Breaking Those Competing Commitments To Change

Volunteer! Business metaphor

Even the most supportive team member can derail organizational change

Change is always difficult in an organization. For a myriad of reasons people resist being taken out of their comfort zone and asked to take on new tasks or modify old ones. It is for this reason that “we’ve always done it that way” is such a comforting way of doing business (see my article 15 Excuses For Not Changing And 5 Reasons To Change The Way We Make Change). But good organizations need to change to keep up with new customer demands, competitive pressures or just to grow and remain efficient.

In life change happens and people adapt. In business change happens and people react. Those who are resistant to change are usually easy to spot and equally as easy to manage and therefore rarely derail a change initiative. However, it is the person that generally supports change and outwardly appears to be working for the implementation of a new initiative that can sometimes harbor a “competing commitment” that can have a more deleterious impact on the success of a new initiative.

The unknown hidden agenda

I know this comes as no surprise to all of you savvy managers, but yes there is a psychological reason that people don’t actually effectuate change despite good intentioned efforts.

Harvard Graduate School of Education lectures Robert Kegan and Lisa Lahey state in their article, The Real Reason People Won’t Change, that “even as they hold a sincere commitment to change, many people are unwittingly applying productive energy toward a hidden competing commitment” causing change initiatives to fail. In fact, they go on to state, “competing commitments cause valued employees to behave in ways that seem inexplicable and irremediable….” These valued employees aren’t deliberately trying to undermine change but rather there is an underlying hidden agenda that conflicts with their stated desire to support the initiative.

According to the authors, competing commitments stem from deep rooted beliefs or underlying assumptions that are formed early in life.  Understanding those underlying beliefs and identifying the “big assumptions” will help to break down those hidden barriers.

I had a client, Joe, who was the head of claims for a large organization.  Joe was one of the biggest supporters of a large change initiative to reorganize and modernize the operation. Joe’s management style was to take on work that should have been done by subordinates. He had a very difficult time delegating, and even when he did, he would often re-do the work to ensure it was being done correctly.  Joe knew the organization had problems with technology, staffing and most importantly the ability to deliver consistent results.  As initiatives in the project were designed, Joe was supportive and helpful in identifying problems and offering ways to change and improve the organization.  However, as a particular project was being implemented suddenly Joe would be unavailable or would find a reason why the change he supported, and agreed to, wouldn’t work. Joe’s competing commitment was that the work couldn’t be done if he didn’t do it. His underlying big assumption was if he delegated the work and it was done wrong it would show that he truly didn’t have the management skills to warrant his position.

Joe was someone who started as a field adjuster and worked his way up through management. He worked with many around him that had formal training or advanced degrees and Joe felt the best way to succeed was to become the expert on certain issues and hold them close to ensure his value. This underlying belief system was subconsciously impacting his ability to make change.

Manager = Psychologist = Results

So how does one break the underlying big assumptions?

Whether you realize it or not, part of being a good manager is developing skills akin to a psychologist.  You have to listen, be empathetic to the issues, and help to provide solutions and coping mechanisms to elicit results. Kegan and Lahey give three steps managers can take to help break through and employee’s resistance to change. This is not some quick hit magic pill and takes time and energy to achieve results.  Each step is designed to help draw out what drives a person to be adverse to change.

Step 1 – Diagnose the competing commitment

Digging up a competing commitment will take a small commitment of its own and a few hours to to realize there is another voice countering an employees desire to make things work. The authors suggest these questions be worked through:

  • What would you like to see changed at work, so you could be more effective, or so work would be more satisfying?
  • What commitment does your complaint imply?
  • What are you doing, or not doing, to keep your commitment from being more fully realized?
  • Imagine doing the opposite of the undermining behavior. Do you feel any discomfort, worry or vague fear?
  • By engaging in the undermining behavior, what worrisome outcome are you committed to preventing?

Step 2 – Identify the big assumption

Big assumptions are the elephant in the room within your subconscious.  It is fairly understood and can be identified but often hard to make the connection to the actions a person takes.  “People often form big assumptions early in life and then seldom, if ever, examine them.” One way to understand the big assumption is to invert the competing commitment. Like Joe who couldn’t delegate because he felt the work wouldn’t get done would have a big assumption that would be that if he didn’t do the work it won’t be done right and people would discover he didn’t have the skills to manage.

Step 3 – Test – and consider replacing the big assumption.

Sounds easier said than done. However the trick here is to get the employee to understand their big assumptions and test them as situations come up. From there, the employee can try and behave differently and try and replace those assumptions holding them back.  Changing deep rooted behavior is obviously the goal but even getting an employee to understand and test these assumptions will have a positive impact on a projects success.

It’s worth the trip

Kegan & Lacey point out that “while primary commitments nearly always reflect noble goals that people would be happy to shout from the rooftops, competing commitments are very personal, reflecting vulnerabilities that people fear will undermine how they are regarded both by others and themselves.” Achieving success is no easy task but managers should not be deterred.  Trying to understand and get to the bottom of such competing commitments and big assumptions will in and of itself provide management with additional insight that will undoubtedly help to move the project forward.

How do you deal with stalled projects and understanding people’s resistance to change?

 

Commentary: Claims Departments Are Facing A Crisis And Have To Learn To Encourage Innovation

So Much Work And No Help In Sight

I hear it time and time again from colleagues all over the industry. With cutbacks many are being asked to do more with less.

This trend began several years ago as more technology was implemented into insurance companies. Gone were the support staff; why were they needed when the claims professional could do it all on their own lap-top. Gone were supporting groups like subrogation departments and litigation management assistance; why were they needed when new systems could manage it all.

More efficiency meant more time to do more work. Certainly this will translate to better results…I mean it’s supposed to right?  But has it really?

I’m Not Going To Take It Anymore

The claims industry is at a crossroads and needs to change. I know you have heard this one before, but when speaking with people in the business I was reminded me of the famous scene from the movie Network where the anchorman screams out “I’m mad as hell and I’m not going to take it any more”.  Check out the clip below to be reminded.

In a recent discussion that I posted on LinkedIn, I asked the question, How do you keep the claims department from become stale? (see prior posting Is your claims department becoming a bus company?). For some reason after seven months of posting I received a flurry of comments on how the industry is facing a crisis of staffing and turnover. Quoting one post on LinkedIn from John M. Beringer:

“A sad fact is the majority of adjusters rarely last for five years. That is not due to a lack of skill or commitment; it has to do with how their pending is counted, the layered management reporting; unrealistic expectations of claims management and management by edict rather than training and critical reasoning.”

While there were many wonderful responses to my question, the general feeling was that case loads have crept too high and there is a lack of emphasis on training and development. We as claims people have a knack for complaining about caseloads, however, this one is truly one that needs to be addressed. With more technology came more expectations for claims professionals to take on more administrative tasks. Departments contracted, and claim counts rose. In my opinion this resulted in an increase in indemnity and expenses (I wish I had the data to support this, but can only i have seen it the file reviews i have conducted over the past year).

In order to excel in this marketplace, claims departments will need to innovate and attract, and maintain, new talent. Unfortunately, we are not an industry that accepts change easily, and for the most part innovation, is slow and not encouraged.

Change Requires Innovation To Be Encouraged

I have quoted Serth Godin before and will continue to do so especially with pearls of wisdom like this:

“That’s not the way we do things around here

Please don’t underestimate how powerful this sentence is. When you say this to a colleague, a new hire, a student or a freelancer, you’ve established a powerful norm, one that they will be hesitant to challenge. This might be exactly what you were hoping for, but if your goal is to encourage innovation, you blew it.”

In my consulting practice (Lanzko Consulting) I am often confronted with clients that say something like “That’s not the way we do thing around here” or, more likely, “that’s how we have always done it.” Change in claims cannot happen unless the organization looks at, and breaks, the old habit of accepting the status quo. Challenging the norm has to become the new norm. Industry executives have known for years about the declining talent pool and that need for changes, yet they have taken few steps to modernize the technology, as well as the process.

Technology is a great tool, but it will never substitute the skills of a talented claims professional. Technology must be implemented into the process to assist, not hinder, claims professionals.  We need to move back to a time when claims professionals can be claims professionals.  We need to make the job as interesting as it can be, and not purely about automation. Without this, the profession will struggle to attract talented people to its ranks and will certainly cost companies far more in the future.

Let 2011 be the year to take the industry forward.  How do you think we can innovate the claims industry?

Medicare Secondary Payer Enhancement Act Being Introduced in Congress Could Address Many Concerns of Section 111 Reporting

Dealing with MSP Can Feel Like Walking Into a Maze

The Medicare Secondary Payer Enhancement Act of 2010 (HR 4796) is a new piece of bi-partisan legislation introduced on March 9, 2010. It is designed to streamline Medicare Secondary Payer reporting and provide some finality for insurers required to reimburse Medicare for “conditional payments” of medical expenses. This legislation would address many concerns raised by reporting requirements, as well as from recent lawsuits filled by the government seeking recovery.

Section 111 reporting requirements are complex and, if not done correctly, can result in significant fines. I previously addressed how serious the government was in seeking recovery in my posting  Warning – Medicare Secondary Payer (MSP): Government sends strong message and goes after non-compliance. In that article, I discussed a case where the government went after all the parties (attorneys and insurance companies) for not reimbursing medicare following a 2003 class action. Several issues were raised in that case that clearly sent a message to carriers about the government’s intentions and raising significant concerns around other issues. The process has been so confusing, and created so many questions,  that the production date for reporting was again postponed till January 2011 (see Important Update: Medicare Secondary Payer changes production date to January 1, 2011).

The Medicare Advocacy Recovery Coalition (MARC) was formed in 2008 to advocate for the improvement of Medicare Secondary Payer requirements. “The current Medicare Secondary Payer (MSP) process places considerable impediments upon the flow of needed information, beneficiaries’ ability to settle claims, and everyone’s ability to promptly reimburse the Medicare trust fund,” said Roy Franco, co-chairperson of MARC and director of risk management services for Safeway Inc. “These roadblocks discourage settlement, slow down the return of trust fund dollars, and ultimately rendering many cases involving Medicare beneficiaries unsettlable.” (see MARC Coalition Supports Medicare Secondary Payer Enhancement Act (MSPEA)/H.R. 4796)

Potential Changes to MSP Would Streamline Reporting and Address Many Concerns

HR 4796 is an attempt to address some of the problems with the reporting requirements by:

  • Allowing the government discretion in determining when to impose penalties for rules violations;
  • Establishing a 3 year statute of limitations, limiting the government’s time to sue companies for failing to comply with the rules;
  • Limit Medicare Secondary Payer recovery to claims of $5,000 or more which would prevent CMS from seeking recovery for less than that amount;
  • Eliminate the requirement that claim notifications to CMS contain the claimant’s Social Security numbers, helping to reduce fears that securing social security numbers in liability settlements would expose reporting to possible exposure should the information be misused;
  • Call for CMS to provide to claimants and insurers the amount of a “conditional payment” the agency will demand, within a certain time frame, before parties settle a claim; and
  • amend the current penalty assessed an applicable plan that fails to report claims payments under Section 111 from $1,000 a day to “up to” $1,000 a day based upon the “intentional nature of the violation”

Providing the limitations noted above would go along way to answering many of the questions that have been raised over the last several month.

Some related articles:

These proposed changes would be a significant improvement, and the progress of this legislation needs to be watched closely.

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Some background on the Medicare Secondary Payer Act and New Reporting Requirements

The Medicare Secondary Payer Act has been in place since the early 1980’s. The act allowed Medicare to seek reimbursement for money an insurance company or self insured pays on behalf of a Medicare beneficiary. MSP covers all carriers, self-insureds, no fault insurance, and workers’ compensation insurance.  In the past, Medicare’s ability to track and enforce these claims was limited. With the passage of the SCHIP Extension Act of 2007, Medicare was given new tools to track payments. The passage alone marked the start of new steps to increase enforcement by the Federal Government to collect on the Secondary Payer provisions. As part of the Act, the Responsible Reporting Entity (carrier or self-insured) must advise Medicare when a claim is received involving a Medicare beneficiary recipient. Responsible Reporting Entities now have an ongoing requirement to determine from time to time whether a claimant is a Medicare eligible recipient.

For more extensive information about the Medicare Secondary Payer Act and the new reporting requirements, please look to these valuable links:

Why use a consultant? The second set of eyes!

Ever try and organize your own closet? It should be so easy to get the thing in order yet for some reason it’s very difficult. That is until you bring in a closet organizer to arrange everything in easy to manage sections. Sometimes the only way to truly accomplish a task is to have a second set of eyes. Your operation is very much the same way. There are many reasons to consider a consultant – here are some of my favorites:

  • Independence – Plain and simple the consultant has independence. They have none of the political ties nor history within an organization. They are free to ask the sometimes difficult questions and make recommendations that are truly in the best interests of the client.
  • Objectivity – It is common for staff to become attached to their organization and procedures. Often ideas come from within and it is human nature for individuals with very good intentions to get emotionally connected to a particular method of doing things. The consultant comes in with no emotional or political agendas and can look at how things are being done with a fresh set of eyes. A good consultant provides an objective, fresh viewpoint–without worrying about what people in the organization might think about the results and how they were achieved.
  • Experience -You can’t be an expert at everything. A consultant bring a depth of knowledge based upon the uniqueness of their experience and particular history. For example, I was an attorney, claims handler, claims manager, operations director and builder of a claims department. Given my unique experience I have seen operational issues across the board and can speak to them at multiple levels. Most claims managers come from a purely technical claims handling role and as such may not have spent time addressing organizational ills.

But don’t just take my word for it . According to Entrepreneur Magazine’s Small Business Start-up Guide, here are some reasons organizations hire consultants

  • A consultant may be hired to identify problems. Sometimes employees are too close to a problem inside an organization to identify it. That’s when a consultant rides in on his or her white horse to save the day.
  • A consultant may be hired to supplement the staff. Sometimes a business discovers that it can save thousands of dollars a week by hiring consultants when they are needed, rather than hiring full-time employees. Businesses realize they save additional money by not having to pay benefits for consultants they hire. Even though a consultant’s fees are generally higher than an employee’s salary, over the long haul, it simply makes good economic sense to hire a consultant.
  • A consultant may be hired to act as a catalyst. Let’s face it. No one likes change, especially corporate America. But sometimes change is needed, and a consultant may be brought in to “get the ball rolling.” In other words, the consultant can do things without worrying about the corporate culture, employee morale or other issues that get in the way when an organization is trying to institute change.
  • A consultant may be hired to do the “dirty work.” Let’s face it: No one wants to be the person who has to make cuts in the staff or to eliminate an entire division.
  • A consultant may be hired to bring new life to an organization. If you are good at coming up with new ideas that work, then you won’t have any trouble finding clients. At one time or another, most businesses need someone to administer “first aid” to get things rolling again.

At the end of the day the consultant can speed change, improve your operation, add value to your organization and truly save your money.

Start-up – Lets get down and dirty and pitch in on everything

On day one as Vice President of Claims for Arch Insurance Company I found myself working in cramped space in Lower Manhattan where the CEO shared an office with others and the head of Professional Liability Underwriting found a happy home in an electrical closet. Arch was rapidly growing its underwriting and was binding new policies at a breakneck pace. After getting my credenza in the hall (with a shared phone as there were no more phone lines) I was handed the entire company’s log of claim files to get to work. This consisted of one property loss, and one notification of a casualty incident. It was easy to think that claim counts would be low for a while but that would change quickly. I was hired to manage and concentrate on the administrative operation, which would free the technical claims staff to focus on strong claims handling from the inception.

We needed everything including a claims system, best practices, litigation management, a way to manage and store claim files and methods for making claim payments. Given that we were a public company, all had to be done with strong controls in mind as well. It was a different challenge every day. We concentrated on things at first that would have little impact later. It was easy to go down paths that later became muddied or ones that should never have been followed. It was not known how quickly claims would grow and what types of policies were going to be written. At first we affiliated with Third Party Administrators to handle our intakes and possibly handle claims if needed over time they handled little direct matters and even less as it relates to intakes (they did handle claims our program business which were a whole other set of problems). In some ways we were driving blind as everything changed so quickly all the time. A decision was made that we needed to outsource a call center so off I went to research and meet with various providers. I never believed we would be the type of operation that needed to handle that many calls and over time my belief proved true and that project correctly fell by the wayside. This was common in claims as well as other departments. Decisions were made, paths were followed, change happened, and the path changed.

Trying to connect all the moving parts in the early days was difficult. Each group needed to accomplish tasks quickly and there was no time to stop and connect with everyone. Underwriting needed a clearance and binding system, finance needed a system to bill and account, actuarial needed a way to manage IBNR and rate new clients and we needed all of those things to happen to manage claims. Our path to a claims system also stopped and started. At first we were going to “rent” a system from one of our TPA partners. Then we were going to use a legacy system that had been adopted by underwriting and actuarial as a stopgap (we were a start up with legacy problems already). The path to what would become a home grown state of the art system will be the subject of another posting, but needless to say, like many, we started with a spreadsheet.

Change happened daily but we needed to be ready to handle the technical aspects of running claims. We began to hire heads of claim departments – one for Healthcare – one for Property and one for Directors & Officers. Of course there was no place for them to sit. You knew someone was being hired when someone walked in with a tape measure trying to figure a way to squeeze a new desk in. It was a fun and interesting time for everyone and those who thrived checked their egos at the door and rolled up their sleeves and pitched in where needed. Despite a rich investment, we might as well have been working out of someone’s garage. As they say – it was the best of times.