In early November ReSource Pro hosted our second Insurance Innovation Advisory Council event of the year. The theme was “managing by the numbers”. Speakers Jag Dalal and Ashwin Rangan shared insights and experiences about successfully managing by the numbers.
The key to successfully managing by the numbers is to first know what we want to achieve. Once we know our goal we can then determine the metric needed to measure our success. “We start with a goal to determine the metric and use the metric to achieve the goal.”
Not all metrics are created equal
There are several dimensions to a good metric. In order for a metric to have meaning it must be relevant to the goal. You need to laser focus on your desired outcomes then determine the metrics and processes around them. If the goal is to write profitable accounts, the total number of quotes issued is probably not the best metric for achieving this goal.
A metric needs a reference point – one measurement alone doesn’t tell us much. The measurement must be compared with something else such as time.
A good metric is:
- reliable
- credible
- understandable
- available
- abuse-proof
Measure carefully
There are two different kinds of measurements that are crucial to monitoring your progress to a goal:
- in-process measures
- results measures
In-process measures ensure your process is under control and performing the way you intended. They act as checkpoint and keep you and your team on target.
Results measures are output results. Most of us use results measures — we keep tabs on the final numbers. However, if the end result isn’t what we expected we might not know why if we aren’t in-process measuring.
The cost of quality
There is a price tag on quality and it is dependent on the cost of conformance and non-conformance. The cost of conformance entails defining processes and measurement, staffing, technology, in-process and end-result inspections, and continuously improving the process. The cost of non-conformance involves rework, retraining staff, fluctuations in morale and its effect on performance, errors and omissions, and lost revenue.
The balancing act
Ultimately you are the best person to decide which things to track and measure in order to reach your insurance business goals. A balanced set of measurements, a balanced scorecard if you will, should include metrics from different areas of your insurance business such as financial, employee, growth, and internal business processes.