This post was originally published on 06 June 2017 and updated on 24 February 2021.
In my previous article within this series, I looked at the requirement for strong actuarial leadership in order for transformation projects to be successful. Once the leaders are on board, what can they do to get buy-in from their teams?
Leadership in actuarial transformation projects is crucial to their success, but why do these projects struggle to get the buy-in from leaders and team members alike? How do we obtain the actuarial buy-in required to make any transformation project a success?
How can we get actuaries to buy-in to change?
One reason getting buy-in is a challenge is that actuaries are trained to be autonomous problem-solvers.
Non-standard policy to be valued? We’ll just whip up a manual adjustment in a spreadsheet. New regulation coming in? Let’s squeeze the margins built into our monthly process to make sure we report on time. IT taking too long to upgrade the data model? We’ll just learn to code it ourselves.
This can-do attitude – and the trust placed in actuarial teams – may mean that they are not always aware of the inefficiencies and risks present in their processes and hence don’t see the need for transformation.
A clear transition plan is critical for success
Lack of buy-in may also be explained by the need of actuaries to see a clear transition plan, including the projected long-term benefits, in a measurable, tangible format. Actuarial resources are almost always under pressure, rushing from one deadline to the next. If they are going to sacrifice precious time (of their own and of their teams) to make these changes, they need to have, from the early stages of a project, a very good idea of what they are working towards.
But articulating a well-defined outcome is not always easy to do.
Actuaries know better than anyone that it is difficult to make predictions based on limited data. For a start, we need to know the basic metrics of our current state to be able to measure the success of any transformation project. But, in my experience, very few companies measure the simple KPIs that could be used to baseline the efficiency of operations.
- What is the throughput yield on the model runs and what are the reasons for failure?
- How many hours does each step of the process take, and how many hours are spent on rework?
- How many tasks were delivered on time and what is the total cost of each task?
If we don’t know where we are starting from, visualising a better state becomes challenging. Some actuaries sweep their inefficient processes under the carpet of “expert judgement”. But teams need to start formalising their processes – however inefficient they may be – to give themselves the chance to see the potential benefits of change.
Does accuracy jeopardise efficiency?
Another obstacle to buy-in from actuaries is the ever-present desire to reconcile to the nearest penny. Current modelled numbers are often taken as gospel and any deviation, no matter how efficient the new systems or processes are, will be met with suspicion.
This mistrust comes from a good place – the desire for accuracy – but loyalty to what’s known and comfortable may impede teams from seeing the flaws of their current models and processes.
To paraphrase statistician George E. P. Box, one of the things we know for sure is that all models are wrong. Some of them, however, may still be useful. This happens when timely and transparent data becomes easily accessible to the wider organisation.
Strong leadership, coupled with buy-in from the teams, will result in change being embraced as business as usual long after the process consultants have left the building.
Whenever changes are made, they are always easier to digest in small steps. Read the thoughts of Vibeke Fennell, MBE Partner, on this topic in the Raconteur Business Transformation Report.
If you would like to discuss how you can gain buy-in from your actuarial team, contact me at [email protected].
Image (c) Shutterstock | STILLFX
