It is not an easy time to be an insurance company at the moment. Cultural, operational and general market challenges are converging, shifting the overall market landscape and forcing insurers to take a long, hard look at their traditional approach to business. Given that the top priorities for today’s insurers are to increase customer retentions and ensure company growth, they must prioritise the task of improving customer experience across all channels, but particularly in leadership.
The focal lens on insurance services in the 21st century should not overlook the impact of globalisation, managing cross-border business, and the increasing demand for knowledge workers in knowledge-driven business. Studies suggest that, nationwide, insurance companies found that a one percent increase in customer retention increased annual premium by one million Br. In total, 74pc of insurance customers – more than retail, cable and satellite TV services, banking, cell phone services and personal computers – will call a contact centre as the first means of getting in touch. Twenty-six percent of insurance customers will switch insurance providers based solely on a bad experience with the contact centre, and 40pc of dissatisfied customer are more likely to tell others about their experience.
In the traditional market, insurance service delivery, of both satisfied and dissatisfied customers, will not take prime position nor could we even measure their impact on the spectrum. The notion of service would no longer guarantee customer satisfaction. The lack of knowledge and knowledge-based management makes it very difficult to guarantee both individual customers and other business partners, like reinsurers, loss assessors and banks. With no intelligent leader and no sound system in place, everything becomes complex.
It is obvious that knowledge-based management is critical in any knowledge-driven business. Eliminating traditional business is a big deal for insurers and bankers. Technology shifts the value system of policy holders and depositors in order create formats that don’t require procedural complexity. Mobile banking and mobile insuring initiatives are predominantly employing knowledge workers, rather than manual leaders. An insurance company issuing its proposal forms and policies through technology will be more profitable, as modern approaches reduces cycle time and costs. it also boosts its business within international business corridors, such as hotels, supermarkets and airports. For leading insurance companies and banks with the rationale of becoming globally competitive, it is an inevitable step. Since such shifts activate major changes and challenges in this regard, it is difficult to perceive a traditional mindset.
The Ethiopian financial industry has for more than three decades measured performance using international standards, over coating the same fictitious growth. We may have celebrated performances at every level for more than 30 years during June and July on the bases of nominal profit, but if we look at the top 100 financial institutions on our continent, there are no Ethiopian brands or names.
The trend of such performance measures will not last long, with major changes in Europe, particularly Great Britain – the gear shifter of financial industry, banks and insurers. Their influence extends to Africa and Middle East. Any change in international banking agreements and reinsurance arrangements will bring about change in our country. Such an assignment will require knowledgeable staff and management, and if this isn’t realised, the usual business complexity and anxiety will prevail.
I argue without hesitation that doing business as usual is scary, since the turbulent environment caused by technological advancements and the increased knowledge of customers destroys the traditional approach.
If not, it is normal to feel anxious, most people do – even those who don’t have an anxiety disorder. The first day after a change comes with having to embrace new technology, working methods, systems and knowledge-based management, as well as learning what is expected and finding out how a new management philosophy will work. The so-called business anxiety begins to challenge change-resistant leaders.
When new systems are designed, their day is filled with uncertainty and anxiety. The remedy is simple – the world is in a perpetually flux and they should adjust to the changing environment or look for ancillary business.
We should keep in mind that such anxiety is even worse in financial business, since it brings about much loss, which is an aggravating factor. In a country like Ethiopia, where there is a shortage of business psychologists, the impact of decisions made by traditionalists, especially during the peak points of anxiety, is tremendous – both in material and monetary terms. And if there is no sound monitoring and evaluation mechanism against such destructive action, they will cluster every business community with their procedural complexity.
As stated above, in the Ethiopian financial industry detailed procedures and their allied anxiety blocks everyone in the system from doing business as usual, and measuring the results traditionally. June is the period of bonuses; if no bonus or salary increment is achieved, our anxiety reaches its optimal point. Our anxiety stops us from debating on other better rewards, like service excellence, modernisation, taking international assignments through training rewards and acquiring a sound knowledge of globalisation, either from a chartered bank or insurance institute. This could shift our economic capacity and personal assets more so than traditional parameters of performance.
Why should we wait for a year to give rewards in the form of a bonus or salary increment? Why do we lack the guts to change this tradition? Do we really compete internationally with such standards?
Employees will not be retained through traditional rewards.
It might take a little time, but soon an institute would reach its expected level. Proactive leaders, who believe in knowledge-based management and innovation, seek to open their doors to the international community in order to adjust their business anxiety – not through cognitive behavioural therapy, but by being engaged in international assignments that produce worldwide bonuses for them and their followers.
The creation, or accumulation, of investing in assets in the business community requires a knowledge of industrial psychology that ultimately brings procedural complexity and anxiety under control.
We have to candidly argue that the door should be opened to new techniques of doing business, and measuring performance and rewards, rather than the explicit numbers we have been fond of for so many years. These simply increase our anxiety whenever they are missed.
Can one measure the magnitude of motivation if a bank or an insurer provides international training or visits award winning companies?
We may argue that such parameters of performance rewards at a cost; but they are costs only in the traditional view. Without them, we will live with our procedural complexity and business anxiety throughout the 21st century.
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