“Be careful what you wish for,” thought Martin Quinn, senior vice president for service and operations for the Denver-based health insurance company. Mountain West Health Plans, Inc. When there was an opening for a new director of customer service last year due to Evelyn Gustafson’s retirement, he’d seen it as the perfect opportunity to bring someone in to control the ever-increasing costs of the labor-intensive department. He’d been certain he had found just the person in Erik Rasmussen, a young man in his late twenties with a shiny new bachelor’s degree in business administration.

A tall, unflappable woman, Evelyn Gustafson consistently showed warmth and concern toward her mostly female, non-unionized employees as they sat in their noisy cubicles, fielding call after call about Mountain West’s products, benefits, eligibility, and claims. Because she had worked her way up from a customer service representative position herself, she could look her subordinates right in the eye after they’d fielded a string of stressful calls and tell them she knew exactly how they felt. She did her best to offset the low pay by accommodating the women’s needs with flexible scheduling, giving them frequent breaks, and offering plenty of training opportunities that kept them up-to-date in the health company’s changing products and in the latest problem-solving and customer service techniques.

Her motto was: “Always put yourself in the subscriber’s shoes.” She urged representatives to take the time necessary to thoroughly understand the subscriber s problem and do their best to see that it was completely resolved by the completion of the call. Their job was important, she told them. Subscribers counted on them to help them negotiate the often Byzantine complexities of their coverage. Evelyn’s subordinates adored her, as demonstrated by the 10 percent turnover rate, compared to the typical 25 to 45 percent rate for customer service representatives. Mountain West subscribers were generally satisfied, although Quinn did hear some occasional grumbling about the length of time customers spent on hold.

However, whatever her virtues, Gustafson firmly resisted all attempts to increase efficiency and lower costs in a department where salaries accounted for close to 70 percent of the budget. That’s where Erik Rasmussen came in. Upper-level management charged him with the task of bringing costs under control. Eager to do well in his first management position, the hard-working, no-nonsense young man made increasing the number of calls per hour each representative handled a priority. For the first time ever, the company measured die representatives’ performance against statistical standards that emphasized speed, recorded the customer service calls, and used software that generated automated work schedules based on historical information and projected need. Efficient, not flexible scheduling was the goal. In addition, the company cut back on training.

The results, Martin Quinn had to admit, were mixed. With more efficient scheduling and clear performance standards in place, calls per hour increased dramatically, and subscribers spent far less time on hold. The department's costs were finally heading downward, but department morale was spiraling downward as well, with the turnover rate currently at 30 percent and climbing. And Quinn was beginning to hear more complaints from subscribers who’d received inaccurate information from inexperienced representatives or representatives who sounded rushed.

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It was time for Rasmussen’s first performance review. Quinn knew the young manager was about to walk into his office ready to proudly recite the facts and figures that documented the department’s increased efficiency. What kind of an evaluation was he going to give Rasmussen? Should he recommend some midcourse corrections?

How would you describe Evelyn Gustafson’s leadership style? What were its strengths and weaknesses? What were the sources of her influence?