Leading A Professional Service Organization Strategic Leadership Imperatives in the Insurance Industry. .Richard O. Ikiebe.
Introduction Leadership has been around for thousands of years Yet we still are unable to contain it in a single definition we can all agree on Leadership is a complex concept which is continuously evolving The concept of leadership has many applications and implications The result usually depends on the culture and context in which it is being applied In recent years, much has been written on Leadership
Evolution of Leadership StylesLeadership thought has evolved over time from many identifiable stylesStyle on its own has applications to different contexts: ◦ in business, medical, non-profit or charity, ◦ education, religious or spiritual groups and ◦ even at the family levelIt is not surprising that most people define leadership, from their perspective ◦ the version that makes the most sense to them
Leadership Theories and StylesA review of leadership literature reveals an evolving string of theories, from: ◦ “Great Man” and “Trait” theories to ◦ “Situational” and “Transformational” leadership.Early thought focused upon the characteristics and behaviors of successful leadersLater thinking begin to consider the role of followers and the contexts of leadership.
Leadership Stock in Short SupplyLeadership has generated so much interest for one reason: it is in critical short supplyMcKinsey & Co. in 2000, surveyed about 7,000 executives. Only 7% could strongly agree that: “Our Company has enough talented managers to pursue all or most of its promising opportunities”Tom Peters said: “We’re going to see leadership emerge as the most important element of business- the attribute that is highest in demand and shortest in supply”
Warren Bennis’s Four CriticalAspects of LeadershipAdaptive capacity: A sense of resilience, hardiness, and creativity. The means by which you seize opportunitiesEngage followers: the capacity to engage followers in shared meaning – to align the (work force) around a common, meaningful goalMoral compass: Leaders will have to rely on a moral compass in order to lead effectively – a set of principles, a belief system, a set of convictions
Warren BennisSelf-mastery: Leader must spend quality time in a continual process of finding out about who they really areThey must learn their own voice, how they affect other people, & learning about emotional intelligence
Problem with the Super LeaderInaddition to the “soft” skills, the leader is also expected to: ◦ display excellent information processing ,walk the talk, ◦ project management, customer service delivery skills, ◦ build partnerships, proven business political acumen, ◦ show incredible drive and enthusiasm, ◦ have a can do attitude, demonstrates innovation, ◦ creativity and thinks “outside the box”.
The Superman Leader ◦ They must be entrepreneurs who identify opportunities ◦ they like to be challenged and ◦ they’re prepared to take risks ◦ they are people of high moral values – honesty, integrity, empathy, trust, ethics and valuing diversity. ◦ The leader is expected to show a true concern for people that is drawn from a deep level of self- awareness and personal reflectionItis difficult to find this multi-talented individual with a wider range of attributes
Re-Thinking LeadershipMost leadership thoughts take bearing mostly from one individual’s success story a rather than from a more holistic perspectiveA school of thought gaining increasing recognition is that of “dispersed” leadershipIt views leadership as a process that is diffuse throughout an organisation rather than lying solely with the formally designated ‘leader’
Complicated SectorFormer CEO of Groupama, Pierre Lefevre once said, “People do not understand the insurance product”He also said: “Many companies do not value experience and knowledge”Regulators are confessing: ‘We have found that insurance is a hell of a lot more complicated than banking’ (Leading EU regulator, 2004)It is always more complicated than we thought!’ (Andrew Moss, CFO, Aviva)
More Complex Than Outsiders Believe‘Insurance should be simple – you pay a premium to cover a risk or you put aside some money for the future. From the point of view of the consumer, nothing could be easier. This apparent simplicity, however, masks a highly complex industry, driven by a wide range of different issues.’ (KPMG 2007)
Key Leadership/ManagementChallengesThe Very Insurance Business is Different.“A long term risk business”Quick quantum loss possible overnight after long gestationLaw of large numbers good on paper, and if you can bring in the premiums.You can’t know which policy will bring down the house roofChanging WorldThe world is riskier, people are more risk averseEconomy uncertain, & IT is complex, poor and shifting regulatory quick sand
The Leadership ChallengeLack of Understanding.Offers intangible and suspicious business proposition.The average customer an unwilling purchaserComplex pricing and claim issuesThe Sins of the Haunting Past.Insurance is scam. Fraud stories abundantEthical (Integrity & trust) are a collective industry problem.Too hot for any one leader to deal with. Yet it affects each leader differently and separatelyThe Unsteady Cycle. Up today, down tomorrow. False highs. Real lows! Forced to count the chicks too early
The Leadership ChallengeMarketing –Limited product lines, mostly generic. Hard to differentiate yourselfMarket power in the hands of branded intermediaries. Agents. Banks. Affinity groups.When it’s good they get the credit. When it’s bad, you carry the short end of the stickRegulation and GovernmentHow do you deal with an activist regulator? Comparing chickens with duck – banks and insurance companiesPoor understanding of the real world of underwriting risks not text book knowledge
The Leadership ChallengeVanishing Intellectual Capital.Poor strategists. Deadwoods manning posts. Known bad eggs still in business. Will you hire a competent bad egg? Management fraud. No investment in continuous training. Failure to retain experience staff.Growth Pressures – to be like othersIntimidating pressures make leaders think they are smarter than they really are and they do insane thingsUnderwriters take risks beyond acceptable limitsStaff write risks with bad finger prints all over it
Dickinson A. WalkerIn August 2008, Walker observed that: The industry is taking on more uncertainty ◦ the world is riskier ◦ more concentration of value ◦ more complexity ◦ compensation cultureMost failures involve management failure ◦ poor strategy ◦ lack of integrity ◦ short-termismThe industry is taking on more uncertainty ◦ the world is riskier ◦ more concentration of value ◦ more complexity ◦ compensation culture
Central issuesThe central issues in insurance today are: leadership, strategy and knowledge ◦ Consumers of insurance products, regulators, the media and even insurance professionals suffer from knowledge gapThe gap in leadership knowledge is more profound because with the right leadership, the other two will seize to exist
Effective Strategies for LeadingTHE SITUATIONAL LEADER
Dispersed Leadership In todays complex insurance sector leadership must be dispersed at all levels of the organization Engage in shared leadership beyond empowerment and delegation Share knowledge. Renew and regenerate values and beliefs Release individual potentials for the benefit of all Motivate and give strategic direction Leadership is a lifelong development process Leaders must hold itself accountable
The Situational SchoolEarlier theories on leadership give little guidance as to what constitutes effective leadership in different situations.Researchers have found that no one leadership style is right for every manager under all circumstancesNew thinking indicate that style is contingent upon such factors as: ◦ the situation, the people, the task, the organization, and other variables.
The Hersey-Blanchard ModelBlanchard and Hersey insist that the developmental levels of subordinates play the greatest role in determining which leadership styles are most appropriateA leader must provide direction, or social or emotional support in a given the situation, and depending on the "level of maturity" of the followerThis way the entire system is supported vertically as well as horizontally
The Situational Leader “Situational Leadership is not something you do to People But something you do with people…applying different strokes for different folks”
Four-Style LeadershipFor Blanchard one of the key variables, in determining the appropriate leadership style, is the readiness of the subordinate(s)This model proposes four leadership styles: Directing, Coaching, Supporting &DelegatingOne leader can apply all these to different individuals at the same time“When the best Leader’s work is done, the people will say: we did it ourselves.”
DirectingThe Leader provides specific direction and closely monitors task accomplishmentThis style is best matched with a low follower readiness level “Everyone Is A Potential High PerformerSome People Just Need A Little Help Along The Way”
CoachingThe leader continues to direct and closely monitor task accomplishmentHe explains decisions, solicits suggestions, and supports progressHe encourages two-way communication and helps build confidence. He motivates.He retains responsibility for, and controls decision making.Coaching style is best matched with a moderate follower readiness level.
SupportingThe leader facilitates and supports subordinate’s efforts toward task accomplishmentHe shares responsibility for decision-making with them. The relationship is not directive or coachingParticipating style is best matched with a moderate follower readiness level“Everyone has peak performance potential –You just need to know where they are coming from and meet them there”
Delegating The leader turns over responsibility for decision- making and problem-solving to follower Both are competent and motivated to take responsibility. Appropriate for leaders whose followers are matured and ready to accomplish a particular task. The leader determines the appropriate leadership style to use in a given situation. He must first determine the competency level of the followers in relation to the specific task.
Competency FrameworkOrganisations now go to great effort and expense to develop their own leadership frameworkThere is no more a “one size that fits all”The leadership competency framework is an integral element of the leadership development process
Competency FrameworkIt is hands-on company-wide leadership programme – used to define content and mechanism of deliveryIt helps mentors and individuals measure and explore level of developmentIt forms the basis of the 360-degree feedback process ◦ to monitor their progress, ◦ identify personal learning and development needs, and ◦ underlies assessment and appraisals.
The Nokia Approach Fluid organizational architecture Leadership operated as a team; open and approachable. They set an example of teamwork throughout the organization. Value-based leadership rather than control through rigorous processes was the model Project teams form and dissolve easily. Provided people opportunity to work and build intra-firm networks The firm promoted values of customer satisfaction & respect for the individual Achievement, and continuous learning were acted upon consistently.”
US Marine CorpsUS Marine makes leadership development at all levels a priority.Personal leadership by all Marines is an ethic that is constantly on the agenda.It is reflected: ◦ in continual training, ◦ in the culture of daily life, ◦ celebrating what the Corps values most: honour, initiative, and accomplishment by the team.
The Approach of AstraZenecaThe AstraZeneca leadership provide a link between its business priorities and values: ◦ respect for the individual and for diversity ◦ openness, honest, trust and support for each other ◦ integrity and high ethical standards; and ◦ leadership by example at all levels
The Approach of AZAZ has seven key capabilities: ◦ Provides clarity about strategic direction ◦ Develops people ◦ Demonstrates personal conviction ◦ Builds self-awareness ◦ Builds relationships ◦ Ensures commitment ◦ Focuses on delivery
The Approach of ShellShell’s Leadership Framework has nine key elements: ◦ Build Shared Vision ◦ Motivate, Coach & Develop next level leaders ◦ Champion Customer Focus ◦ Maximise Business Opportunities ◦ Demonstrate Professional Mastery ◦ Display Personal Effectiveness ◦ Demonstrate Courage ◦ Values Differences ◦ Deliver Results