Category Archives: Uncategorized

A Simple Perspective on Business – It’s Ultimately about the People

I have long held that organizational culture is the critical factor determining why some companies are wildly successful and others struggle to create meaningful value for their customers.  And culture is directly tied to people.  Great people executing a mediocre plan will outperform mediocre people with a great plan every single time, provided there is goal alignment across the team.

In that spirit, I want to share the guiding principles of TrueNorth Companies, an insurance brokerage firm, upon its creation in May 2001:

  • Profit will determine who exists.
  • Technology will determine who competes.
  • Quality will determine who grows.
  • People will determine who wins.

I don’t know that I’ve ever seen a more succinct understanding of business in the 21st century, regardless of industry – from high tech to medicine, from hospitality to finance.

While it’s laid out in black and white, let’s break it down:

For starters, if you don’t make money, your business will fail.  And unless you’re Amazon, which didn’t turn an overall profit for nearly ten years, you’ll fail quickly.  But simply making money today is no guarantee that your business will achieve its ultimate objectives.  After all, the Dallas Cowboys make plenty of money, but haven’t been to the Super Bowl in 25 years.  The New York Knicks make boatloads of money of too.  Yet they haven’t won an NBA Championship in nearly half a century (1973).  When your sole organizational goal is to win championships, these two franchises, worth over $10B combined, equate to nearly 75 years of combined failure. Making money just allows you to keep your doors open.

Today’s technology is nothing short of miraculous.  Our individual Fitbits have more computing power in them than the largest mainframe computers powering large enterprise applications in the 1970’s.  But no company is going to beat its competition based on its technology spending.  Technology is no more than what’s called ‘table stakes’. If you want a seat at the big boy table, if you want to truly compete, then you must be willing to make some serious investments in technology.  This will then give you a chance.  As the various state lottery promoters say, “you can’t win if you don’t play.”  But you only get a chance.  You need to do more if you want your investment to pay out.

One of the more recent trends in American industry has been around ‘Six Sigma’, one way of attempting to quantify (or qualify) quality. Building off the long-term Japanese commitment to lean manufacturing processes, American businesses recognized that they had to up their game to grow, and many jumped on the Six Sigma bandwagon, minting new Black Belts who could institute processes within their organizations that would drive material improvements in product and service quality. College football programs did the same, sending members of their staffs to learn from Alabama coach Nick Saban, known for his fanatical commitment to ‘the Process’.  Many of Saban’s acolytes have leveraged their learning to greater success; but just as many have not.  And none of Saban’s former coaches has won a national championship.  Saban’s programs of course have won six, the most ever.

Which leads us, as it always does, to people.   The quality of the people on your team ultimately determines who wins in the business arena, and in your market specifically.  It largely doesn’t matter how much short term profit you make, how good the technology is you utilize, or even how good your product or service is today.  The only thing that matters is how good your people are at executing in crunch time over the long haul (given an adequate organizational commitment to fiscal discipline, technology investment, and product quality.)  After all, none of us are interested in building organizations that have a few great years but whose achievements are ultimately not sustainable.  We want to build organizations that are built to last, and consistently win the battles against our competitors for years to come.

In short, we want to create what Nick Saban has created at the University of Alabama.  Yes, the school makes money on football, which allows them to exist in a D-1 world.  Yes, they utilize the best human performance technology, which allows them to compete against their highly skilled SEC rivals.  And yes, Saban’s process creates a high quality product that features very few defects (such as penalties or blocked kicks) throughout a season.  But why do they win championships?  Because layered on top of the money, the technology and a tried and true process, are the absolute best college football players on the planet.  Year in and year out, Saban manages to recruit the best talent to Tuscaloosa compared to his rivals, and then commits to their continued development. It’s as simple as that.  His people are ultimately better than anyone else’s people.   

There are obviously other achievements which are worthy of our admiration for their ability to harness and direct human potential.   Think of the Manhattan Project, the Moon landing, the development of vaccines, mapping the human genome, or the summiting of Mount Everest.  Every leader theoretically seeks to create an environment whereby such achievements are possible.  Granted, a company devoted to the manufacture of pipe fittings probably doesn’t seek to have a seismic impact on the overall well-being of mankind, but its leader is likely just as committed to being the top performer in its industry, and should seek to make the lives of its customers better through the delivery of high quality products at a competitive price.  And that objective requires just as much commitment from smart, motivated employees as does landing on the moon for their NASA counterparts.

Thank you, TrueNorth Companies, for crystalizing a 21st century business strategy in four short bullet points. Your principles really say it all.

How to Enhance Your Value…and be Rewarded for It

I know a young lawyer who is early in what should be a successful career, and I asked him recently how he was doing at his firm.  His concise answer summed up what I think is a great way to look at one’s value to an organization at any time in one’s career.  It went something like this: “I’m not the smartest person at the firm, I didn’t go to one of the elite law schools like many of my peers, and I don’t have material business or client ‘connections’, but I make sure I’m easy to work with, I eagerly jump in to assist wherever I can, and when I am given a project with a deadline, I usually complete the assignment early and without any issues.  So while I may not be the best lawyer, I’m building a solid reputation within my firm as a great colleague.  So I’d say I’m doing pretty well.”

I don’t know about you, but in my business, employees with that kind of attitude are worth whatever you are paying them and more.  Why?  Because at the end of the day, what every business craves is a job done efficiently, a job done properly, and a job done without drama.  In short, what you’re paying for, and therefore expecting, is a quality outcome.

As a consumer, think about some of the purchases you routinely make, whether it be cellular service, a haircut, car insurance, medical services, etc.  How often are we swayed by how glitzy or funny the advertising is, how attractive the storefront is, how impressive the provider’s credentials are?  How important are these factors when the product or service doesn’t ultimately meet with the expectation that was set?  Not much, because for most of us, what really matters is the outcome. Shiny objects may get us through the door the first time, but consistency, predictability and reliability are what keep us coming back.

Now let’s consider this same question from an employer’s perspective.  The most important purchases you make are not the raw materials or equipment procured from your supply chain. Rather it’s your ‘purchase’ of your employees. These are the real assets of your business.  If you hire the right employees, they will in turn make the right supply chain decisions (as well as all other business decisions they are tasked with.)

So what’s the message?  For employers, we all need to be smarter about how we hire.  We need to focus our assessments less on how impressive the candidate appears to be on paper, and more on determining how likely the candidate is to consistently produce a high quality outcome, and just as importantly, how likely is the candidate to fit within your culture.  Stated differently, if pre-employment assessment is done really well, you should be able to determine, with a high level of probability, if the candidate will be successful in your organization – before you hire them.  The only question post-hiring should be ‘how high can they go?’

As for employees, the message is far clearer, and ultimately more valuable.  Businesses need to deliver predictable, hassle-free outcomes for their customers to be successful over the long haul.  Your ability to successfully contribute to that process, at whatever level, is the difference between being an overlooked clock-puncher and a fast-rising superstar.

For those aspiring to be recognized within their organizations for their efforts, I recommend three simple rules:

1)      Be easy to work with.  It’s probably best to sum this thought up via a paraphrasing of the Golden Rule – “treat others as you would want to be treated”.  While everyone comes to the workplace with different educational backgrounds, financial backgrounds, religious backgrounds, family structure backgrounds, etc., once they walk through the organization’s doors, they are teammates, all striving together toward the same goal.  No one’s ‘better’ than anyone else, even though someone may have more responsibility.  Treat them that way.  Be a good colleague. And for goodness sake, say ‘please’ and ‘thank you’.  I don’t always remember the please part myself, but I go out of my way to make sure I say thank you in every business communication I send.  Gratitude never goes out of style.  I’ll let others judge if I am easy to work with, but I’ll die trying to be.

2)      Offer assistance.  Go out of your way to develop a reputation for being helpful. By sticking your neck out, not everything you’ll do will be fun, but much of it will be, and you’ll likely learn new skills and develop new relationships. You’ll build a network of trusted advocates for your work throughout the organization.  That kind of reputational capital is worth its weight in gold.    

3)      Be reliable.  Live up to your commitments, and never give anyone reason to doubt that an assignment you’ve been given will be delivered late or in less than a quality manner.  Provide brief interim progress reports to let people know how you are tracking on your assignments.  Double check your work to make sure it is error-free. And when you submit your work, don’t make a big deal about doing what you are paid to do.  Be humble.  If the work you submit is consistently completed in a quality manner, people will notice.

There’s a saying in service businesses that you are only as good as your last job.  And for many businesses (and people) that’s true.  But for those who commit to these three simple rules over time, you will find that the risk associated with a rare slip-up will be substantially reduced due to the reputational capital you’ve created, and the reward you will reap for being a quality outcome-based professional will be worth it. 

A Constructive Approach to Leading People, Teams, and Organizations

A situation arose recently that caused me to step back and re-assess a fundamental responsibility of organizational leaders today – how do we lead/manage people in a manner that achieves our business’ goals, meets our employees’ career development needs, and lives into a larger set of values that current day organizations should (hopefully) hold? 

It goes without saying that the demands of leadership get more difficult every day, regardless of industry sector.  The current COVID-19 pandemic crisis has made this abundantly clear.  If we weren’t already grappling with:

  • the accelerating advancements in technology,
  • our newest employees (Gen Z) calling for us to take a meaningful stand on social issues,
  • the continued steady rise of health care costs,
  • the impact of social media on the way we sell and market,
  • the virtual disappearance of geographic boundaries to our traditional markets,
  • and so much more,

the pandemic has acted like an accelerant to an already raging wildfire.   While I have often contended that business is not that difficult – make a promise, deliver on that promise – the reality is that our businesses are made up of people, each one different from the next, and getting everyone to work together toward a common goal is often just plain hard.

So, confronted with a recent situation, I thought it useful to step back from the fray and jot down some very basic principles that would re-ground me and provide a basic framework for how leaders can create a sustainable environment that supports organizational success.

# 1 – Whether you are running a company, a business unit, or an office, you will only win as an aligned team, not as a group of disparate employees focused on individual recognition and accomplishment.

That said:

  • There is a place for individual praise and recognition.  Praise is always a good thing.
  • Individual excellence generally leads to team success, so long as it is not pursued to the detriment of others.

I’ve always believed that a football squad best demonstrates the value of team focus vs. individual focus.  While it is possible for an individual player to put up exceptional numbers while playing within a team-focused framework, a team is rarely successful when one or more individual players are focused on individual statistics or awards as their primary motivation.  All you have to do is listen to great team leaders like perennial All-Pros Russell Wilson and Drew Brees following a big win, who emphasize the hardwork of their teammates in making their team’s success possible.  Notably, each has won a Super Bowl and neither has won a league MVP award, a trade-off each leader will gladly take.  We can find just as many remarkable talents who racked up big individual numbers but never advanced very far in the playoffs, often because they could not take the focus off of themselves for the good of the team.    

# 2 – Praise and/or positive feedback should be offered publicly whenever possible or appropriate.  It is reaffirming when one’s peers hear that you have done a good job, and it provides motivation to do a good job again.  However, critical and/or developmental feedback should always be delivered privately, behind closed doors. There are few things more de-motivating than being criticized in front of one’s peers, and decreases the likelihood that the coaching will be properly incorporated into future performance.

#3 – Competition between teammates can be constructive and motivating, so long as it is not used as a weapon.  Those performing well will strive for greater success, and motivated employees will take needed action to ensure they are not at the bottom.  However, constantly chastising or incessantly highlighting those at the bottom can temper their drive to succeed.  If your business requires a team to succeed, not just a few superstars, competition must be properly managed.

#4 – Words matter.  As leaders, we should always be as moderate, temperate and constructive in our language as possible, versus being inflammatory, judgmental and argumentative.  We should talk to our teammates in the same manner we would want them to speak with our customers.

#5 – Employees have a reasonable expectation to be supported by their teammates. While this may seem an obvious tenet, too often we are not observant, and we don’t see that someone is in fact drifting out in open water, with no one helping them back in the boat.  As leaders, we need to ensure that our employees are not just all in the boat together, but in fact pulling the oars in the same direction, focused on the same destination.

#6 – Employees have a reasonable expectation to enjoy what they do.  Presuming that an employee likes their functional work (and is good at it), it is in our best interest to make the performance of the work a pleasant experience.  We want them to be excited to get out of bed each day, come to work, and take good care of our customers.  And hopefully it is enjoyable for us too! 

#7 – This is arguably the most important principle, because it speaks to culture, the linchpin for any effective leader. It is the responsibility of an organization – and by direct extension its leader – to create and support a business environment in which focused, motivated professionals can perform their job functions to the best of their ability. Provided that the organization’s business strategy is sound, a leader who succeeds in this component of their job cannot help but be successful.

That said, there is a corollary to this principle, which is that it is not the responsibility of an organization to cater to every desire of every employee.  That would lead to chaos.  An essential component of an organization’s culture is an established set of norms to which all employees generally adhere.  These norms, set by the organization’s culture, lead to the concept of ‘fit’.  At one time or another we have all said something along the lines of “’Joe’ was a bad fit.”  Sometimes when a bad fit exists, it is the fault of the organization, often due to there being a weak culture.  However other times it’s literally just a bad fit, and no one is to blame.

#8 – There is no value to keeping a private scorecard of ‘gotchas’, either for an employee or their manager.  Leaders should take a holistic approach to the performance of each employee, constantly assessing their value to the team and the organization, both short-term and long-term.  No one has ever shared with me that the reason their long-term marriage is successful is because they kept a scorecard of their spouse’s past slip-ups that they can refer to whenever it benefits them in an argument.

#9 – It seems obvious, but it’s worth overtly stating – no intelligent leader or organization is interested in seeing an employee fail.  There is too much of an investment made in an employee’s hiring and development to hope for failure.  The most sensible path is always managing toward success. 

#10 – While #9 is true, it is equally true that not every employee ends up being successful in your organization.  Even when the cultural fit is good, there are times when an employee simply cannot meet the expectations of the role and a change must be made for the good of the organization. When such a situation arises, leaders understand that such a change is also for the ultimate good of the employee. People deserve to have an opportunity to be successful.  As part of a professional termination process, leaders should guide them toward an alternative path that can lead to their personal success elsewhere.

When I first wrote these down this unnumbered list of principles, I had no idea there would be ten of them, but somehow that seems appropriate, as they really do form the bedrock for a sensible approach for creating culture, leading people, and wrestling with the day to day challenges of managing a diverse staff of employees.  I have great confidence that anyone who implements these principles will be well on their way to creating the type of organization that motivated professionals would want to work for, and that your competitors would not want to compete against.

So go forth and lead.

Why ‘Why’ is the X Factor

Ever since we were kids, we have always asked the question “Why?” – “Why can’t I have any candy?”, “Why can’t we go to Florida?”, “Why can’t Johnny sleep over?”  All of us, in unison, can repeat the answer we were most commonly given by our parents – “Because I said so.”

Interestingly enough, our insatiable need to know ‘why’ did not abate as we entered the workforce, and I increasingly see the manner in which companies respond to the ‘why’ question as critical inflection points that drive organizational culture, and in turn drive (or limit) overall organizational success.

As a general rule, people want purpose in their lives.  We seek purpose in our family relationships, our social networks, our ‘off time’ (church, volunteering, leisure activities, etc.), and if we are lucky enough, our vocations (unfortunately, not everyone is passionate about their current career position.)  We want to be working toward something, we want to add value, we want to make a difference, we want to understand how what we do is an important part of a bigger objective. We are generally not interested in just punching a clock, taking orders, going through a rote routine, and repeating it day after day.

We want to know ‘why?’

  • “Why am I being asked to do this?”
  • “Why is this important?”
  • “Why did we choose to take this approach as opposed to that one?”
  • “Why is my role changing?”
  • “Why are we implementing this new system?”

The ‘why’ questions are endless because committed, motivated employees actually want to fully support our companies’ missions and strategies.  They want to know how what they do each day supports those objectives, but all too often we as leaders are still giving “because I said so” answers.  Few things are more culture killing than giving what is effectively a response that a parent would give to a nine-year old.

Successful leadership unleashes the passion that exists in all motivated employees by explaining how the decisions you make, and the work you ask them to do, contributes to achieving the organizational objective.

For example, let’s say you institute a new procedure that requires an additional step to your current sales process.  You choose to send a bland communication to your team that simply states “you are now required to complete this new form every time you take an order.” With no further context, this change will in all likelihood be viewed as ‘just more bureaucratic paperwork’ by your staff.  Alternatively, if, when you communicate the new procedure, you explain that the new form will allow the company to do a more effective job segmenting the market, leading to a more effective targeting of sales prospects and thus drive new revenue opportunities, you have directly addressed the ‘why’.  You have clearly stated why the form is important to the organization’s success.  The employees who need to complete the new form will have the knowledge that if they do their part well, they will have played a valuable role in increasing the revenue of the company.

With the economic expansion reaching its ten-year anniversary and labor markets incredibly tight, it becomes increasingly important to maintain a corporate culture in which your employees understand exactly why they do what they do each day, and how what you ask of them contributes to your organization’s success, and their own individual success.  Those leaders that consistently answer the ‘why?’ with clarity and conviction will find that achieving alignment of purpose throughout their organization is seldom an issue.

Back from Sabbatical

For those familiar with sabbaticals and the Old Testament origins of the term, you know that every seven years, Jews in the land of Israel are expected to take a year-long break from working in the fields.  In modern times, sabbaticals are most often associated with colleges and universities, where professors often take a semester or two off every seven years to research a topic of interest.  However, sabbaticals have found their way into the business world as well.  A good friend of mine has worked at Intel for over 20 years, and every seven years he has been afforded eight weeks of paid sabbatical to go off and recharge his batteries before returning to the hectic world of high tech.

Why my interest in sabbaticals?  Well, setting aside the fact that I believe strongly in them as a mechanism to allow valued employees to pursue personal interests for a material chunk of time (climb Mt. Everest, teach a class at one’s alma mater, volunteer full-time at a summer camp, travel across the country in a motor home one last time with the kids, etc.), more to the point, I have been on one from this blog for almost exactly seven years.   And I think that’s long enough.

What have I been up to these past seven years?  A lot.  I spent four tremendous years helping a New Zealand-based company gain a foothold in the US auto collision repair market.  Our team rolled out a transformative electronic marketplace which allows body shops to buy collision parts efficiently and profitably.  The beachhead firmly established, I then returned to the disaster restoration industry nearly three years ago by joining BELFOR, the world’s largest and most capable restoration firm.  I have helped the team continue to grow the business in manner that is the envy of our peers.

As you might surmise, much has changed in the disaster restoration industry over the last seven years, but as the saying goes “the more things change, the more they stay the same.”  Our industry continues to struggle with the same issues that it has for decades, though additional issues have popped up.  The good news is that there remain dedicated professionals who are committed to doing their best to address those issues for the benefit of all.

Along this vein, my last post in April 2012 encouraged industry stakeholders to attend the second meeting of the Property Insurance Conference, or PIC on April 15, 2012.  The PIC was created in January 2012 with the express purpose of bringing all parties from across the industry to the table on a regular basis to collaboratively discuss difficult issues facing the industry and seek common ground solutions to them.  And when solutions couldn’t be found, to at least create a greater understanding amongst all parties as to why the other parties behaved the way they did.  It’s very hard to vilify another party (as some are wont to do) when those parties come to the table and discuss their perspectives openly and in good faith.

I’m sad to say that the PIC died a rapid death shortly after I left the industry in May 2012, but I’m just as excited that the concept was resurrected as the Property Insurance and Restoration Conference (PIRC) in October 2016.  We are now seven(!) meetings into the new forum structure and I am excited with the progress being made.

For Bob Newhart fans, you know that arguably the greatest television series finale in history occurred when Bob woke up beside Suzanne Pleshette (his wife on the Bob Newhart Show) at the conclusion of the Newhart show, telling her that he’d just had the weirdest dream.   Well I feel about the same way about this blog.  When I ‘fell asleep’ seven years ago, I had just encouraged people to attend the PIC in Orlando in April 2012.  And now, as I return to my writing seven years later, I am encouraging people to attend the next PIRC in Frisco, TX on June 27, 2019.

I am delighted to be recharged.

Are You Attending this Weekend’s Property Industry Conference?

The annual PLRB Claims Conference opens this Sunday afternoon in Orlando, with a few thousand insurance executives, claims personnel, and suppliers to the property claims industry in attendance.  I’m sure it will be another outstanding educational event.

On Sunday morning, before the PLRB officially opens, the second meeting of the Property Industry Conference (PIC) will take place at the Orlando World Center Marriott from 8am to 1pm.   The PIC represents a structured open forum where all of our industry’s primary segments – insurers, restorers, software providers, manufacturers, training organizations, independent adjusters, consultants, associations, etc. – can meet to discuss and effectively address issues that create inefficiencies in the property claims handling process.  Through the collaborative work of PIC participants, all industry segments can benefit, with the ultimate winner being our common customer – the property owner.

The first meeting of this group in Austin, TX in January produced some encouraging momentum for our industry in tackling some tough issues.  I hope you are planning to attend this second meeting and continue the ball rolling.

If you are looking for more information on the Property Industry Conference or if you want to pre-register for the meeting, you can go visit http://www.propertyindustryconference.com.   I know that same day registration will also be available.

Closing the Gap – Part 18 – The Final Part

It seems fitting that as a lifelong and fanatical golfer, Part 18 of this month-long series is the final part.  And like any 18th hole, it is the most challenging but most rewarding one of the round.

In my last post I recommended the creation of a Property Industry Conference so that all parties in our great industry can come together on a regular basis to discuss and resolve issues that face us, allowing each industry player to compete more efficiently and effectively for the direct benefit of our common customer.  I am pleased to say that this recommendation is now being made a reality.

On Sunday, January 22, 2012 at the Hyatt Lost Pines Resort outside Austin, TX, the inaugural Property Industry Conference will take place.  Facilitated by Mike Condon of Condon Consulting, this very first, one day meeting will commence at 9am and is open to anyone in the industry.  There is no charge to attend this first meeting, which will be focused on explaining the Property Industry Conference (PIC) concept and determining what types of issues the attending group would like to see addressed by the PIC.  The highly collaborative session should set up a very productive second PIC meeting this April in Orlando, FL.

If you are interested in learning more about the Property Industry Conference, if you’d like to review the agenda, or if you would like to register for the inaugural meeting, please visit the PIC website at www.propertyindustryconference.com.  There are already several dozen people registered from all segments of the industry, so the concept is off to a great start.

I hope to see you there.

Closing the Gap – Part 17

Having discussed a solution that would be effective, but unfortunately is out of our immediate control, let’s look at a solution that is.

Solution 2 – Create a Property Industry Conference

As was stated in Part 12 of our series, the leading barrier to progress is that the property insurance claims and the property damage repair industries do not institutionally speak with one another. There currently exists no meaningful forum to discuss and resolve structural issues that affect both industries for the benefit of both industries.  And in this regard, it is not just insurers and restorers who need to have a dialogue. It is also information providers (e.g., Xactware), product vendors (e.g., DriEaz), TPAs (e.g. Code Blue), and other third-party service providers (e.g., Cunningham Lindsey, FRS Team, Horticultural Asset Management, Wondermakers, etc.)  It is the entirety of the property damage industry.

Therefore, what I propose as a more practical solution is to collectively create a new forum called the Property Industry Conference, or PIC, that would meet four to five times a year to collaboratively address significant issues facing our industry. If this sounds like a pie in the sky concept, it is not. In fact, it is a time-tested idea that works. All we have to do is look to our colleagues in the auto collision industry to see this.

The Collision Industry Conference was created in 1984 and has a clear mission:

“The Collision Industry Conference (CIC) is a forum where collision industry stakeholders come together to discuss issues, build broad understanding, find common ground and communicate to the industry at-large, findings and possible solutions.” 

Its vision is a noble one. It calls for “a collision industry in which all segments work together efficiently, effectively, ethically and respectfully to enable a complete and safe repair while facilitating the most pleasant experience possible for our mutual customer, the consumer.” 

Amazingly, it works.

One of the reasons it works is because it is open to everyone and there is no hierarchy. Everyone comes to the table as equals four to five times a year. Chairpersons of the CIC are elected every two years from amongst the entire industry, and past chairpersons have included body shop owners, insurance claims executives, information provider executives, consultants and newsletter publishers. Everyone gets to participate.  Committees that do real work have participation from anyone who wishes to be involved, representing all industry segments.

Twenty-eight years after its creation, there are currently 11 CIC committees to address critical issues as defined by all CIC participants. They include Education and Training, Business Improvement Task Force, Governmental, Human Resources Task Force, Data Privacy Task Force and Insurer Relations. Committee members currently include representatives from Amica, Allstate, Storm Appraisal, California Casualty and Progressive, in addition to Chrysler, Mercedes Benz and nearly 50 other industry organizations and companies, many of them independent auto body shop owners.

Working committees do not exist merely to exist. When their work is done, they disband  and their results are available for all to use.  There are 20 such committees whose work is complete (such as Cycle Time Task Force, Vehicle Repairability, Estimating Practices and Procedures and Database Task Force), their tasks have been combined with other working groups (Legislative combined with Governmental), or they have been spun off into a stand-alone organization (Electronic Communication.)

It is this last committee that represents CIC’s greatest task-oriented achievement.   Fifteen years ago, the body shop industry faced a financial crisis because there were three computerized estimating systems in the industry (think of them as Xactimate, Simsol and MS Boeckh) and different insurers required the use of a specific system to participate in their network programs. This required thousands of body shops to license all three estimating systems. They often ran on three different computer systems, tripling overhead expense because none of the systems could talk to each other through a standard interface.

To stem this crisis, CIC created the Electronic Communication Committee. Its task was to create a common communications standard so that a body shop could license the estimating system of their choice, and it would effectively communicate to any insurance carrier in the language that the insurer wanted. In essence, the goal was to meet everyone’s needs in the most efficient and affordable way possible.

That committee spawned the Collision Industry Electronic Commerce Association (CIECA). For the last decade, shop owners have made their own choice about estimating systems rather than having it dictated to them. CIECA currently has five officers and 22 trustees, including representatives from all segments of the industry.

In spite of the valuable attainment of estimating system interoperability, the greatest overall achievement of CIC remains the fact that insurers and shop owners, parts suppliers and estimating system providers are all at the same table. They are working together to solve common problems so that all can prosper. Imagine the impact that such a structure could create within our industry.

Indeed, imagine BELFOR, Crawford Contractor Connection, American Family, Xactware, Dri-Eaz, DKI, Itel, Alacrity, Symbility, Liberty Mutual, IICRC, Home Depot, Jon Don, WonderMakers, Business Networks, Fiberlock, Sunbelt Rentals, State Farm, Code Blue, RIA, Paul Davis, independent restorers and dozens of other entities meeting regularly as equals at a Property Insurance Conference to address the issues facing the industry. To be sure, many of the participants will be fierce competitors. But there is a difference between two companies competing strategically and two companies flushing money down the drain because of market barriers that create waste without creating value. Imagine if we could collaboratively figure out how to:

  • best address the impact of mortgage companies holding on to claims payments that rightfully belong to a contractor for work provided,
  • reduce the necessity of filing liens against property owners,
  • enhance communications between repairers and insurers, and
  • develop best practices for documentation so that claims could be paid faster,
  • and much more

The benefits to our industry are endless and the actual cost of action very small.

Collectively, we can do it.

At our company, we have enjoyed a wonderful relationship with one particular client. At the very heart of our strategic success with them is a single word: communication. It is the focus of everything we do because we jointly understand that high quality communication minimizes problems that waste the precious resources of time and money. We have minimized the gap between insurer and restorer with one client, proving it can be done. It is my hope that we can extend this simple concept to our entire industry through a Property Industry Conference so that the gap can be minimized by all.

(To be continued with the final installment of this series…)

 

Closing the Gap – Part 16

Welcome back from the holidays and Happy New Year.

For the last dozen-plus posts we’ve been talking about the challenges related to bridging gaps between restorers and insurers, and for that matter, all parties involved in a property-related claims ‘transaction’.  We’ve itemized challenges, identified barriers, and discussed facts.  Now it seems appropriate to offer up solutions.

From my perspective, there are potentially many solutions, but for now I want to discuss two.  Here is the first:

Solution #1 – HMO and PPO Policies

For nearly 20 years, I have been an advocate for HMO and PPO policies in the auto insurance world, and for 10 years, I have been an advocate for a similar structure in property. The impetus is not related to cost control; it is all about expectations.

When consumers buy health insurance, they generally know exactly what they are buying. The biggest reason is because of our general familiarity as consumers with the health care process; we use the system frequently. So before a consumer buys a policy, they check doctor lists (is my doctor in the network?), hospitals, co-pays, exclusions, etc. There is virtually never a surprise over which doctors a consumer can use or what will be covered.

However, whenever consumers buy auto and property insurance, and especially property, they generally have no idea what they are buying. They are generally ignorant about the claims process and they have usually never read the policy. Most people experience an insurable loss (a car accident or property damage) once every seven or more years, so even if they have had a previous claims experience, it is likely they have forgotten the details about it. Thus most claims events are procedural surprises with significant differences between expectations and reality.  By then, it is too late to fix the expectations damage that has been done.

By offering two types of policies in property – one in which a policyholder must use a restorer within the insurer’s network (an HMO policy) and one in which the policyholder can use any restorer he wants without pressure (a PPO policy) – the purchaser will know what to expect upfront.  They can pay less and have fewer choices or pay more and have greater choices. By taking this approach, we could eliminate all the anti-steering legislation and complaints about insurers “influencing” policyholders because each purchaser would have a clear, overt choice upfront when he buys. There would be no need for any alleged “steering” and no soapbox speeches about consumer choice.

Restorers would also have a clear choice. Each restorer could evaluate each insurer’s HMO program and determine if they wished to pursue participation. If they should choose not to, they would still have equal access to all the PPO policyholders of that same insurer.

Unfortunately, as effective as this idea may be, implementing this approach is out of the hands of restorers and the insurance claims community. This idea solely rests with an insurance company’s product management team and underwriting department. Until those folks can get their arms around the concept, we will be left with the confusing, one-size-fits-all property insurance policy we have today.

(To be continued…)

Closing the Gap – Part 15

Fact #3 – Auto Portends Property

This is a simple one.  Because of their lesser complexity and, to some degree, massively higher volume of claims, insurers have tended to implement material changes to their auto claims processes before they implement comparable changes in property.  As a general rule, the implementation of property claims strategies tend to trail similar auto strategies by about 10 years.  The clearest example of this is direct repair programs (DRPs), or networks. DRPs were introduced to the auto world in the later 1980’s.  The DRP concept in property was introduced in the later 1990’s.

So What?

So there you have it.  Ten core challenges, one critical barrier, and three overriding facts.  All of which must be considered before attempting to propose any type of solution which will close the gap between insurers and restorers.  When we return from the holidays and embark on a new year, I will offer up one possible solution, and then follow that up with a more desirable and practical  solution #2.

(To be continued…)