|
Tillinghast Briefing |
|
|
|
No. 41 February 1996 |
|
|
|
For the Financial Services Industry Incorporating Insurance Matters |
|
|
|
|
|
|
What Happens when the Dust Settles? |
|
|
|
by Max Underhill |
|
|
The consumer protection legislation being introduced into the life insurance industry
is driving a shift in focus the extent of which has never before been experienced
in this industry.
These legislative changes are imposing enormous pressures on the
way insurers go about doing business and the way their people are managed.
The legislation,
in particular the Code of Practice, will have a major influence on how the business
is organised and how the services are delivered. However, we need to be careful
to ensure that this “code” is built into their business strategies and not merely
used as a substitute for developing strategies.
Clarification of the business direction,
identification of the necessary capabilities and development of competent people
will become paramount to survival in this regulated but highly competitive industry.
The big question, which organizations are asking, is “where will our organization
be when the dust settles?”
The answer will be dependent on how well this transition
phase is managed. Today product discrimination is becoming much more difficult to
maintain and technological advantages are only short-lived. Where will the competitive
edge come from?
It is becoming clear that this competitive-advantage will come from
the people – it is people that manage well or poorly, it is people that are innovative
or indifferent, it is people that which deliver good service or poor service.
Organizations
often find the people issues difficult to deal with. If your car had worn out brake
pads and was only operating at 80% efficiency, you would get it assessed against the specification, and brought back to expected efficiency levels.With people, we
need to know what are the expected efficiency levels and what keeps them at this
level. This is known as the “People Programs”.
To better understand the people issues
and to develop People Programs, organizations need to have a clear picture of their
business dynamics; organizations need to have a clear picture of their business
dynamics.The business strategy needs to be comprehensive and includes financial,
market, product and people strategies.The steps involved are:
The capabilities are
the collective abilities required to deliver the business strategies.These will
include both people and non-people capabilities; for example, delivering customer
service standards involve customer commitment and an
information system.
The people
drivers are usually described in outcome-based competencies. These outcomes are
measurable and observable. Competencies define the roles and expectation.They are
the link
between the role expectations and the individual’s ability to deliver.
People Programs include; training and development, recognition and reward, recruitment
and selection, performance management, career and succession planning. These programs
must be integrated and all driven from the common “people driver” framework.
In
broad terms, your competitive edge is your most important resource – your people.These
people will operate in tune with your organization only if you align the People
Programs with the organization’s business direction and focus.
Part three of the
Code of Practice places the responsibility for “Training and Competence” with the
life offices and brokers. The choice is to provide technical training in the traditional
way or be innovative and competitive by putting in place an integrated approach
to People Programs.These People Programs need to consider all the roles: Sales Manager,
Agents (tied and multi-agents) as well as other management, “sales” and support
roles.
The People Program needs to be driven by the people drivers, which in turn
are propelled by the organization’s strategic direction. Integrated People Programs
should include:
Structure and Job Roles
This provides the fabric for an efficient,
flexible and responsive insurance organization.An appropriate structure enables
organizations to respond quickly to changes such as legislative change or competitive
focus. Depending on the circumstances the job roles can be highly flexible or specialised.
Training and Development
The first question needs to be, what is the range of competencies
and how should they be clustered? These are likely to include technical, business, customer and people competencies.For example, the competency mix will be different
for a Customer Service Manager and a Tied Agent.
The nature of training delivery
is changing – the approach is now more “outcome focus” rather than specific skill
or task based.This enables people to apply these broader abilities in new and varying
situations.
Recruitment and Promotion
The Code of Practice places more responsibility
on life companies and brokers to have “the right person for the right job”.The use
of competencies ensures that the right person is in the job through the use of situation
simulation, which demonstrates outcomes.
Reward and Recognition
The degree to which
the people drivers are aligned with the recognition and reward system will be critical
to the success of the business. The traditional “volume based bonus” will no longer
be appropriate in reinforcing desired behaviours.
Recognition and reward has three
distinct components, which need to be established for each level of service provider
and manager.These are:
- base salary and benefits;
- variable or performance pay;
and
- non financial recognition.
Performance Management
Performance management drives
the organization’s performance.A component of the performance management system
relates to the individual’s and/or group’s
contribution. While competencies drive
the base pay component of remuneration, they also support the performance management
system, ensuring a meshing between the measures and the roles.For example, the competencies
for a Sales Manager will reflect the people competencies as well as the business
and customer orientated competencies.The agent competencies will focus more on the
customer and technical competencies.
Now ask yourself where will you be in the mob
when the dust settles? The answer will depend on two criteria:
1. How well you have
consolidated your business direction; and
2. How well you have aligned your people
programmes with this business direction.
|
|
|
|
|
|
|