'Call it whatever you like-re-engineering, restructuring, transformation, flattening, downsizing, rightsizing, a quest for global competitiveness- it's real, it's radical, and it's arriving every day at a company near you.' (Fortune April 5, 1993)
Years later, this statement still reverberates. Virtually all surveys of agency performance in the past year show that total compensation continues to increase faster than revenue, indicating the need for significant improvement in agency productivity. These times require a total reconceptualization of business process and technology applications. The real problem is fundamentally changing the way people work in an automated environment. We have been at this workflow improvement stuff a long time. We have learned a lot about what does and does not work. This quotation from CIO says a lot about what we have seen:
'Typically organizations try to streamline all redundant and non-value added steps and bottlenecks while bringing automation to manual parts of the process. The unavoidable first step in any workflow project is also the most time-consuming: to thoroughly analyze existing flows. One insurance firm spent six months doing this; only four weeks were needed to design and prototype the new flow. The hardest part is going through each process and defining which steps you really need.' (Steve Graham, senior director of systems development, Ingram Micro Inc.)
Our approach is radically different. First do not ask an external team to re-engineer processes for you. Instead teach your agency team how to totally reconceptualize the business, its products, services, its processes, and its interactions with customers.
BEGIN BY CREATING A LEARNING LABORATORY
The idea is to create a learning environment where your staff uses live agency data to work on real issues. By actively gathering and analyzing their own data, your staff learns an incredible amount about the agency, what is working, what is not, and the roadblocks to superior performance.
The concept: Discover the patterns, correlate them to problem's root causes, and then eliminate the root causes. Do not even attempt to solve problems because solving problems one at a time rarely uncovers and eliminates their root causes. Front-line data gathering and analysis is your opportunity to truly understand what is getting in the way of superior performance. If someone does the discovery and analysis for your team, it may become defensive and may not accept the findings no matter how accurate they are. More important, it will lose a powerful method of organizational and personal learning. This is your opportunity to break your existing paradigms.
A paradigm is any set of rules and regulations. These rules and regulations (also known as procedures, standards, routines) do two things. First, they establish boundaries. In a sense, that's what a pattern does: It gives us the edges, the borders. Second, these rules and regulations then go on to tell us how to be successful by solving problems within these boundaries. It is our paradigms, our rules and regulations, that keep us from unsuccessfully anticipating the future by looking for it through our old paradigms.
Some of the most common issues we find in most insurance agencies are:
FUNCTIONAL ISOLATION: Producers and CSRs have no idea what the other does or how their work impacts the other's. Haven't you seen CSRs maintain extensive paper documentation (A) just to cover their you know what, or (B) because they think someone else needs it? When you dig deeper you discover that there is no valid reason for the paper documentation at all.
INCOMPLETE OR INEFFECTIVE COMMUNICATIONS BETWEEN PRINCIPALS, PRODUCERS, CSRs, AND SUPPORT STAFF. We don't talk to each other enough. So we often duplicate what others do, and/or do totally unnecessary work. When we automate one unit or department at a time, we frequently retain these wasteful practices.
NARROWLY DEFINED, OVERLY SPECIALIZED JOBS. The original insurance workflows were designed like production lines with many single step processes. Automation frees us from that structure. Automating tasks allows you to combine, consolidate and eliminate work, permitting you to do more work in fewer steps. To do more in one stop you have to broaden the job and the knowledge of the person performing it. Think about it. After you eliminate the paper, how will that impact what a person does and how they work?
THE ABSENCE OF A LONG-TERMS SYSTEM STRATEGY. Too often, agencies try to solve problems one at a time with technological solutions. A great example is when someone says, 'Let's be paperless' when they have no idea how work is really done on the front-line. Most agency principals haven't spent five minutes on the front-line in years, so it is important to actually see how work is done before automation decisions are made.
UNDERUTILIZATION OF EXISTING AUTOMATED SYSTEMS. Most frequently, systems add to what people do rather than replace it. We don't have to tell you about this, you see it all the time. You build a great system yet no one knows how to use it properly. The people don't trust the system so they keep both the electronic record and the paper record. Managers and producers are often the worst offenders. Unfortunately their attitudes are transmitted to the front-line, so it does what the others do, i.e., do the work twice, once on the system and once with paper. Agencies and companies are willing to spend millions on system development and maintenance, yet they hardly spend anything at all teaching people how to maximize its capabilities or to integrate it into the way people work.
A LACK OF COMMON PURPOSE. Too many agency people have difficulty relating what they do to a specifically defined outcome. Therefore they focus more on activities versus results. Most of the waste found in agencies today is not intentional. It is caused by a lack of focus on what is truly important. Too often people do work because someone tells them to do it. They often don't know why it is important, how it impacts what others do, or its effect on agency results.
A LACK OF EFFECTIVE FRONT-LINE TRAINING, EDUCATION, AND DEVELOPMENT. You can create the most wonderful systems in the world, but they won't do you any good without knowledgeable workers. Once you automate away the routine, repetitive, rule structured work, all that is left are exceptions, problems, and work too infrequent to automate. People who work with electronic files have to learn to think abstractly, to reason and to communicate what they know. Take the extra step when you build the system. Teach people how to leverage technology and maximize their performance by offering thinking solutions to customers needs and expectations.
AN ABSENCE OF INNOVATION, CREATIVITY, AND RISK TAKING. The changing needs and expectations of customers requires agencies to respond faster than ever before. Yet the insurance industry is by nature conservative. Therefore we see little evidence of true innovation, creativity and risk taking on the front-line with customers or with the systems to support customer-driven products and services. Today's technology is so flexible that it can provide multiple solutions to a variety of situations. But that requires us to re-think how systems are designed and how people use them.
THE STEPS FOR CREATING A LEARNING ORGANIZATION
Begin the learning process by creating a model of today's reality. This Current Operating Model describes exactly how people view their work and how work is actually done. This is the time to tell the truth about your organization: what is working, what isn't working, and the barriers to effective and efficient performance.
THE DISCOVERY PROCESS: Why do people think work is to be done the way it is done today? Is it because of arbitrary rules or is it because people know the reasons behind the processes? The ultimate benefit is to learn more about your agency and how it works than you ever thought possible. We are not interested in fixing what is wrong but to be certain everyone knows what is currently happening at the transaction level.
DIAGRAM EACH PROCESS: every step no matter how small. Look for the redundancies such as storing data electronically as well as in a paper file. Or, someone writing information on a slip of paper so someone else can enter it into a system.
HOW TO BEGIN: Begin by having a series of one-on-one conversations with the staff.
1. Who to ask? Everyone in the value-added chain, customer to customer, plus support staff. The purpose of the interviews is to gather data, not to give information or correct a problem. Unless the place is burning down or someone is breaking the law or stealing from the agency, do not react to what you hear or see. Your purpose is not to fix problems but to create an environment where they will be prevented from occurring in the future. The Teams Job Is To RECEIVE information, not to give it. Ask: Show me. See:
What is done and how it is done.
2. What to ask? Keep it simple.
How long have you been with the company? (to find the average tenure and experience level in your agency.
What did you do before you got this job? (to find skills and experience that can be useful to the agency in a changing environment)
How did you learn this job? (Did we really train the person or simply give them a few days with another person who showed them what to do? I call this OJTE. In other words, on-the-job trial and error.)
Show me what you do? Document every step no matter how small. (This is to discover all of the useless and redundant steps in the existing processes.
Where does the work come from? Who gives the person their work, customers, producers, company staff? Is it coming from the appropriate source?
What happens before it gets to you? Does the person know what should be done to the work before it gets to them? Do they have to go back to the person for additional information or to correct something that was done incorrectly? If so, that can be a major source of rework and unnecessary expense.
What happens to it next? Does the person know what others need and why it is important? If they don't, they are more likely to leave off important information.
What do they do with it? Does the person know how they will use it and what the end result is?
How many do you do a day? Here you are looking for volume. If the person isn't sure, have him or her take a count for a few days. You may be surprised at how few items are processed on any given day.
How long does each step take? Use this information with the information from the previous question to determine the daily or hourly workload.
Why do you do it that way? Is it simply because they were told to do it a certain way, or does the person know the reasons and benefits behind the process? If they are simply working from rote procedures, they will be likely to have difficulty with exceptions and anything that does not fit the rules.
Why is this step important? Do they understand the impact the step will have on the final outcome and the overall results of the agency?
MAPPING PROCESSES
Mapping processes, or drawing a blueprint of today's processes, is the second part of creating your Current Operating Model. Mapping requires interviewing a minimum of two people involved in every step of the value added chain, from first customer contact until final product or service delivery. This includes billing and receivables and the support staff who are indirectly involved in the process.
IMPLEMENTING THE PROCESS
Break the entire office up into teams. Assign each team to a product or service such as processing a claim, writing new business, endorsements etc. Have the team accurately describe what is currently done. Ask everyone involved in the process to contribute to the blueprint so no step, no matter how small, is overlooked.
This data is used for analysis only! Do not try to 'fix' or 'improve' current processes. However, it is critically important for the team to understand how work is currently done.
This is where the redundancies, the overlaps, the non-essential work, the lack of system utilization, and the totally unnecessary work shows up. It also clearly demonstrates how many people are busy doing tasks that accomplish absolutely nothing. Your team will be able to document every instance where information is already in the system yet people still maintain paper. You will see where paper is totally unnecessary.
You will discover reports and logs that are maintained simply to 'prove' someone did or did not do something or because someone thinks they are needed when no one uses them. And so on.
DEALING WITH CHANGE
Recognize that for many, change is difficult to accept and adjustments are not always easy. Organizational change can be influenced by changing people, technology or organizational structure, processes, and conditions.
A change in any one of these variables usually produces important changes in the others. Thus, any change should be considered by viewing all structures and processes so that the total ramifications and impact can be seen.
Unanticipated consequences of shallow or poorly conceived changes can wreak havoc for organizational changes. Therefore, take your time, test your assumptions and begin with small steps. As people gain understanding and see what is ahead, the changes will become more acceptable and the pace can quicken.
Now that you know what is, ask yourself, 'Is that what we want?' If not, scrap it and create what you want. First, some thoughts for everyone.
Do not try to make the initial plan perfect. Design the best processes and operating systems you can. Try them out, and then go back and see what you can improve as you learn what does and doesn't work. That is the value of the process.
Continuous improvement requires continuous effort. It's a never-ending process. Everyone has input. All ideas are important. Everyone involved in doing the work should have some say and some ideas on the best way to get things done.
ESTABLISH PERFORMANCE BENCHMARKS
Begin by defining the results you want your agency to attain. We call this process Benchmarking desired performance. Performance expectations, in terms of specific, tangible results, are the benchmarks that must be established and met if the company is to attain its long-term goals. Performance expectations are also defined in relation to operating benchmarks for every department, business unit, and position.
Starting with a blank sheet of paper, lead your team through a process of establishing performance benchmarks. The result is a complete set of performance criteria for:
- Customer growth
- Revenue growth
- Enforce policy growth
- Expenses by area of responsibility
- Profit
- Service timeliness
- Quality,
- Customer satisfaction
- Productivity:, corporate, departmental, and individual
- Other areas the team feels should be included
Everyone should know what the agency's performance benchmarks are. To be certain they do, conduct an open and candid discussion of the purpose of each Performance Benchmark and why it is important. Be certain everyone understands the reasons and benefits for the Performance Benchmarks in terms of their impact on customers, employees, the agency, and the ownership. This step gives the organization focus and direction. It gives purpose to the entire team's work. If they know the expected outcomes of their work, they are more likely to take a personal interest in its attainment.
CREATING THE IDEAL OPERATING MODEL
'Most planners ride into the future facing the past. It's like trying to drive a train from its caboose,' says Russell Ackoff, Professor of Systems Sciences at the
Wharton
School
. Do not try to solve problems or improve processes. Instead to create a totally new or an Ideal Operating Model.
This is the way the agency would operate if it weren't encumbered with self-imposed constraints (paradigms) real or perceived. The goal is to create a model that shrinks cycle times from weeks to days, to reduce multiple processing steps to an essential few, to maximize the use of automated systems, to eliminate unnecessary paper, and to increase the company's capacity to provide flexible, customer-driven products and services at less expense.
'To unleash the power of the new technologies, revolutionary reconception of the entire organization system-tasks, people, relations with customers and suppliers-is mandatory,' says Tom Peters. Don't just talk about it; this is your opportunity to get it done.
1. Describe the ideal workflows.
Do not try to improve what is. Start over and create the ideal way of attaining the anticipated result. Don't focus on the activities; do focus on the expected and required results. Do not get overly detailed in how work should be done, but do be detailed in the expected results, the errors and omissions criteria, financial controls, service standards, regulatory and legal criteria, and the required documentation.
The goal is to accomplish the most work with the fewest steps. Do not pass work back and forth or to overly specialized functions. Strive for multi-skilled, multi-functional roles where one or two people do as much as they can in a one-stop process wherever possible.
2. Now draw an ideal workflow blueprint. How would the team members work if they could do the work any way they wanted?
Starting with a blank sheet of paper, the team members define what they want to occur the moment an agent or producer is eye to eye with a customer. Continue working to create a model of how processes can work from first customer contact to final service or product delivery. The model must be able to deliver what customers, the agency, its carriers, and employees consider to be a successful outcome. By focusing on what outputs customers require from the agency, the team