Dog Pack Operating Model

It was starting to get seasonably warm in Maryland last week, so we decided to escape to St. Paul, Minnesota, on Saturday to enjoy one last blast of winter and take in Garrison Keillor’s Prairie Home Companion show at the historic Fitzgerald Theater. Unfortunately, winter followed us back home, setting up a white St. Patrick’s day with about six inches of snow on Sunday night.

The round trip journey between Baltimore and St. Paul is rather complicated and time consuming, so I brought plenty of reading materials, but I still had time to take a look at the Southwest Airlines Spirit magazine on the plane. I opened it to a one page article by author and dog trainer Cesar Millan, a TV celebrity who is known to many people as the Dog Whisperer.  I have enjoyed Cesar’s show, I like dogs, and I will usually read almost anything about them.  But what really grabbed my attention was the article’s opening line, where in response to the question:  “What is the key to a functional workplace?”, Cesar replied:  “This is one particular area where we can learn a lot from animals.”

I have worked in functional workplaces, and in dysfunctional workplaces, and with lots of people who behaved like animals, so I knew this article was for me. Essentially, Cesar argued that a dog pack is a model of a cohesive and effective workplace, and he described how dogs, in a pack, naturally form into three groups:

1.  Dogs at the front (the alpha dogs), the leaders who set direction.
2.  Dogs in the middle, who keep things orderly and on track.
3.  Dogs at the back (the cautious dogs) who alert the others to threats.

According to Cesar, no group in the pack is superior to any other group, and the groups complement and balance one another, and that’s why a dog pack functions well.

So I started imagining property casualty insurance companies as dog packs. Projecting Cesar’s model, the insurer alpha dogs would be the senior executives who protect the company’s capital and reputation and share price, identify market opportunities, and develop strategic plans to make the most of those opportunities.  The middle dogs would be the operations folks—Claims, Underwriting, Policy Administration, IT, Loss Control, Marketing, Distribution Management, Accounting, Payroll—who execute the strategy and interact with stakeholders and deliver products and provide services.  The dogs at the back, always nervous and on the lookout for threats and danger, would be wearing collars with tags such as Human Resources, Risk, Compliance, Legal, Actuarial, Internal Audit, Communications, Product Development, and Finance. The dog pack model seemed like a good fit.

Thinking about all of the insurance companies I have worked with and for, I concluded that the functional, successful companies were indeed organized like Cesar’s dog pack.  The different departments were clear on what they were supposed to be doing, they did it well, they complemented and supported one another, and pulled together as a team to produce the best outcomes.

But what about the dysfunctional companies, the insurance companies I have known that are now long gone or floundering? Did their workplace model contribute to their decline? I think so. I have lived through enough workplace drama in 40 years to recognize the signs of an insurance company starting to unravel. In a dog pack, trouble seems to start when dogs, for whatever reason, don’t stay within their natural groups, and get distracted from what they are supposed to be doing. In an insurance company, the straying might be fueled by personal ambition, or hubris, or a leadership vacuum, or lack of clarity about roles and decision rights, or an acquisition or merger, or even just an arbitrary or ill-advised reorganization or transformation. Whatever the reason, the wandering and interfering dogs disrupt operations and negatively impact processes and outcomes, so the company’s ability to achieve critical objectives degenerates rapidly. As the structure of the pack deteriorates,  one group often emerges as more highly regarded than the others, and it gets treated and compensated as if it is superior to the others.  At that point, any latent pack cohesiveness rapidly dissolves.  Then, one of the most reliable indicators that the end game is near occurs: the alpha dogs aggressively move into the pack and try to directly manage or redesign operations or, even worse, attempt to dictate to and control the critical financial functions that are managed at the back of the pack (particularly Finance and Actuarial).

What about those people I have worked with who behaved like animals? Unfortunately, Cesar isn’t very encouraging on that score: “I have never met a dog I couldn’t help; however, I have met humans who weren’t willing to change.”  I think I have met some of those humans, too!

I am always pleased but rarely surprised when I find inspiration in unexpected places. Thank you, Cesar Millan, for sharing your dog pack model and for unwittingly encouraging me to squint at the property casualty insurance business from a new and intriguing perspective.

Dean K. Harring, CPCU, CIC is a retired Chief Claims Officer and an expert and advisor on Property Casualty insurance claims and operations. He can be reached at dean.harring@theclm.org or through www.linkedin.com/in/deanharring/

Your Key Number

During my years as a claims executive I was involved in many group interactions that yielded useful lessons and insights that often weren't on the agenda. Usually the setting involved a "town hall" meeting with employees, lightly scripted, where I asked and answered questions on a wide range of topics. If you have ever watched the Prime Minister's Questions (PMQ) on the BBC, my town hall meetings were a bit like that, although the attendees weren't nearly as boisterous nor the speakers as eloquent.

I still remember one of those meetings, during my first visit to a particular claims office location, in a session with a group of claims employees I had never met before. I introduced myself, talked a bit about the purpose and format of the meeting, and asked the group what I thought was an innocent, open-ended question to get things moving: "How are things going here?"

Silence, puzzled looks, finally a tentative question from the back of the room: "What do you mean?"

We were in London, so I thought my question hadn't converted well into the local vernacular. "I am interested in hearing about how well this office is performing," I explained.

A young man sitting near the front of the room shouted: "We are doing very well, thanks for asking!" He was grinning, quite pleased with himself, and the group was laughing.

"Excellent. But how do you know?" I asked him. More silence, more puzzled looks. "How do you keep score?"

We ended up having a valuable discussion, at least from my perspective. The office measured all kinds of things, but they didn't have a common balanced scorecard or performance dashboard for keeping score. So when they were asked to describe performance, they had no performance touchstone, no evidence-based view of how they were performing. Instead, they offered up generic testimonials such as "Brokers like us" or "Our underwriters rely upon us."

Of course if as an employee you don't have clarity on your goals and objectives, if you don't know what success looks like, if you are not entirely sure what is important and what you are supposed to be doing and what it looks like when you do it well, you are at a disadvantage. Brian Tracy describes it this way in Eat That Frog:

"In our world, and especially in our business world, you are paid and promoted for getting specific, measurable results. You are paid for making a valuable contribution and especially, for making the contribution that is expected of you."

He goes on to make the point that if employees don't understand what contribution is expected of them, and if they don't know what specific, measurable results they are supposed to be getting, they are probably not going to be successful.

That town hall meeting convinced me that every claims organization needs a carefully balanced set of performance measures to provide an objective, evidence-based view of how they are performing. I felt so strongly about it that I wrote an article back in 2005 for Claims Magazine, Keeping Score: Efficiency and Effectiveness in Claims Handling. So when I came across an article recently on the HBR Blog Network by John Case and Bill Fotsch entitled A Winning Culture Keeps Score, I was intrigued by their assertion that while key performance indicators are necessary, defining "winning" by using a single indicator may be more effective:

"The trick is to focus everyone’s attention on a single key number—the one number that, if improved by a significant margin, will leave the business healthier and stronger at the end of the year."

What is a key number? According to Case and Fotsch:

" A good one meets three conditions: 

· It’s directly connected to the financials. Improve the key number and you get better financial results.

· It’s not imposed from on high. Open-book companies consult with managers, employee teams, and other stakeholders to develop their key numbers. They ask: What are the biggest challenges we’re facing this year? The biggest opportunities? How can each unit best measure its contribution?

· It’s for now, not forever. Companies’ situations change. Sometimes revenue growth is the top priority; other times it’s profitability or cash flow. When a company makes progress on one objective, it may want to set its sights on another the following year."

Finally, they point out that larger companies usually "expect each unit or function to come up with its own key number."

So while I remain convinced that performance standards tied to only one component of a complicated process like claims management do more harm than good, perhaps I have been seeing this as more complicated than it needs to be. If you are running a claims organization, and you use a key number to help focus your claims teams on winning (producing optimal results), I would love to hear about it.

Just to be clear, though, despite the article in Insurance and Technology this week (Cycle Time: The Most Important Metric in Claims), I have a strong bias that cycle time isn't a realistic candidate for a claims key number!

Dean K. Harring, CPCU, CIC is a retired Chief Claims Officer and an expert and advisor on Property Casualty insurance claims and operations. He can be reached at dean.harring@theclm.org or through www.linkedin.com/in/deanharring/

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