Leadership: The Change Process In Claims Requires A Different Approach

By Marc Lanzkowsky – March 10, 2014

Meaningful and Successful Improvements to Claim Departments Require a Different Approach to the Management of the Change Process

Successful organizations are always changing and adopting to improve their operations, lower costs and increase efficiencies. Claims departments are no different and have been under pressure to transform their operations and live by the mantra of doing more with less.  Good claims organizations continuously evolve and adapt to ensure they add value to the overall business. Regardless, changing to meet the challenges of the marketplace is often fraught with problems and difficulties.  Many initiatives fail to get off the ground or fail in the implementation process. Change can be very successful and if managed and led correctly.  To change effectively there must be a strategic approach and a change in how these initiatives are led.

Why is claims transformation so difficult?

One reason claims transformation is so difficult is that claims departments are generally linear organizations. The claims value chain, or the process of moving a claim from first notice to resolution, is always looked at in a straight line. A claim comes in, is evaluated, reserved, and then resolved.  Of course there are many steps in between depending on the claim, but generally all claims follow a similar pattern from beginning to end.  Claims departments are often structured in a linear pattern as well. From intake units, to claims handlers, adjusters, managers, and operations – the claim moves through the organization in a linear pattern. Claim managers know this pattern and manage it well. However successful transformation does not follow a linear path. As such, many claims managers fail to have the transformational leadership skills needed to move projects to a successful outcome.

Change Leadership is Different Than Management

Management of the claims process is not the same as providing leadership to change processes and the culture that has been entrenched to those processes. Leading change is very different than managing change. Management guru and Harvard Business School Professor Dr. John P. Kotter puts is best when he said that:

[m]anagement makes a system work. It helps you do what you know how to do. Leadership builds systems or transforms old ones. It takes you into territory that is new and less well known, or even completely unknown to you.

Although most claim managers are well suited to managing core business functions such as staffing, claim volumes, customer satisfaction, budgets, day-to-day process and other operational and technical aspects of running a claims department, they often lack the skills necessary for effectively managing strategic change initiatives. In order to successfully lead change, a strategic vision and a specific program for management of a series of transformational projects to support those visionary objectives needs to be developed. Taking short-term approaches to individual tactical solutions will not create the strategic outcome needed to transform the organization successfully. Achieving this type of Strategic Transformation requires a new paradigm and skillset to deal with managing multiple interconnecting projects.

Another reason transformation is so difficult is that in response to problems, claims executives will initiate a variety of complex transformation projects to improve operations based upon the same linear task based approach to their day-to-day management. Claims executives use this linear approach to identify problems, conceive and implement solutions, manage expectations and results all within an enterprise environment where multiple interdependencies and stakeholder interests may impact outcomes.

Transformation Requires a Different Appraoach

Despite good intentions to improve operations many initiatives become ad-hoc responses to an immediate problem rather than a holistic solution to operational ills. This reactive focus means that projects will often get initiated in a vacuum, not managed fully, delayed or simply never implemented. To transform organizations, and achieve Total Outcome Management, executives need to adopt a proactive holistic Strategic Transformation approach to changing the organization for the better.

How Should Organizations Approach Change?