Thursday, April 24, 2014

Competence: A Blend of Knowledge, Skill and Will

For most of my years as a Chief Claims Officer, I carried a notebook with me constantly. I used it as a journal, capturing meeting notes, assignments, commitments, requests, details of conversations, lists of people I had to see, and tasks that needed to be accomplished. I also logged ideas or topics or quotes that struck me as interesting or potentially useful. Each weekend I would review my notes, then categorize and prioritize the items into action lists for the coming week, month, quarter and year. A notebook would last me about three months, except in very busy times, and I still have most of those notebooks. This past weekend I was flipping through an old one, and I came across a quote I had written in block letters, attributed to German writer and politician Johann Wolfgang von Goethe:

“Knowing is not enough; we must apply. Willing is not enough; we must do.”

Funny how a simple quote in a notebook can provoke vivid memories. I was immediately able to recall the situation I was facing when I scribbled that note. I had been in place as the Chief Claims Officer for a large, troubled insurance company for a little more than a year. One of the premier US management consulting firms had been in residence the entire time, helping to do a baseline loss cost leakage study. It was a very tense situation. Just to be clear, there are some inconsistent definitions out there now, but when I use the term "leakage" I am referring to the amount paid on a claim above and beyond what should have been paid. Leakage is generally reported as a rate, a % of the total amount paid on a claim (or sample of claims), so if $10,000 was paid on a claim that should have been resolved for $9,000, the leakage rate would be the amount overpaid ($1,000) divided by the total paid ($10,000) or 10%. Leakage rates under 5% were considered acceptable back then, but the baseline numbers I was seeing were at least three times that number, across all lines of business, so I knew I had a problem.

While a properly executed baseline leakage review reveals, by line of business, where in the claims handling process leakage is happening, it's the root cause analysis that pinpoints why it is happening. The only good news about leakage is that it is easy to eliminate if you have access to a candid and dependable root cause analysis.

I remember being disappointed with the original root cause analysis because it concluded that training was the remedy for the leakage problem. In other words, claim handlers were making poor loss cost management decisions because they hadn't been trained appropriately--they didn't have the level of knowledge necessary to handle claims properly.

I knew it couldn't be that simple. I had looked at closed files myself and I had seen breakdowns in core claim handling that couldn't be fully explained by lack of knowledge. Best practices were being ignored by claims handlers and their managers, file documentation was substandard, the prevailing claims management focus was passive and tactical (process based) rather than active and strategic (resolution based), and there was an alarming lack of urgency evident in the files. Something else was going on.

We dug a bit deeper, and it didn't take long to conclude that our primary leakage root cause did indeed involve a competence gap, but the gap had three different components: knowledge, skill and will. Think of knowledge as the process of learning and understanding how to do something. Skill involves applying that knowledge in a practical setting to produce desired results. And will, as we considered it, was all about attitude, character, determination, discipline, and the desire and willingness to work to produce the best outcomes. Competence requires all three--knowledge, skill and will. In claim handling, that means the claim handler has to know how to handle claims, be skilled at applying that knowledge, and be willing to diligently work at producing the best results.

While training can close a knowledge gap, and hands-on training, guided practice and mentoring can help improve skills, will is a "hearts and minds" challenge--it involves determination and choice. People decide the degree to which they are willing to apply their knowledge and skills and efforts in any given situation based upon well known motivators. Of course today we tend to talk about employee engagement (the extent to which employees feel passionate about their jobs, are committed to the organization, and put discretionary effort into their work), not will, although the concepts are basically the same.

It turned out our most significant competence gap component back then was will, not knowledge and skill, so additional training on its own would never would have solved that leakage problem. Once we understood that and knew where else to focus in order to create an operating environment conducive to producing better outcomes, we managed the leakage number below 5% within about 12 months.

Many thanks to Johann Wolfgang von Goethe, who according to my notebook played at least a supporting role in illuminating the true nature and breadth of the root cause problem we were facing!

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 LinkedIn or Twitter.









Thursday, April 10, 2014

When It Comes to Learning, Let’s Treat Adults Like Adults

When I retired from QBE last year, I thought it might be interesting to do something totally different, so I got myself appointed as an adjunct faculty member at our local community college, where I teach courses in management, leadership, business writing and presentation skills. Since I am in the School of Continuing and Professional Studies, my students are adults.

Recently, my connection with the college led me into a project with a Maryland defense contractor, and as part of that project I did some background research on adult learners--how they learn, what motivates them to learn, and what learning strategies are the most (and least) effective. Now that I am well read on the topic of Andragogy (the art and science of teaching adults), I can tell you something you may already know based upon your own personal experiences--adults and children learn differently. Instructional strategies that work well with children do not work well with adults.

As learners, adults:
  • Are wary of formal classroom learning. They may feel uncomfortable or "at risk" in the classroom since their self-esteem and ego and reputation are on the line. That being said, adults learn better in a classroom setting when they are treated with respect and when their knowledge, abilities and achievements are welcomed and acknowledged.
  • Choose what they will learn. They are more strongly motivated to learn by intrinsic rewards (personal growth, satisfaction, self-esteem) than by extrinsic rewards or requirements (promotions, increase in compensation, licensing or certification.)
  • Need to know why they are being asked to learn something, and why it is in their best interest to learn it. They routinely weigh the benefits of learning against the consequences of not learning. To move into a state of learning readiness, they may need to be convinced they have a critical learning gap that needs to be filled.
  • Prefer learning that is problem or task-centered, not subject-centered. Ideally, content should have relevance and immediacy so they can apply newly learned concepts to real world problems and situations.
  • Prefer to learn by doing. They dislike lectures and survey courses, but are increasingly fond of self-directed and self-paced instructional media such as self-study, programmed instruction, and computer or web-based training. In the classroom, active learning experiences involving problem solving, judgment, reasoning, questioning, critical thinking, exploration/research, and group relationships and dynamics are most effective.
  • Need to be given time and space to integrate new ideas, particularly if those new ideas conflict with what they already know or believe.
Of course I don't have to worry about running a Claims operation any longer, but for me Claims is still a powerful personal frame of reference. Once I understood these adult learning principles (having given myself the time and space to integrate them with what I already knew, of course!), I suddenly had more informed insight and a new and potentially useful perspective into why so much of the training I experienced, and designed, and delivered at insurance companies over the years inevitably failed to fully achieve learning objectives. For whatever reason, in most cases the training just wasn't designed with adults in mind. It didn't appeal to what motivates adult learners, it didn't consider their learning preferences, and it didn't employ the most effective instructional techniques to help them learn. That was unfortunate, in retrospect, since one of the first steps in designing any instructional approach usually involves a detailed analysis of the learner group so the training can be tailored to their needs and preferences.

Perhaps your training strategies are sound, but I sense an opportunity to review and possibly improve claims training outcomes simply by incorporating and considering adult learning theories and principles that have been around for decades. If you want to learn more about those principles, just do a search on Andragogy or start here.

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/