that aims to make a profit through daily operations. In order to align with the FCA regulations, no insurer holds any shares in MPI Brokers. MPI Brokers defines its organisational purpose as providing “insurance for the Travel and Ski industry – businesses, staff and customers” (MPI Brokers, 2019). Its’ organisational goal is to continue to be an expert and leader in its field by providing high quality insurance, employing trustworthy and knowledgeable employees, and assisting customers throughout the process, from purchasing a policy, through making a possible claim and providing compensation for any losses covered by the policy. MPI’s value stems from the quality of their cover which is reflected in the slogan “it’s the cover that counts” (see appendix 1). This is shortened from their website “Remember it’s not the cost that matters but the cover that counts” (MPI Brokers, 2019).
A Description of the Services and Customers of MPI Brokers
Services
MPI Brokers is service rather than product based. When a customer makes a purchase from MPI, they receive a certificate and an insurance card which are tangible products. These tangible products signify that an agreement has been made between the customer and provider: a promise to provide insurance as per the terms and conditions of the policy. The certificate and the cards are meaningless if they are not backed by service. MPI sells various types of cover which are divided into two main groups; company insurance and retail insurance (see appendix 2 for more information).
MPI is priced higher than its main competitors, however, it provides a superior level of cover so the value is higher. In addition to superior cover, MPI states that they offer “renowned personal service, extensive experience and quality insurance products providing a wide scope of cover” (MPI Brokers, 2019). MPI does have experience and expertise, especially in their specialized ski insurance. MPI’s personal service enhances the customer experience, however, customer service can be challenging in the insurance industry as demonstrated by the following quote:
“Insurance rarely comes to mind as an industry that provides a rewarding customer experience. The only time people find out whether their insurance company is actually any good is when they are at their most distressed and vulnerable.” (Reason, Løvlie and Polaine, 2013).
This poses a challenge to MPI; how to provide excellent customer service to all customers, including those who file claims. MPI achieves this by having a small, friendly team that is able to respond to customers queries in a timely manner and who are experts in their field. MPI works with its underwriter and assistance companies to ensure that customers have a satisfying experience when they purchase a policy.
Customers
Different types of cover are marketed and sold to different consumers (see appendix 3). Travel insurance is part of MPI’s ‘retail’ sales, meaning that it is sold to the general public. Company insurance is sold to other businesses such as ski chalets, resorts and travel companies who need to insure their overseas resort staff. This means that MPI operates in both B2B and B2C markets.
B2B Customers
B2B is segmented based on industry, region, and season. For instance, most B2B clients are travel, or resort companies in Europe who want to insure their UK staff who are travelling to work overseas. This is further segmented to companies who require insurance through winter months – usually staff for winter sports related activities – and those who require summer staff – usually staff for sailing. The companies that MPI sells to range in size, from as little as 5 employees to as many as 2,200.
B2C Customers
B2C is segmented based on geodemographic, or the combination or geographic, demographic and lifestyle characteristics. Geographic segmentation is appropriate as only those who reside in the UK or are UK citizens living in the EU are able to purchase insurance with MPI. Demographic segmentation differs between the type of cover that MPI provides. Therefore, MPI’s customers have many characteristics from young adults to the elderly, a single person to the head of a family, a student purchasing gap year insurance to a retiree purchasing a holiday. On the whole, MPI customers are middle class and well educated. Core market segments are families and persons 50-70 years of age. Psychographic segmentation is an appropriate method of segmentation as it relates to how consumers choose to spend their time. MPI markets to those who choose to spend their money and time on holidays, specifically skiing and snowboarding holidays. Marketing effort is focused on target market segments in order to generate sales.
Analysis of How External Factors Impact the Business Activities of MPI Brokers
An analysis of MPI’s external environment reveals there are several important factors that may impact business activities such as Brexit, currency fluctuations in relation to sterling, climate change, and an aging population.
Brexit
Brexit may impact how readily people are able to visit countries such as a possible need for visas, restrictions, etc. As MPI works B2B with many chalets and resorts in Europe, these changes could be potentially detrimental for business. MPI Brokers says that while the future of the European Health Insurance Card is uncertain, that “insurance policies (e.g. travel and tour operator liability), however, will remain in force after [the UK] exit[s] the EU, but premiums are likely to rise over time” (2019). If premiums increase, people may choose to go to a competitor who offers more affordable policies.
UK Economy and Currency Exchange Rates
The future of the British economy is uncertain which may impact people’s income or cause a recession. If people have less disposable income then they may not book as many holidays, meaning that there would be fewer people buying travel insurance which would decrease sales and profit. Also, if exchange rates fluctuate then it may be a deterrent to those who would have previously vacationed somewhere where the pound was stronger.
Climate Change
Now more than ever there are growing concerns about the environment. Air travel is a heavy pollutant and there may be new policies that tax customers more for their airline ticket to help the environment. This would make travel more expensive and potentially deter people from going on vacation, therefore MPI would be selling fewer policies. In addition, as climate change worsens, there may be increasingly irregular weather more natural disasters which would also deter potential travelers.
Aging Population
As the population ages, there are more people nearing their retirement age. Retirees often choose to spend more of their time and money on holidays, whether they be weekend retreats, visiting grandchildren, or spending the winter months in warmer destinations. This would be beneficial to MPI as more people would be purchasing holidays.
Description of the Structure of MPI Brokers and the Functions Within It
Appendix 4 demonstrates MPI’s organisational structure and functions. It mainly operates as a functional structure, however, it does have some elements of a hierarchical structure. This structure is beneficial as within the small functional teams, each employee is knowledgeable about their area of the business. While a common shortfall of a functional structure is that there is a lack of communication between departments, this is not an issue at MPI as the company is small enough that all employees sit within one office and are aware of what is going on in the other department. The in-house staff of the company is small, having only four full time employees, one of which is the MD, and five part time employees.
The functions within the structure are; sales and marketing, claims management, bookkeeping, and HR. Sales and marketing are in charge of promoting and selling the insurance packages, both B2C and B2B. Within sales and marketing, each employee has their own specialized role relating to an aspect of the policies provided. The claims department is in charge of working with underwriters and assistance companies in order to manage and settle claims. The MPI bookkeeper is in charge of petty cash, bill payments and collecting sales income and communicates with the outsourced accountant. HR is outsourced and is responsible for creating job descriptions, new employee processing, and various other document creation and processing tasks. All of these internal and external departments work together in order optimize performance.
As all in-house employees sit within a few meters of each other, communication is mainly face-to-face, both verbal and non verbal. This means that decisions are made quickly and communication is done with ease as there is less noise and barriers.
How Different Functions Work Together Within MPI Brokers to Optimize Performance
In order to examine the internal workings of MPI, an example of a new hire will be used. In this example the Sales and Marketing department has raised a concern to the MD that they need a new staff member in order to keep up with increasing sales calls. The MD would then transfer this information to his PA who would contract the outsourced HR administrator. She is responsible for creating the job description which must then be approved by the MD. The job description must accurately reflect the role and attract candidates that will align with the company’s values and goals. The HR administrator for MPI does not deal with recruitment directly as this is done by an outsourced recruitment company.
Once the job description is approved, the MD would discuss the salary with the accountant who would determine whether the cost is within the company budget. The interviewing process would be led by the sales department who must select the best candidate in order to have an employee who helps to optimize company performance. Once they chose the successful candidate, the MD must sign off. He would then direct the HR administrator to create a contract and complete the necessary paperwork. Once the new hire starts, the MD would instruct the book keeper to make payments to the recruitment company and HR administrator as well as to add the new employee to the payroll. This process requires effective communication.
How the Culture of MPI Brokers Affects its Operations
The formal organisational culture is a power culture, as described by the Charles Handy model (Handy, 1993). As MPI is a small company owned by the MD, he has the final say in all decisions that are made. The formal culture, however, is not reflective of the informal culture. The informal culture is a close, friendly and supportive environment in which employees take a genuine interest in their co-workers lives. The co-workers are effective at communication, help each other solve queries and are receptive to new ideas. There is a clash between these two cultures. On the one hand, the MD is the centre of power who wants to have authority and control of all significant workplace decisions. However, his outlook differs to that of the other employees. This leads to tension and inefficiency within the company because the MD prefers the ‘old fashioned way’ while the rest of his staff work hard to try to move the company forward. These staff efforts are usually under appreciated and not given proper consideration which leads to lower workplace involvement.
While employees are generally happy in the office due to positive relationships with co-workers, it is not uncommon to hear negative comments regarding leadership management style. As the HR function is outsourced and is typically only used for creating documents etc., there is no HR capability within the company to improve this issue. Therefore, this is something that should be reviewed as an area of improvement.
How HR or L&D Activities Support MPI Brokers Strategy
In order to achieve MPI’s longer term organizational goal of being an industry leader and expert, they need high quality staff who make this possible. There are several ways that HR could support the organisation to meet this goal. Based on the CIPD Professional Areas, the following areas are relevant to resolving the main organisational issue which is the biggest potential threat to MPIs success (CIPD, 2019).
Employee Engagement- Embed Employee Engagement Interventions
Employees feel that their improvement efforts go unrewarded as the MD is not receptive to other ideas and this causes decreased employee engagement. A strategic plan is needed to increase employee engagement. This plan should be long term based on the goals of the company and should be specific, measurable, attainable, and realistic. The plan should translate into changing the culture at MPI so that in the future the employees feel engaged. This plan could include creating feedback and formal staff suggestion programs as well as a performance based reward system. This is critical as all employees should want to see the company succeed and meet its goals, and that it should operate efficiently with optimal use of resources.
Learning and Development – Develop Learning Strategy and Plans
HR should work with the MD and Sales and Marketing Manager to identify where the current performance gaps are within the company, and potential areas for improvement. In addition, in a small company like MPI, the employees are aware of the capabilities and working methods of the MD and are also in a position to contribute ideas. Rather than a one-off, short term information gathering exercise, this should be a strategic move that will be integrated into common practice within the company. HR should then work with the MD and managers to develop a long-term strategy to help MPI Brokers achieve its goals. Although L&D may increase costs, if employees are working more efficiently then profits should increase.
Organisational Development- Managing Change
HR should create a long-term plan that focusses on the company’s responsiveness and willingness to change. This would mean meeting with stakeholders to decide where MPI Brokers is now and where it hopes to be. This would help make MPI relevant and more appealing to customers, helping to meet their goal of industry leadership. This would increase profit which in turn could be reinvested into more organisational development. Internally, employees would be able to work more efficiently which would save the company time and money.
The Role of HR or L&D Professionals in Supporting Line Managers and Their Staff
At MPI, the team is small enough that there are not clearly defined line managers. Other than the MD, only one employee, the Sales and Marketing Manager, manages other employees. Therefore, HR and L&D professionals should work with all employees in order to understand their needs as well as successfully unlock their full potential. Using the same examples as above, HR can support the line managers and staff in several operational methods.
Employee Engagement- Embed Employee Engagement Interventions
HR can begin working with employees in order to collect data regarding employees wants and needs. This should be done weekly so that issues are addressed promptly. In addition, HR should begin creating regular, short-term engagement exercises for all employees including the line managers. This should start to close the gap between the MD and the other employees. In addition, HR should work directly with the MD to provide training on how to engage with his employees.
Learning and Development – Develop Learning Strategy and Plans
HR should begin collecting data based on current employee and manager capabilities. This could include issuing tests to employees to gauge their general strengths as well as knowledge relating to the company. It may also include working one-on-one with employees and line managers to understand where they feel they need support in order to reach their potential. Another operational task that HR could complete would be researching best practices and workshops that they could then present to the MD.
Organisational Development- Managing Change
HR operational roles would include assisting both management and employees through the process of change. This would mean identifying resisters and working one-on-one with them until they are on-board with the change. If an employee continues to be a resister, this may mean that HR would have to replace that employee with a new hire who is more receptive to change.