We knew that the change needed at ACHS would require more than bringing in a new manager or two. We were looking to change the culture and introduce a new value system. - Fernn Gazmuri, President, ACHS Board of Directors In mid-2010, things were not looking good for Asociacin Chilena de Seguridad (ACHS), a workers' insurance non-profit corporation.1 Also known as a "mutual," ACHS provided member companies with risk prevention services and their workers with free, high-quality healthcare and, when needed, salary compensation for work-related accidents and illnesses. ACHS's accident rates were now rising, even as its financial performance declined. In fact, the 52-year-old organization was losing money for the first time. Workers wanted a better healthcare experience, and companies wanted better risk prevention services. Meanwhile, as ACHS coped with its eroding performance, Chile's new pro- business, results-oriented president, Sebastin Piera, was openly communicating his goal of creating a "First World Chile" by 2020. ACHS was founded in 1958 by Sociedad de Fomento Fabril (SOFOFA), a federation of private industrial companies led by some of the best-known businesspeople in Chile. These included the new company's CEO, Eugenio Heiremans. During the half-century that followed the founding of ACHS, Heiremans focused on enhancing the dignity of the Chilean worker by improving safety and health conditions; he believed in putting the well-being of people ahead of all else. Now 87 years of age and suffering from a debilitating illness, Heiremans knew it was time to step down. SOFOFA's Executive Committee asked committee member Fernn Gazmuri, ACHS's newest board member, to set the change process in motion. Finding the right successor for Heiremans would require a better understanding of how ACHS operated and a leader who could reverse the organization's decline in performance while maintaining its historical commitment to the safety and health of the Chilean worker. With roughly 4,000 employees, ACHS and its country-wide network of 100 agencies provided risk prevention services to 38,000 companies, 84% of which had 50 or fewer employees (7.6% had 50-100, 6.9% had 101-500, 1.5% had 500+), and delivered healthcare and financial services to two million workers. (See Figure 1 for a breakdown in ACHS industry membership by company and worker and by industry accident rates.) Among the three private mutuals, ACHS was the market share leader with 52%; MSCCC and IST had 34% and 14%, respectively.

Figure 1 ACHS Members by Industry 2010

Member by industry % Workers by industry % Accident rate %

Utilitties 1.30% 0.90% 4.8%

Mining 0.80% 1.40% 2.10%

Financial 7.70% 3.2% 2.30%

Construction 7.50% 5.5% 6.1%

Rental 13% 14.6% 6%

Manufacturing 15.3% 4.6% 7.3%

Services 28.9% 45.1% 4.1%

Telecom,transportation 9.1% 4.5% 8.1%

Agriculture, foresty 16.4% 10.2% 6.9%

As ACHS's founder, Heiremans had built a non-profit corporation that took great pride in its work and in the treatment of its people. Employees were paid well and given generous healthcare benefits. (They could receive healthcare at lower rates at ACHS's healthcare facilities.) They were also guaranteed a financially stable retirement if they stayed with the company. Employees contributed 2% of their monthly salary to a retirement fund, an amount matched by ACHS. Upon retirement, they received 100% of their most recent monthly salary times the number of years employed. Employees averaged 19 years on the job, and the executive team 29 years. In 2009, ACHS scored 31st on the Best Places to Work in Chile rankings. Aside from its own employees, ACHS's key stakeholders included affiliated companies, workers at affiliated companies and their unions, and the government. For affiliated companies, ACHS's value proposition was the degree to which it helped curtail work-related accidents and illnesses, thereby lowering the variable fee that affiliates paid to ACHS. For many years, affiliated companies had voiced dissatisfaction with the organization's risk prevention and safety services, and believed that the organization had focused too much on healthcare. Workers, and the unions that represented them, looked to ACHS for the free healthcare provided when a work-related accident or illness occurred and for financial compensation services when they were unable to work. While workers were satisfied with the healthcare they received, especially when compared to the quality provided by public healthcare clinics, they complained about the amount of time they had to wait to see a doctor. The government's demands on ACHS shifted depending on which political party or coalition led the government. For example, President Michelle Bachelet was an outspoken defender of workers' rights during her time in office from 2006 to 2010. During her term, ACHS focused more on the workers' experience by continuing to improve the quality of healthcare they received. Pro-business president Piera, elected after Bachelet, stressed the importance of liberal, open, competitive markets to keep Chile on its development trajectory. He questioned the ability of a group of non-profits to lead the workers' insurance industry and sought a for profit competitor to shake up the industry landscape.

Answer the following questions

Q1. One cannot have good leadership without the ethical/moral dimension, that it is integral to and informs leadership. Explain how far is the former statement true in Heireman's case. Also elaborate of the type of leadership exhibited by Heirman.

Q2. What type of leader and what leadership skills would you prefer in the future leader of ACHS. How can the skills you mentioned help the company to recover from its present situations.