Case Study on Hr

Subject: IHRM

Professor: Aravinda Prabhu T

Marks: 20

=================================================================

Cultural change that sticks

A version of this article appeared in the July–August 2012 issue of Harvard Business

Review.

In the early 2000s Aetna was struggling mightily on all fronts. While on the surface

revenues remained strong, its rapport with customers and physicians was rapidly

eroding, and its reputation was being bludgeoned by lawsuits and a national backlash

against health maintenance organizations and managed care (which Aetna had

championed). To boot, the company was losing roughly $1 million a day, thanks to

cumbersome processes and enormous overhead, as well as unwise acquisitions.

Many of the problems Aetna faced were attributed to its culture—especially its

reverence for the company’s 150-year history. Once openly known among workers as

“Mother Aetna,” the culture encouraged employees to be steadfast to the point that

they’d become risk-averse, tolerant of mediocrity, and suspicious of outsiders. The

prevailing executive mind-set was “We take care of our people for life, as long as they

show up every day and don’t cause trouble.” Employees were naturally wary of any

potential threat to that bargain. When Aetna merged with U.S. Healthcare, a lower-cost

health care provider, in 1996, a major culture clash ensued. But instead of adapting to

U.S. Healthcare’s more-aggressive ways, the conservative Aetna culture only became

more intransigent. Aetna’s leaders could make little headway against it, and one CEO

was forced out after failing to change it.

What Aetna’s management didn’t recognize was that you can’t trade

your company’s culture in as if it were a used car. For all its benefits and

blemishes, it’s a legacy that remains uniquely yours. Unfortunately, it can

feel like a millstone when a company is trying to push through a

significant change—a merger, for instance, or a turnaround....