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From Resource, February 2005
Copyright by LOMA
The
Manulife Approach to Policyowner Service
Canadian
operations.
U.S.
operations. Mergers with other major financial services giants. Integrating all
the legacy systems you inherit after a merger. How does Manulife Financial
manage to serve its policyholders well amidst all these other concerns?
According to a Manulife official, they do it by having the right people,
processes and technology in place.
By Stephen Hall
With the
completion of its merger last year with John Hancock Financial Services and its
subsidiary, Maritime Life, Manulife Financial Corp. executed the largest
cross-border merger in Canadian history—and in the process, became the largest
life insurer in Canada, the second largest in North America, and the fifth
largest in the world.
But
with all these superlatives came the monumental task of integrating John
Hancock’s policyholders, employees, products and technology infrastructure
into the Manulife organization. So how does one of the giants of the financial
services industry keep its eye on the prize of quality policyholder service
while juggling the many tasks that resulted from last year’s merger?
According
to Mary Ann Mooney, FLMI, ACS, vice president of operations for individual
insurance at Manulife Financial’s Canadian division, the key is to organize
your business units and design your service and distribution channels so they
can meet the demands of a constantly changing marketplace. In the opening
general session of LOMA’s recent Policyholder Service Seminar in
Toronto
, Mooney explained Manulife’s unique vision of what quality policyholder
service means and how their business units are structured and run in order to
fulfill that vision.
“You
can concentrate all you want on an integration, but in the end, you’ve got to
remember strategy, and you’ve got to have a vision going forward,” Mooney
said. “We have just as many service issues as the next company; we struggle
with problems when volumes go up, and we struggle with integrations and all of
the other issues that you also deal with. My goal for today is to tell you what
we do to address these challenges, and to spark some debate and discussion. I
may say some things about what I believe that you may find somewhat
controversial, or that you may not agree with, because I have strong opinions on
certain things that might go against the grain of the service mentality or the
service culture.”
A Balanced Approach
Following
her brief introduction, Mooney provided seminar attendees with some background
on Manulife and its approach to organizing its global business. “Manulife is
organized globally into territorial divisions,” she said. “We have a
Canadian division, a
U.S.
division, an Asian division and a Japanese division, which is kept separate
from the rest of
Asia
. Our corporate headquarters are in
Toronto
, our
U.S.
headquarters are in
Boston
, and our Canadian division headquarters are in Kitchener-Waterloo. Inside each
territory, we are divided into business units, so we are not functionally
structured at all, which may be different from the way your firms are
structured. Manulife’s philosophy is that every business unit should be able
to stand on its own; every business unit leader is responsible for his or her
own bottom line in the business that he or she leads. So we each have our own
income statement, balance sheet, and profitability targets that we are trying to
achieve.”
Manulife’s
Canadian division consists of three main business units: individual wealth
management, group benefits and pensions, and individual insurance. “Primarily
in individual insurance, and in Manulife as a whole, we’re all about
balance,” she said. “Our individual insurance portfolio is balanced on the
three types of life insurance that are available. So what we’ve noticed in our
business unit is that, depending on where the market is ebbing or flowing, our
sales may increase in one of these product categories—the universal life,
whole life or term products—but our incoming revenue stays fairly stable. So
over the past few years, at a time when the stock market was low, universal life
product sales in
Canada
have suffered a bit, because it is a variable-based product.” At the same
time, Mooney said, Manulife’s whole life products became more popular. It is
this balanced approach to its product portfolio that enables Manulife to
maintain its revenue stream, she said.
This
emphasis on balance is also applied to the distribution of the products in
Mooney’s division. Its products are sold through three types of distribution
channels: independent advisors, managing general agents (MGAs), and national
accounts firms. “About a third of our products are sold through each of these
three distribution channels,” Mooney said. “We are one of the few life
insurance companies in
Canada
that will directly contract with independent advisors. There are many Canadian
insurers who either have a captive sales force or distribute only through the
middleman, which are the MGAs or the national accounts channels. So there are
not very many life insurance companies left in
Canada
that will allow an independent advisor to contract directly with them to sell
their products, but also go out and sell other firms’ products as well.”
Having
realized the growing importance of MGAs in the Canadian marketplace, Manulife
has also put a strategy in place to support the MGAs in the country’s
distribution of insurance products.
“Certainly with the acquisition of Maritime Life, who were strong distributors
through the MGA channels, we’ve gained some bench strength in doing that,”
Mooney said. “And finally, we also distribute through the national accounts
firms, which are primarily the large stock brokerage firms in
Canada
. We were one of the first firms to penetrate that distribution channel, and
even today, years later, we have about half of the sales that this channel
generates coming over to us at Manulife. These stock brokerage firms primarily
distribute money products like stocks and bonds, but they do have a number of
insurance specialists who work with the investment advisors to help make an
insurance sale to a client with an insurance need. And we spend a lot of energy
supporting those insurance specialists in order to maintain and grow our
presence in that distribution channel. So once again, both our product portfolio
and our distribution strategy is all about balance.”
Individual Life Operations
Copes with Change
As
a result of Manulife’s early 2004 merger with John Hancock Financial Services
and its subsidiary, Maritime Life, Manulife’s Canadian individual life
operations department now has 1.6 million policyholders to serve—not to
mention more than 800 employees and a heap of legacy systems to integrate (at
least nine, by Mooney’s count). Prior to the merger, she said, her area
already had its hands full with legacy-system conversions. “Through a number
of Manulife’s acquisitions over the years, we acquired a number of home-grown
systems, and we had a number of CAPSIL-based systems that we were busy
converting down to three go-forward target systems at Manulife,” Mooney said.
“If you can believe it, we’re still working on a system that was surely
designed in the ’60s. And now, due to our merger with John Hancock, we’ve
just doubled our legacy-system count again. So that’s something for us to deal
with, and it has implications for a lot of the decisions we make around people,
process and technology.”
Once
the integration is complete, Mooney said, the individual insurance business unit
will be located in four different cities. “The strategy we had in reorganizing
after the integration was to focus on distribution channels,” she said. “So
in
Kitchener
,
Ontario
, we’ll serve the independent advisors and the national accounts channels, as
well as conduct some centralized functions; we were already good at serving
these two channels out of
Kitchener
. Also, our MGA life service will be done in
Halifax
,
Nova Scotia
, for the same reason: Our employees there have developed very strong
relationships with the distributors in the MGA channels. In
Toronto
, we have the service for our entire living benefits portfolio; this was a
Maritime-acquired department, and we already have the disability underwriters
and service specialists there, so we’re not going to mess with success. And in
Montreal
, of course, we have our organization that services the
Quebec
marketplace. Those of you who have operations in
Canada
understand the challenge of servicing that unique marketplace, in terms of
language requirements and culture. The way they do business is often a little
bit different from the rest of
Canada
, and it’s important to respect that.
“So
we’re retooling the organization so that all go-forward products and all
in-force products are being serviced by the employees who are familiar with
those distribution channels,” Mooney said. “This was a strategic decision
that we had to make early on in the integration. We’re trying to build on our
strengths.”
Policyholder Service:
What’s the Vision?
But
when you’re a business unit that’s so preoccupied with integrating acquired
functions and reorganizing existing ones, it’s easy to lose sight of what all
this hustle-and-bustle is ultimately meant to achieve, Mooney said. Not wanting
to fall into this trap, the individual insurance business unit worked together
to devise a vision of exactly what kind of service they wanted to be known for
after the dust of integration and reorganization had cleared. And so, after much
discussion, the business unit reached a consensus: They wanted “to be known in
the marketplace because of our professionalism and prompt, efficient service.”
On
the face of it, this may seem like the kind of innocuous, garden-variety
customer service philosophy that everyone can agree with—after all, who wouldn’t
want to be known for professionalism and prompt, efficient service? But don’t
be fooled, said Mooney: “You would actually be amazed at how much debate has
gone on when working on this vision statement. Our vision statement used to be
‘We will be known in the marketplace because of our professionalism and our
excellent service.’ And the word ‘excellent’ provoked heavy debate. Now,
as service professionals, we all want to provide excellent service.” But the
problem with this word, according to Mooney, is that people may associate
“excellent service” with some of the extraordinary things a company like
Federal Express has been rumored to do, such as chartering a plane to make sure
a single package is delivered on time. “So when we used the word
‘excellent,’ it was often misinterpreted to mean that we were trying to be
Federal Express and that we would spend money until the cows came home to
provide excellent service. And of course, that was never the intent; we have a
balanced approach to everything that we do.”
Therefore,
Mooney said, the individual insurance business unit agreed to replace
“excellent service” with “prompt, efficient service.” “That means we
deliver on our promises,” she explained. “We’re more like Maytag, the
appliance manufacturer who says, ‘I’m going to make it right the first time,
I’m going to deliver it on time, and then I’m going to become the loneliest
repairman in town.’ We decided we want to have the loneliest call center in
town, so that no one has to phone about problems. But this is an interesting
topic for debate: Is the word ‘excellence’ misleading? Is it really what
your organization is trying to achieve? Also, how do you motivate your staff
with a vision that doesn’t have some big buzzword to strive for in it?”
The Right People
Mooney
described the Manulife approach to quality policyowner service as consisting of
three components: people, processes and technology. The first component, she
said, is crucial not only for Manulife, but for the entire financial services
industry—which, unlike a manufacture-based industry, produces intangible
services.
“None
of us in this room worry about supply-chain management, which is what operations
professionals do in any other industry where they make things,” Mooney said.
“So the biggest challenge for us is to manage our most expensive resource in
our value chain, which is the human resources component. I’m sure that if any
of you look at your budget, the majority of the money that you spend in service
is in the personnel category. So at Manulife, we spend a lot of time and put a
lot of rigor into managing our human resources.”
When
it comes to recruiting, Mooney said, Manulife employs a comprehensive set of
standards, including behavioral-based interviewing, “a tool that has yielded a
lot of success for us in the organization,” she said. And once someone is
hired at Manulife, rigorous performance management practices are used to
motivate employees to strive for excellence. “We are very strong performance
managers,” Mooney said. “I would characterize Manulife as a great place to
work, but you’ll work hard and you’ll perform well, or you just won’t make
it in the organization. We’re not a firm where seniority gets you anywhere; we
are a meritocracy. Our CEO, Dominic D’Alessandro, often speaks about how you
will go far at Manulife if you are bright, ambitious, willing to work hard, and
willing to develop yourself personally.”
Another
part of Manulife’s approach to managing human resources is using staffing
models to make better-informed decisions about whether additional hiring is
truly necessary. “We have developed a simple Excel spreadsheet that indicates
what our forecasts for volumes are in the upcoming year, what amount of
transactions are being processed or cases are being underwritten, or the number
of calls a person can take in a day,” Mooney said. “And once we put these
numbers through that model, we can make a good staffing projection and then
track the actuals against what happened according to the model. No one dares
come to me and say, ‘We’re really busy; I need to add to our head count.’
It doesn’t fly. I need to see the numbers, I need to see a staffing model, and
we need to vet it with a lot of rigor before an extra person gets added into the
organization. It may sound harsh, but it’s good business practice. If you were
running a factory, you wouldn’t add a machine or invest in capital without
having a good forecast and good projections of the capacity of the machine
you’re thinking of adding. So the same kinds of manufacturing operations
principles can be applied in the financial services industry.”
The Right Processes
As
crucial as it is to recruit the right people for your company and to manage
their performance for continuous improvement, it’s just as important to ensure
that your high-quality employees’ skills and efforts won’t be thwarted by
inefficient processes or poorly designed workflow, according to Mooney.
“I
think you really do need some business analysts and professionals to help put a
process design together,” she said. “We recently went through considerable
re-engineering and process redesign to prepare for the installation of our
automatic workflow distributor. We did have a little bit of outside help, and a
little bit of Six Sigma philosophy came into play. But honestly, I do believe
that process design, re-engineering and continuous improvement is all about a
lot of common sense and the ability to write things down, map them out, and look
at them with a critical eye.”
The
individual insurance unit has also spent a considerable amount of time on
measuring performance and feedback, Mooney said. “Every year, we have a great
number of surveys that take place. We survey our customers via telephone; we
survey our advisors, depending on their channel, once or twice a year; and then
we survey our employees once a year. But the other thing that we have to measure
is our day-to-day volumes, cycle times, quality, and unit cost. And I think that
sometimes, unit cost is something we forget to measure in our service industry.
We’re all very good at measuring volumes—we know how much we have, and we
know how much we sent out the door—but we don’t always know how long it took
us to get it out. We’ll know if we hit our service standard, but did we know
how long a customer actually waited to get their paperwork back, their policy
issued, their check mailed to them?”
With
all of these measurement needs in mind, Mooney’s division has been developing
a sort of performance dashboard that indicates to employees whether they’re
meeting policyowner service standards. “As we send measurements up the ladder
to senior management, we want to make sure that we highlight the things that are
most important for them to see,” Mooney said. “So we’re developing a
dashboard that shows red lights when you’re completely out of standard, yellow
lights when you’re in danger of slipping out of standard, and green lights
when you’re meeting the standard. Therefore, the factors you choose to measure
and the measures you report to senior management are all important things to
think about.
“The
other thing that’s important is sharing best practices,” she added. “What
I believe in is that in every service department, there is a crackerjack
underwriter, there is a top-notch clerk, and there is an excellent customer
service rep on the phones who is your star in the organization. And it’s very
important to get those people to share what they do with their peers, because
they’re often the most productive people in the organization. They’ve got it
all figured out, and they never get a chance to tell others exactly why they are
so successful. So supervisors on the floor and managers in the department should
be facilitating that type of discussion amongst the peers. Don’t leave it to
informal networking over the lunch hour; make sure this discussion happens.”
The Right Technology
The
third ingredient in Manulife’s quest for happy policyowners is arming those
top-notch recruits with the high-tech tools they need to cater to the needs of
policyowners, no matter how high call volumes get—or what Mother Nature might
dish out.
“We
have an excellent home-grown call center technology that we have installed in
our
Kitchener
operation, and as part of the integration, we are installing it in all other
locations as well,” Mooney said. “By having this technology available in
every location, we hope to have a lot of backup disaster recovery capabilities
in the future.” But if this kind of across-the-board implementation seems like
overkill, Mooney is quick to point out that at each of the four locations for
Manulife’s individual insurance operations, Murphy’s Law has played itself
out—with a vengeance. “We had a hurricane that ripped through
Halifax
in 2003,” she said. “In
Montreal
a few years back, we had an ice storm that took out power for at least a week.
In
Toronto
last year, we had a blackout that took out most of this province and a number
of the northern states. In
Kitchener
, we had a squirrel that blew up our computer system at least twice; we had a
bomb threat, and we had a fire next door. These are things you need to think
about, so our philosophy is to put this technology in all locations so that if
or when we have another disaster, we’ll be able to move customer and advisor
calls to any of those spots.”
Another
tool that Mooney’s division has implemented is EZ-app, a Web-based, short-form
application for their network of independent advisors to use. “Many advisors
are not comfortable asking medical questions of their clients,” she said.
“They don’t think it’s productive, and they’re embarrassed to ask those
questions. Certainly our national accounts channels don’t like to ask the
medical questions. Most of these people are busy selling investments. So
they’re quite happy to go on the Web, fill out this short-form application
that gives us tombstone information and product information and then send it to
us, and we have an in-house group of tele-interviewers that will call those
clients to ask all the medical questions.” According to Mooney, EZ-app has
been quite a hit for her business unit. “We’ve been promoting it like crazy
since we launched it, and we’re getting a high percentage of business in
through this method,” she said.
In
addition, Manulife’s individual insurance unit is using E-app, an electronic
application that sits on a computer desktop and allows producers to ask all the
application questions online. “It has a lot of features that prevents the
producer from accidentally leaving out information,” Mooney said. “Those of
you working in a paper-based application world know how often you have to go
back and fill in the blanks when information is missing.”
Mooney’s
business unit is also making use of Repsource, a Web portal designed for
independent advisors to use. “This is a portal that was developed many years
ago in one of our branches,” Mooney recalled. “We had a branch manager who
had a technical guru, and this person built this portal for agents that worked
out of that branch, and as our distribution channels have moved, changed and
consolidated, we’ve embraced this tool at the head office and used it quite a
bit. Advisor portals are often marketing-based; there’s a great deal of
product information in them, and marketing departments tend to take better
advantage of these kinds of things than operations departments do. But we’ve
tried to make Repsource every bit as much an operations tool as it is a
marketing tool. We use a secure portion of Repsource as an inbox; we can send
notifications to advisors about where their new business is at, let them know
about any maturities on their products, or conduct confidential communication
with them. But here’s another topic for debate: At Manulife, we’re very
nervous about communicating policyholder information through the normal e-mail
system, and so we generally won’t do it. We insist on communicating with
advisors through this secure inbox—which, to many advisors, doesn’t make us
all that easy to do business with. But again, it’s a debate that we have
internally, and it would probably be a good thing for you all to talk about in
your companies.”
In
closing, Mooney reminded her audience that all the changes in people, processes
and technology that she described in her business unit have been occurring at
the same time as many of the mergers and acquisitions that Manulife has
experienced over the last decade or so. “And what that means for us is more of
everything—more people, more products, more processes and more technology,”
she said. “But it also means more challenges, more learning and more fun. So
it keeps Manulife an interesting place to work, and it’s also a very good
place to build a strong career.”
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