The Hartford to Develop 5-year Strategic Plan for Operations

Posted on December 7, 2011 by ibh

Case Type: operations strategy; organizational behavior.
Consulting Firm: Ernst & Young (EY) final round job interview.
Industry Coverage: Information Technology (IT); Financial Services; Insurance: Life & Health; Insurance: Property & Casualty.

Case Interview Question #00442: The Hartford Financial Services Group, Inc. (NYSE: HIG) is a Fortune 500 company headquartered in Hartford, Connecticut, USA. As one of America’s largest investment and hartford financial services group HIGinsurance companies, the Hartford Group is a leading provider of life insurance, group and employee benefits, automobile and homeowners insurance and business insurance, as well as investment products, annuities, mutual funds, and college savings plans. With 2010 revenues of $22.4 billion and more than 1.5 million plan participants, the company’s earnings are divided between property-and-casualty operations and life operations.

Your client is the Operations division of The Hartford Group. The Operations division is worth $1 billion and is responsible for 50% of the operating expenses of the overall company. The general perception within the company is that this Operation division:
1. Costs too much
2. No one knows exactly what they do
3. The division should be outsourced

You have been asked to produce a 5-year strategic plan for the company, and specifically to address the problems posed by this Operations division. How would you go about the case?

Additional Information: (to be given to you when asked)

  • The other two divisions of the company are Investments and Insurance.
  • The Operations division is responsible for accounting, documents, data warehousing, hosting services, information technology (IT) and communication infrastructure like telephones, etc.
  • The Operations division does a significant amount of back end processing for the other two divisions, such as processing sales.
  • The Operations division does not directly generate revenue, but the work they handle is essential for the company.
  • There are no regular meetings between the representatives of the three divisions.

Possible Answer:

This operations strategy case relates to improving the internal processes of a financial services and insurance company. Focusing too much on the company’s products, customers, competitors or other such external factors is unproductive.

It should be clear that the Operations division is a cost center and the goal should be to determine the worth of this division, and help the other two divisions realize this worth. Communication management is the key in this case, and this can help integrate the division into the larger company.

The Operations division’s employees should first be able to quantify the benefits of the work they do and explain it to the rest of the company.

Suggestions may include working towards activity based costing, where the cost bucket can be identified and associated with the other divisions.

Also, the formation of cross-functional teams could help all three division better understand their needs and how best to meet those needs.

In addition, the Operations division may be able to identify some standard tools, technologies or other backend functions, which can be outsourced to shave off some costs.

Finally, proposed solutions should include an expected time frame, since the case asks for a 5-year strategic plan.

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