Consultants' Corner

Doing What You Said You Would Do

Tim Lauer
Insurance Experts' Forum, June 22, 2010

It might seem like a basic character building block to most, but the premise of doing what you say you will do often goes out the window in many organizations, replaced by a host of mechanisms that drain the effectiveness and directional ability of the company. How can leadership spot the problems, and what is the corrective plan? The best way to differentiate your organization may be to simply deliver on this promise: “We will do what we say we will do.”

Often senior management cannot understand why an important initiative or project does not deliver. The opportunity and investment were there, the people and technology were there, and certainly the commitment of the senior management staff was present—so what happened? Why can’t we turn this ship? Why did we lose our biggest account? How did that newcomer get so big in our market? Can your organization spot the failures in doing what you say you will do?

There are several ways this insidious problem manifests itself. One is through a catastrophic failure of a key component to deliver. Another is through a gradual decomposition of the intended goal, which falls behind or fails. Yet another is that a goal is parsed and then regrouped to end up in a different direction than originally intended. Some organizations may complete all high-profile initiatives, but their yields are unknown, watered down or drowned out by new initiatives.

There are preventions and remedies, of course. The old saying that “It starts at the top” is true. If people at the top do not communicate effectively, are indecisive or do not hold people accountable, their behavior permeates down through the organization and can kill organizational effectiveness. The remedy for this is to make short, clear communications a priority. Carefully think through your direction and strategy before communicating it. Insist on consistent messaging by senior staff and hold them accountable for results. Do not drown out the main message with unnecessary detail.

A potential cure for catastrophic failures is better, more intense risk management at all levels, including the board and C-level staff. Risk management programs are designed to identify, measure and remedy the risks of the organization not reaching its goal. Risk management programs prevent catastrophic risks by addressing these potential failures early in the process, when preventive steps are most effective.

Correct organizational design issues to curtail breakdowns and the failure to execute. The era of horizontal organizational charts resulted in many more decision-making points as teams replaced management hierarchy. Teams increase the potential for failure when they make decisions that change the intended outcome, no matter how small the change. Obtaining approval from a peer is always easier than going up the ladder, so teams tend to approve each other’s changes. Often, results of extremely horizontal organizations have little relationship to the concept originally put forth by senior staff, which is perplexing and frustrating. There are steps within a horizontal structure that help correct this situation, such as stronger project management and governance; however, a more hierarchical organization with good leadership is sometimes more effective.

The nature of business organizations necessarily creates needs for self-protection, self-improvement and control by the people working there. These are human characteristics that cannot be avoided, but if unmanaged, they can completely nullify an organization’s effectiveness. A fearful environment often encourages sandbagging at budget time. Or, you’ll hear people say, “I want to under-promise and over-deliver on this.”

Sandbagging at budget time is feathering the nest by locking up capital. The practice is done out of fear that resources will not be given if needed or that some form of punishment will occur if a budget is not met. A budget is supposed to be the best estimate of resources needed to accomplish the goals of the organization. Managers should be rewarded for their forecast accuracy rather than how far under budget they can be at year-end. Dealing with this noise in the budget makes decision-making harder, riskier and less effective at the corporate level. Preventing managers from needlessly locking up capital frees up money that can be better deployed in growth, development, or margin-producing activity.

“Under-promising and over-delivering” is a euphemism for taking control. Here is the breakdown: I’ll deliberately underestimate my ability to deliver to the point where I can easily perform the initiative in order to look like a hero at the end. Obviously, this can kill organizational effectiveness because the organization never truly knows its capabilities. Capability is hidden behind management’s desire to not take risk. What businesses need is honesty in forecasting in terms of finances and ability to perform.

Business organizations reflect the values of their leadership. Incorporating the simple value of “We do what we say we will do” is a good premise in improving your organization’s effectiveness.

Tim Lauer is a senior consultant at the Robert E. Nolan Co., a management consulting firm specializing in the insurance industry.

Readers are encouraged to respond to Tim using the “Add Your Comments” box below.

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Comments (2)

The comments are just general and very vanilla and what can offerd that will actully do something that resolves a claim in 3 weeks and with no fraud or kick backs to the adjuster or to some one in the insurance company. What will prevent the massive litigation costs over determining the repair costs to repair a damaged property. The court room or in a mediation hearing is not the place to go to determine the costs.

I built to obtain itemized bids from contractors online so they would not try to bribe me to let them inflate the repair costs.
It has reduced the cost of property claims by 10 years.The only way to resolve claims costs is to offer a detail RFP to the contractors at no charge and they bid. The adjuster never repairs any damaged property and the only person on costs is a general repair contractor in determining the amount of money.

The open RFP bidding allows clariffication on damages and can at times generate full subrogation recovery for the company and the insured. Charles Stephens

Posted by: bigadjust123 | June 29, 2010 9:51 AM

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I could not agree more. This is particularly true in the area of claims, which is my specialty. Do what the policy says you will do and more particularly what the insured understands you will do. This means that you and the insured must have a clear understanding of what the policy says and what you will do. This is created by the clear communication between the claims people and the insured. Problem areas should be discussed in advance of problems developing.

In order for the adjuster to communicate with the insured clearly there should be a clear understanding in the claims department of what the policy says, what the policy means and what the company is willing to do under the terms of the policy. If this is clear in the minds of the adjusters they can deliver and "Do what we say we will do" thus avoiding "bad Faith" or the appearance of "bad faith". "Doing what you say you will do" is certainly the product of clear understandings and communications.

Saving money is not the object, it is a by product of
delivering the promise. "Do What You Say You Will Do" should be the motto of all the professionals in the insurance industry. Gene Evans

Posted by: elevans66 | June 25, 2010 4:42 PM

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