On the chronic shortage of skilled adjusters and claims managers in
today’s insurance marketplace.

By Cecil Jaipaul

(reprinted with permission from ci – Canadian Insurance Magazine, January 2002 issue)

A recent study by Conning & Company confirmed what many
on the front lines of claims management have known for some time — good people are hard
to find, and even harder to keep.

The report, entitled “Adjusting to New
Realities”, argued that cuts in recruiting and training of new claims adjusters have
left many claims departments severely weakened and overworked.

“There are many experienced professionals at the
executive and senior management level, but not enough people lower down the line who can
be expected to take their place,” wrote author and Conning assistant vice president
Geri Riley. “The scarcity of future claims leaders needs to be addressed immediately.
The claims division is the most public part of an insurer and it is responsible for
retaining customers as it is for minimizing losses.”

You will get an earful if you ask a claim representative
what it’s like to be an adjuster these days. Yes, there’s a lot of hype today about the
“new adjuster.” And there are probably as many definitions as there are
champions and skeptics. But amid the rhetoric, one fact remains clear: the role is
shifting from processing-type functions to knowledge-based skills. That means survival
increasingly depends on people -their intellect, creativity, energy and commitment.

To get some perspective, the shifting role of the knowledge
worker is certainly not confined to insurance claims managers. According to a new Towers
Perrin study of nearly 6,000 North American workers across all organizational levels, this
shift is a result of the so-called talent wars of the mid-to-late 1990s, which
significantly changed the mindset of employees. It spawned a workforce that is more
sophisticated, knowledgeable and individualistic than ever before.

These characteristics remain entrenched even as the market
for talent softens. Thus, far from being able to feel secure about needed talent,
employers still see a need to compete aggressively in the labour markets and find new and
creative ways to recruit, retain and engage the talent they need for success.

The study, conducted in the U.S. and Canada during April
and May of 2001 and entitled “The Towers Perrin Talent Report: New Realities in
Today’s Workforce,” focused on employee views, examining attitudes of a diverse range
of people working for medium to large companies across regions and industries. It also
targeted a subset of respondents who have managerial roles and are involved in recruiting
and retention. Both groups affirmed that the shifting dynamics at work in managing talent
in today’s business environment have created a new reality for employers.

From the employee perspective, four key trends emerged:

  1. Employees generally are “in the market,” in some way, most of the time.

  2. Employees don’t place much emphasis on a long-term relationship with a particular employer.

  3. Employees define their relationship with their employer in increasingly complex ways.

  4. Employees care about different things when they’re joining a company than when they’re
    deciding whether to stay or how much of their discretionary effort to give.

Many adjusters tell me they are essentially “job
scanners” saying they would consider new opportunities or other offers. They keep
their eyes and ears open in various ways: the largest number said they have talked with
friends at other companies and or talked with a former colleague who has recently left the company.

The job scanners are a whole new category. They may not be
ready to leave tomorrow, or even next year, but who are scanning job boards, posting
resumes and waiting for something interesting to pursue. And they represent a potential
“time bomb” for employers, especially since those most likely to be job scanners are the
30- to 44-year-olds who are potentially the future leaders of an organization or claims department.

Today, adjusters have become far more knowledgeable and
sophisticated about employment and job searches than ever before. They have a wealth of
information about jobs, salaries, culture and management style readily available to them
that they can collect without indicating their desire to change jobs in any overt way.

With high-end job-hopping rampant is some adjusting units,
retaining the best is tougher than ever. That means companies must focus more on the
morale, productivity and job satisfaction of their adjusters. Are Canadian insurers,
brokers and independent adjusters up to the people challenge? Are they well positioned to
get and keep your fair share of talent in a tight and competitive “new adjuster” market?

Ironically, because claim departments count adjusters as
“expenses” rather than assets, bottom line operating salary budgets can appear
to temporarily improve when a more experienced, higher paid adjuster leaves. Some
companies have recognized that turnover and replacement may be one of the most costly
problems. These companies are now attempting to calculate the far-reaching financial
impact of turnover and focus on reducing it.

To gain a competitive edge, some companies are shifting
their strategic focus from cost management to innovation and reward strategies to support
this new direction. To get there, some are creating study groups and retaining consultants
to find ways to help them feel secure about needed talent. Attracting the right claims
people, who have a clear handle on their market value, and then getting them to do their
best work, requires employers to think more in terms of a collection of individuals —
each with very different goals and needs — than a homogeneous group of workers.

Experts say companies that aspire to top performance need
to focus just as much attention, if not more, on engaging employees once they’re on board,
and focusing them on the things that will produce results for the business.

The specific drivers of adjuster engagement include such
things as: a reputation in the market as a good employer; an environment that supports
teamwork and innovation; leadership effectiveness; a culture that recognizes top
performers; development and advancement opportunities; and a clear line of sight between
employees’ day-to-day activities and business goals.

So how can employers avoid the disruption and costly
searches and training that occur when a position is vacant? Well, the typical — and easy
– answer is, pay your adjusters more money! It is certainly a part of the equation, but
not the whole answer. Many adjusters say pay alone won’t keep them in a job. When asked to
estimate how much of compensation (base salary plus annual incentive) increase they would
need to leave their current job, several adjusters told me they would require an increase
of just 5 to 10 per cent.

A recent study by Aon Consulting – Canada @ Work, shows
that when a company makes a commitment to employees by recognizing the “whole
person” and balances this with a well understood, sound, strategic organizational
direction, employees respond with their commitment to the company. Through Aon
Consulting’s Workforce Commitment Index (WCI), Canadians told employers that the five most
powerful drivers of workforce commitment are:

  1. Management’s recognition of personal and family life.

  2. Opportunity for personal growth within the organization.

  3. The organization’s commitment to satisfying customers’ needs.

  4. Competitive pay scale, consistent with industry standards.

  5. Co-workers’ skills keeping pace with the demands of their jobs.

The Aon Canada @ Work study clearly found that employers
who help workers balance work and family needs will not only retain more of their
workforce, but attract new recruits looking for companies with a “people-first
agenda,” such as progressive work-family programs and pay-for-performance incentives.
Note where pay ranked on the employee list.

While there are several things insurers can do to
motivate adjusters, first they must find them. Many recruitment campaigns are haphazard
and poorly designed. There is often little targeting of college graduates or promotional
work done to attract students. Not just that, but companies should do regular audits to
identify talent in their adjusting units. Letting individual supervisors control the
agenda is a bad idea. Too many supervisors undercut successors who shine too brightly.

Once identified, keeping the best and brightest adjusters
loyal usually starts with compensation. However, compensation does not mean a bidding war.
It does involve succession planning. A reward structure that is both valued by senior
management and recognized by line management should be developed. More thought could be
put to the use of nontraditional reward systems like profit sharing, lump-sum bonuses,
pay-for-knowledge, earned time off, and two-tier salary systems.

Few insurers offer tangible rewards to their claim
adjusters. Even the best paid claim supervisors and managers appear to want more
recognition and respect from senior managers. As a result, many competent adjusters have
left positions in companies to become contract consultants.

Adjusters not only value a range of tangible and
intangible rewards, but emphasize different things at different stages of their careers
and working relationships with a company. While competitive base pay and health care
benefits are critical fundamentals, other elements are more or less important depending on
whether the adjuster is deciding to join, stay or fully commit.

What brings an adjuster to a company is different from what
keeps him or her there and is also different from what engages that person; that is,
capturing the discretionary effort that produces top performance. If employers fail to
distinguish among these, they fail to realize full return on their investment in people.

Just as an insurance company’s strategic plan charts its
future direction for revenue and other related activities, it is the responsibility of
claims managers to articulate the goals and objectives of the department. To get the
insurance adjusters’ attention, some insurers are making extra effort to promote their
company’s benefits and work environments. Some are conducting cultural audits to monitor
how the organization’s culture reveals itself to employees and how they can influence or
improve it. It is these kinds of things, rather than knee-jerk strategies of outsourcing,
pay hikes or blind faith in a company’s reputation, that will produce results.

Cecil Jaipaul is president of Jaipaul Consulting and
can be reached at (905) 427-2372 or [email protected].