By TOM MURRAY, senior consultant, Lane4 Management Group Ltd.
The economic climate has sent shockwaves of fear and uncertainty through most business sectors over the last 12 months. Enduring tough conditions have meant massive upheaval, even for organizations that had previously seemed untouchable. With rate increases and challenging selling conditions, the insurance and risk management industry is no exception. Additionally, because of its multisector reach, the insurance industry can expect the pressure for increased profitability and the continued drive to reduce costs to rumble on.
Aside from tough external factors and selling conditions, the internal implications, including mounting layoffs at all levels, tightened budgets and a slump in bonuses, make any organization's ability to cope in difficult times extremely challenging.
Insurance brokers face the daily challenge of selling products to corporate risk managers who are experiencing the same widespread economic repercussions and budget cuts as them. Sales conversations are even tougher and profitability is harder to deliver consistently. Despite this, leaders' expectations are higher than ever.
Securing new clients is not the only priority. Developing relationships and meeting the needs of current clients is also crucial. Brokers must constantly balance their short-term focus with longer-term business development opportunities. They are expected to deliver exceptional customer service and provide unique support for clients' future objectives, demonstrating both ethical and operational efficiency.
Economic volatility makes risk increasingly difficult to assess accurately, and brokers' innovation is too often restricted by the heavily regulated insurance industry.
This array of challenges makes a clear picture of why people, who can not just survive under pressure but need to thrive on it, are vital to business performance. During these periods, it is the resilient people and organizations that will define success or failure.
Transparent communication, both externally with clients and internally with employees, is of utmost importance. But, our work with clients across the insurance sector demonstrates that it's not always executed effectively.
Insurers must be as up-front as possible when they discuss potential changes in risk appetite, coverage and pricing changes. This is also true regarding any regulatory rating changes, both positive and negative. The challenge is to balance the message and its timing appropriately; insurers will not want to scare someone away to get additional renewal quotes. The message needs to be clear, combined with reason for changes and steps being taken to mitigate negative issues.
Fluctuating or increasing rates make for difficult sales calls, and it's those who can navigate these challenges effectively that will be most successful. From asking the right questions in order to develop a genuine understanding of customers' needs, to building strong relationships and articulating a value proposition effectively, strong communication skills help brokers differentiate their service. For this reason a focus must be placed on the development of those skills.
With employees, open communication and direct feedback will create transparency, remove distractions and raise overall performance. High-performing leaders will be honest about the organization's position and welcome regular challenge and questions from their teams.
Conventional forums and process for communication should still be used but not at the expense of two-way communication, where employees can ask questions of senior leaders and discuss thoughts in a semi-structured way. The behavior of business leaders and their position as role models will support any successful communication. What leaders don't do and don't say are as important as what they do say and do.
Another key to performing under pressure is knowing which employees are an organization's best assets. Resilient organizations will continue investing in people when times are tough.
Maintaining focus on people development when the insurance sector is facing difficult challenges is undoubtedly tough. Historically, an organization's training initiatives are first to be cut during similar challenging times. However, in our recent client work across the insurance sector, we've noticed that budgets for critical skill training are still high on the priority list.
Our recent work with insurance brokers includes helping them develop their leadership skills (e.g., vision, support, challenge) and coaching skills (e.g., goal-setting, building relationships, providing feedback, asking effective questions), as well as developing a mindset to make them more mentally tough during these challenging times.
Personalized coaching offers continued support and challenge for individuals. Working with a performance coach provides a critical link between the acquisition of knowledge and skills from training and its application to a performance. This will help create a sustainable performance environment.
It's widely understood that brokers require a set of highly specialized skills--both actuarial and financial. Yet, alone, these are not enough to ensure these professionals can deal with the constant pressure, visibility and accountability that their role requires. Mental toughness, the capacity to respond positively to multiple, sometimes conflicting pressures to deliver consistently high levels of performance, has become an essential attribute for today's labor pool.
Mental toughness is a skill that can, and must, be developed. It can be improved by obtaining tools that allow individuals to thrive on pressure, develop more robust self-belief, making motivation work for them, and maintaining focus on the things that matter at the appropriate times.
VISION OF LEADERSHIP
A strong, meaningful and well-articulated vision that employees can connect with emotionally will be key to an organizations' vitality. Without a compelling vision, employees will lose their sense of relatedness to the organization. Often, vision statements are nothing more than words on a page.
With their employees, great leaders co-create a picture of where they are going and what it will be like when they get there. A vision is not something that is handed down from the top, but instead something that all employees can see their part in achieving something great.
Many of today's leaders in the insurance industry are feeling the pressure to only manage the current business environment. Leaders who focus only on the current crisis and neglect to plan for the long-term risk losing their unique selling proposition when it's needed most.
Innovation for organic growth and the development of new products must be encouraged so that, when better times are upon us, their organizations will be positioned well to capture opportunity. A balance of short- and long-term goals is as important now as ever before.
The initial shock of our current economic environment should be well over; we are entrenched in uncertainty and must forge ahead. Real leaders thrive on pressure; they do not hide when times are difficult. They must decide who is willing and able to take the organization where it needs to go and engage them in a compelling vision of what it will be like when they get there.
Both internally and externally, real leaders display confidence in their actions and create honest transparent relationships. An organization's people are the life blood of its long-term prosperity, and leaders must remain committed to their development. Better times are surely ahead of us, the question is: Who will be positioned best to seize the opportunities in front of them?
September 1, 2009
Copyright 2009© LRP Publications