IAI Actuarial Core Principles · Business Management · Communicating strategy; culture and structure in decision making; strategy case studies
A mid-sized Indian life insurer has just announced a strategy to move from agency-led sales to digital-first distribution. Senior leaders notice that many long-serving employees continue to follow informal routines built around agent relationships and quietly resist the new processes. Which description best identifies the cultural issue?
The cultural issue is that the formal digital-first strategy clashes with the unwritten norms and assumptions employees actually follow. Culture governs real behaviour, so established agent-relationship routines persist despite the announcement, and leaders must address those underlying values rather than only restating the strategy.
- AThe formal strategy statement conflicts with the unwritten norms and assumptions that actually guide behaviourCorrect
- BThe company's mission statement is too short to be understood by staff
- CThe insurer's organisational structure has too few reporting levels
- DThe employees are legally in breach of their contracts of employment
- The insurer has failed to complete a PEST analysis
Explanation
Culture is the set of shared values, norms and assumptions that shape how people behave in practice. Here the informal routines differ from the formal strategy, so the culture is working against the change. Resisting new processes is not by itself a breach of contract, and the other options do not address the behavioural gap.
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