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Customer Service Drives Reengineering Effort

November 1, 1994
Related Topics: Reengineering, Service, Featured Article
Some reengineering efforts start with a big bang. Others, like the one at Warwick, Rhode Island-based Metropolitan Property and Casualty Insurance Company, take more time to gather steam. But once they get rolling, there's no stopping them.

The process at Met P&C began about three years ago. Initially, employees from the marketing and customer-service departments reviewed the company's computerized system of delivering new and old insurance policies. In such a highly competitive and closely regulated business, the difference between success and failure is often the quality of service and the speed in which transactions are conducted. Because the goal was initially viewed as a technological function, the role of human resources didn't emerge until later—only after the relationship between customer service and employee satisfaction was acknowledged as symbiotic. Customers, for example, expect outstanding customer service, and employees want recognition and compensation that relates to the achievement of customer-service goals. Customers want to deal with knowledgeable decision-making servers; employees want to be in charge of their careers and informed. Employees also want to be led, inspired, recognized and empowered, not simply managed and watched. Hence, HR has become a change agent in Met P&C's reengineering effort—ensuring that managers and employees are properly informed, trained and compensated to meet the demands of its growing clientele.

This is how the actual reengineering effort at Met P&C, which provides insurance products to more than 2 million customers, has unfolded since 1992:

About a year after the systems-delivery review, several of our managers attended a training session in Boston in March 1992. Inspired by business consultant Michael Hammer, co-author of Reengineering the Corporation: A Manifest for Business Revolution, Met P&C's president and CEO, Dan Cavanagh, called for a formal reengineering team. It comprised members with computer systems and customer-service management experience, backgrounds believed to be useful in the analysis of the company's business flow.

The team reported to the vice president of automated technology, who sits on the company's senior management team. Included in the senior body are the vice presidents of human resources, underwriting, legal services and public relations, financial planning, claims, sales, marketing and compliance. Fortunately, Cavanagh was formerly head of technology at Met-Life, the parent company, so he held a strong interest in technological improvements and customer service. The effort was viewed primarily as an internal-services department project, exclusive of human resources and marketing—focusing solely on equipment, technology and workflow processes.

But the briefing sessions conducted by the team with members of the company's senior management eventually revealed two missing elements. The recommendations for change were missing the voices of the customers and the attitudes of the employees about Met P&C's customer service. This vital input of our product users and employee deliverers had to be included in the company's reengineering effort if real progress was to ensue. Senior management then communicated its total commitment to a movement from talk to action to gain a multisource feedback on the company. In fact, at the company's January 1993 management conference, customer satisfaction was adopted as a corporate theme. HR was finally recognized as an important strategic partner with the marketing and customer-service departments.

Reinforcing this broader thrust was Richard Whiteley, vice chairman of the Boston, Massachusetts-based Forum Corporation of North America. Whiteley gave the keynote speech, "Wowing the Customer." He helped frame the reengineering process by suggesting we measure employee attitudes with a survey and that we select a few key organizations to benchmark best customer-service practices. Whiteley's approach was blended with the technique of customer researcher Barbara Kaplan of Stamford, Connecticut-based In Vision. An expert in conducting customer-focus groups, she assisted us in determining the perceptions of our organization and collecting suggestions from customers for strengthening our relationships.

Steering committee includes HR.
The charge of seeking customer feedback and employee criticism of the company's service was given to John Rutecki, vice president of marketing, and Bob Stonaker, vice president of human resources. Also called to action was a steering committee comprising HR, division vice presidents, marketing personnel and external consultants. Add to this an ambitious set of deadlines, a limited budget and no experience in gathering this type of information, and you've got the makings of great, short-lived corporate fiction. Fortunately, we stayed on track.

By February 1993, human resources was working side by side with the marketing and customer-service areas. We have 25 staff in our HR department: a vice president, senior director, three organizational-development consultants, seven service and training consultants and a support staff. All of us were postured to support the feedback process recommended by Whiteley and endorsed by top management. As we began to create and conduct the employee survey, Kaplan worked with the marketing department to coordinate the customer focus groups. Rutecki went to work on product, pricing, advertising and strategic positioning views from every angle. Stonaker sought current operational information through a benchmarking effort that compared human resources systems and processes inside and outside of the insurance industry. Assisting him in the benchmarking were representatives from the reengineering steering committee. Each team visited three sites: CSX Corporation's customer-service center in Jacksonville, Florida, for its customer-service systems; Corning, New York-based Corning Incorporated for its HR department's reputation for training and employee development; and San Antonio-based United Services Automobile Association (USAA) for its reputation as a state-of-the-art leader in the insurance industry.

To initiate the process of obtaining customer input, HR stressed that feedback had to begin with Met P&C's employees. In the employee-customer assessment survey form, Cavanagh stated: "We want to know how you currently feel about the relationships we have and maintain with our customers. We will use this feedback to identify steps that we should pursue to make Met P&C a stronger, more customer-driven organization. I encourage you to use the comment section on this form to let us know how you would change some aspect of our current business procedures to wow the customers we serve."

The 38-question survey measured satisfaction levels in key areas such as empowerment, compensation for customer service, innovation, quality, customer relations and continuous improvement of processes. Our use of this survey marked another deviation from the normal course of events. Every three years, Met P&C usually conducts a detailed survey of employee attitudes companywide,where employees' feelings on the company, benefits, environment and a host of additional items are gathered and reviewed to create and implement change. But HR's employee-customer assessment survey was the first to ask Met P&C employees how they actually felt about customer service.

More than 70% of our employees participated in the voluntary survey. Of the 3,735 assessments distributed, 2,639 were completed, a significantly high level of response according to consultants from Response Technologies, Inc. in East Greenwich, Rhode Island, who aided in the collection. The data was collected using scanners to read survey cards. Portable computers then scored the results and graphed levels of satisfaction by predetermined groupings.

These were the results: Items such as personal empowerment, incentives for customer service, self development, customer-complaint resolution and career planning—all relating to satisfaction of external and internal customers—received mixed reviews. These responses served as the starting point for our planning. Now it was evident why human resources was included in the reengineering process. HR would have to take a leadership role in providing the training and design for changing some of the work processes.

Employees at all levels offered hundreds of suggestions for improving customer relations. Among the most common:

  • Simplify our customers' bills
  • Regularly collect customer feedback
  • Provide greater employee incentives for outstanding customer service
  • Integrate technology for claim service and policyholder service
  • Provide customer-service training for all employees.

Customers and employees both expect service satisfaction.
The first phase of the external consulting work also was nearly complete. Those results began to parallel the internal findings. Kaplan met with about a dozen focus groups in Ohio and Connecticut. Each group was clustered according to the length of the participant's relation to Met P&C—there were groups composed of those who have been policyholders for 10 years or more, five years or less, and even a group for defectors who left us after a year. These customer focus groups revealed the absolute imperative that customer satisfaction was the only acceptable measure of future corporate performance. And a similarity emerged between what customers expected and what employees desired.

During the early data returns, internal human resources staff also began to conduct focus groups on salary administration, performance management, career development and empowerment. HR realized that by increasing employee awareness in several key areas, current levels of customer service would be impacted right away. Sample recommendations for human resources training received positive feedback, immediately validating this assumption.

Short-range strategic action by HR included full disclosure of Met P&C's salary philosophy and compensation program. Self-directed performance initiatives and the introduction of personalized salary history profiles have been shared throughout every segment of the organization during this year's first quarter. In addition to documenting an employee's current salary, the profile includes a series of geographic scales reflecting local salary market conditions; a market point within the salary range, which reflects the average of all salaries paid to fully trained employees working in comparable jobs within the local area; a compa ratio, which indicates the relationship between salary and the market point; and the date of an employee's last increase, including merit, promotion, special salary increase or one-time payment.

Also, HR introduced a new focus on individual career development through an interactive system. Human resources consultants worked with department representatives volunteering as mentors for the Focus on Careers process. These champions of development have demonstrated through their own careers the willingness to pursue personal and professional development opportunities inside and outside the organization. A career choices handbook, a video designed with discussion breaks and a series of self-directed assessments were components of this process. The areas that most interest employees are personal networking, resume development, career counseling and mentorships.

In addition, HR has begun a management skills training pilot, to be followed by employee empowerment and customer relationship building. Care and caution must be considered as managers rethink their roles as enablers and coaches. They must still complete their other daily work.

And the reengineering effort continues. Upper management will continue its contact with our customers with a series of forums and calls scheduled for the future. A major overhaul of our 1-800 services has been initiated to provide more service hours and increased availability for customers with inquiries. And Met P&C now is considering the possibility of offering discounts for loyalty. Our human resources department anticipates that more work will be required to satisfy and wow our internal employee customer. These proposals for our internal customers' satisfaction are a high priority, and are all supported by customer input. Kaplan's findings suggest that control, caring and recognition are the three underlying values that must be ever present in our customer relationships.

As the HR function moves to partner with the financial and operational segments of the business, what better starting point than that of addressing the gap of satisfaction between the internal and external customers we serve.

At this juncture of our reengineering and customer-service focus, it's important to mention that we realize reengineering is not process modification—it is change—and the two need to be clearly distinguished up front. Customer focus requires total commitment and support from the top to the front line. Allow time for research and data collection. This isn't a quick-fix approach. Seek input from users, providers, deliverers, customers and decision makers. Establish check points to discuss progress and periods without progress. The key is communication throughout the entire process.

Personnel Journal, November 1994, Vol. 73, No.11, pp. 87-91.

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