Leading A Professional Leading A Professional Service OrganizationService Organization

Strategic Leadership Imperatives

in the Insurance Industry..Richard O. Ikiebe.

IntroductionIntroduction

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 Evolution of Leadership StylesStyles

Leadership thought has evolved over time from many identifiable styles

Style 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 level

It is not surprising that most people define leadership, from their perspective◦ the version that makes the most sense to them

Leadership Theories and Leadership Theories and StylesStylesA 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 leaders

Later thinking begin to consider the role of followers and the contexts of leadership.

Leadership Stock in Short Leadership Stock in Short SupplySupplyLeadership 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 Critical Warren Bennis’s Four Critical Aspects of LeadershipAspects of LeadershipAdaptive capacity: A sense of resilience,

hardiness, and creativity. The means by which you seize opportunities

Engage followers: the capacity to engage followers in shared meaning – to align the (work force) around a common, meaningful goal

Moral 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 BennisWarren Bennis

Self-mastery: Leader must spend quality time in a continual process of finding out about who they really are

They must learn their own voice, how they affect other people, & learning about emotional intelligence

Superman–Leader Syndrome

Problem with the Super Problem with the Super LeaderLeader

In addition 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 LeaderThe 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 reflection

It is difficult to find this multi-talented individual with a wider range of attributes

Re-Thinking LeadershipRe-Thinking LeadershipMost leadership thoughts take bearing

mostly from one individual’s success story a rather than from a more holistic perspective

A school of thought gaining increasing recognition is that of “dispersed” leadership

It views leadership as a process that is diffuse throughout an organisation rather than lying solely with the formally designated ‘leader’

The Insurance Sector.

Complicated SectorComplicated 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 More Complex Than Outsiders BelieveBelieve‘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/Management Key Leadership/Management ChallengesChallengesThe Very Insurance Business is

Different. “A long term risk business” Quick quantum loss possible overnight

after long gestation Law 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 roof Changing World The world is riskier, people are more

risk averse Economy uncertain, & IT is complex,

poor and shifting regulatory quick sand

The Leadership ChallengeThe Leadership ChallengeLack of Understanding.Offers intangible and suspicious

business proposition.The average customer an unwilling

purchaser Complex pricing and claim issues The Sins of the Haunting Past. Insurance is scam. Fraud stories

abundant Ethical (Integrity & trust) are a

collective industry problem.Too hot for any one leader to deal with.

Yet it affects each leader differently and separately

The Unsteady Cycle. Up today, down tomorrow. False highs. Real lows! Forced to count the chicks too early

The Leadership ChallengeThe 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 stick

Regulation and Government How do you deal with an activist regulator?

Comparing chickens with duck – banks and insurance companies

Poor understanding of the real world of underwriting risks not text book knowledge

The Leadership ChallengeThe 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 others Intimidating pressures make leaders

think they are smarter than they really are and they do insane things

Underwriters take risks beyond acceptable limits

Staff write risks with bad finger prints all over it

Dickinson A. WalkerDickinson A. Walker

In August 2008, Walker observed that: The industry is taking on more uncertainty

◦ the world is riskier◦ more concentration of value◦ more complexity◦ compensation culture

Most failures involve management failure ◦ poor strategy ◦ lack of integrity◦ short-termism

The industry is taking on more uncertainty◦ the world is riskier◦ more concentration of value◦ more complexity◦ compensation culture

Central issues Central issues The central issues in insurance

today are: leadership, strategy and knowledge◦Consumers of insurance products,

regulators, the media and even insurance professionals suffer from knowledge gap

The gap in leadership knowledge is more profound because with the right leadership, the other two will seize to exist

THE SITUATIONAL THE SITUATIONAL LEADERLEADER

Effective Strategies for Leading

Dispersed LeadershipDispersed LeadershipIn today's 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 directionLeadership is a lifelong development

processLeaders must hold itself accountable

The Situational SchoolThe Situational School

Earlier 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 circumstances

New thinking indicate that style is contingent upon such factors as:◦the situation, the people, the task,

the organization, and other variables.

The Hersey-Blanchard Model The Hersey-Blanchard Model

Blanchard and Hersey insist that the developmental levels of subordinates play the greatest role in determining which leadership styles are most appropriate

A leader must provide direction, or social or emotional support in a given the situation, and depending on the "level of maturity" of the follower

This way the entire system is supported vertically as well as horizontally

The Situational LeaderThe 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 LeadershipFour-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 &Delegating

One 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.”

DirectingDirecting

The Leader provides specific direction and closely monitors task accomplishment

This style is best matched with a low follower readiness level

“Everyone Is A Potential High Performer

Some People Just Need A Little Help Along The Way”

CoachingCoaching

The leader continues to direct and closely monitor task accomplishment

He explains decisions, solicits suggestions, and supports progress

He 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.

SupportingSupportingThe leader facilitates and supports

subordinate’s efforts toward task accomplishment

He shares responsibility for decision-making with them. The relationship is not directive or coaching

Participating 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”

DelegatingDelegating

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 FrameworkCompetency Framework

Organisations now go to great effort and expense to develop their own leadership framework

There is no more a “one size that fits all”

The leadership competency framework is an integral element of the leadership development process

Competency FrameworkCompetency FrameworkIt is hands-on company-wide leadership

programme – used to define content and mechanism of delivery

It helps mentors and individuals measure and explore level of development

It 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 ApproachThe Nokia ApproachFluid 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 modelProject 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 Corps

US 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 The Approach of AstraZenecaAstraZeneca

The 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 AZThe 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 ShellThe 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