Treating customers fairly (TCF) reinforces the belief and reality in the fact that our industry is service intense. It is all about delivery and not just distribution. Stephen Rosling, Co-founder & Director of UK based TCF Matters candidly answers some very critical questions:
Q: Is TCF indeed about MOT (moment of truth)?
A: This is a complex area Praveen and one that provokes a lot of debate and confusion. My understanding of this term is that it represents those key moments, (can also be known as “voting points”) in the customer journey when the customer expects the provider to keep their service and/or product promises. For example:
When the policy documents arrive, do they represent the product that was sold to me?
When I make a claim, does the product perform as I expect it to?
As such, they clearly affect the customer experience and their level of satisfaction. One thing is clear however, treating customers fairly is not about creating a great customer experiences or creating satisfied customers. (Rejecting an invalid claim is perfectly acceptable, but will clearly have a negative effect on customer satisfaction).
In my experience, the topics of TCF, MOT’s, Customer Experience and Customer Satisfaction can be easily confused and, unfortunately, many organisations have focused on customer satisfaction at the expense of treating them fairly – particularly in the sales processes.
Q: How does one ensure TCF is embedded uniformly across the entire delivery continuum?
A: TCF needs to be applied across all these continuums: product value chain, customer journey(s), and the employee journey. These clearly overlap in some areas and collectively come under the umbrella heading of organisational culture.
As such, you need to look at the following cultural elements: leadership, strategy, decision-making, controls, recruitment, training, and reward.
I’m not sure I can answer the more practical elements of “how” in a few words – as TCF affects the “DNA” of every part of the organisation, it would be very difficult to distil this beyond the process and governance areas I referred to in my presentation.
Q: How much is TCF qualitative and how much is it quantitative in terms of implementation?
A: Another great question Praveen! You need to get this balance right and only you will know what this look like. If we assume that qualitative and quantitative relates to being able to measure the fair treatment of customers, then you certainly need “words” to bring the “numbers” to life. You also need a mix of internal and external data – it would be unwise to rely purely on internal data.
As a principle, you certainly need to be wary of TCF becoming a “tick box” exercise, or being managed as simply another project. I believe this is where some UK and US organisations went wrong.
Q: How does one reinforce it top-down (role-modeled rather than imposed)? Is it about walking the talk?
A: This is about identifying the right sort to TCF behaviours/competencies and then encouraging all staff to act in a way that’s consistent with these behaviours. Organisational leaders can set the cultural tone by visibly demonstrating these behaviours and rewarding those around them who also demonstrate the right behaviours. What you need here is a combination of objectives, job descriptions, competencies, and reward mechanisms that are all aligned to TCF. Depending on the current culture of the organisation, there may need to an element of imposition.
Q: How do you bring consistency between various entities that create a uniquely individual experience for each/ every stakeholder?
A: Another great question Praveen and one where I don’t think there is a simple answer. I think I would start with an organisational vision that everyone can buy into, support and see how they can contribute to the vision – a “line of sight” between what an individual does on a day-to-day basis and the vision of the organisation. Regular reinforcement of progress towards the vision should also keep people on track. I think there’s also something here about having the right people in the organisation, (whatever they do), who have an absolute clear standalone top priority on the customer – with everything else secondary.
(This is a big question Praveen and I’m not sure I’ve done it justice!)
Q: How important is an employee of a practising organisation? Is he or she a customer too?
A: Collectively, the employees and their behaviours toward internal and external customers, make up the culture of the organisation. So whilst the TCF principles very clearly state the customer is the person who buys the product, employees must also treat other in a manner that’s consistent with TCF. Getting teams to create their own TCF Charter is an effective way of achieving this.
Q: Can there be shades of fairness, thereby issues relating to consistency/ inconsistency?
A: Fairness by its very nature is not black or white, but this does not mean it will result in inconsistencies. There are 2 key principles to ensuring consistency when it comes to issues of fairness – get as many perspectives as possible and make sure you identify all customers in the same situation.
Q: How do you bring a balance between subjectivity and objectivity in this space?
A: This is all about getting as many perspectives as possible on a given situation – externally this might include the shareholder view and would definitely include the customer. Internally, this might include sales, marketing, operations, risk etc.
Q: How do you audit & ascertain the degree to which an organisation treats its customers fairly?
A: This is what I do Praveen! If you need a regulatory and cultural assessment of the organisation. I’d be happy to discuss this if you’re interested in exploring this further.
Q: How important is TCF for the emerging markets? Can they avoid some of the pit-falls in development of financial services architecture by learning from mature markets?
A: I think TCF regulations are becoming increasingly prevalent and important in all markets – not just in emerging markets. There were a couple of slides in my presentation that focused on this and certainly recent reports by some of the big auditing firms support this view.
The IMF recently recommended to the Malaysian regulators that their effectiveness could be enhanced with strengthened enforcement tools and the development of a supervisory framework specific to market conduct activities. In developed markets such as the UK, we now have a new regulatory authority, which is expected to be far more visible and rigorous in its investigation and enforcement of TCF principles.
As far as lessons are concerned, I think there are plenty to be learned and I touch on these in my article published in the January issue of Asia Insurance Review.
Published in April 2013 issue of Asia Insurance Review
Article in Company Director Magazine (membership required): http://www.companydirectors.com.au/Director-Resource-Centre/Publications/Company-Director-magazine/2013/March/Opinion-Indian-company-law-gets-a-revamp
Published in Insurance Insight, January 31 2013
The biggest enemy of diversity is ‘anti-diversity’ – anything that stomps over things diverse and intending to homogenize them or conversely anything coming in the way of something attempting to diversify. Over the last couple of weeks, I picked two stories both defying this hypothesis. One in a heroic sense and the other in a mysterious way!
The glass ceiling game:
The heroic one comes from the HBR Blog Network, titled “How Female Leaders Should Handle Double Standards”. It is about how women are perceived – how they dress, talk, their “executive presence,” capacity to “fill a room,” leadership style and public image – has been the object of vast, well-intentioned efforts to get more women to the top. Voice coaches, image consultants, public speaking instructors and branding experts have filled the growing demand for these services.
The premise, goes on the blog, is that women have not been socialized to compete successfully in the world of men, and so they must be taught the skills of their male counterparts have acquired naturally. But, at the same time, they must “tone it down” or risk being labeled as having sharp elbows. The crux of the matter is that women are evaluated against a “masculine” standard of leadership that leave them limited options and distracts attention from the task at hand.
While women are likely no more susceptible than men to such diversions, subtle (and not so subtle) cultural biases can easily turn women’s attention inward as they try to reconcile conflicting messages about how to behave as leaders. What to do then, in a world when image and perceptions matter, and gender stereotypes remain firmly entrenched? Three prescriptions, in the blog, from three women leaders (http://blogs.hbr.org/cs/2013/02/how_female_leaders_should_handle_double_standards.html):
- “We should just focus on what we have to do” says Lubna Olyan, the Saudi CEO of Olyan Financing. She believes, “women shouldn’t be distracted by things that take away from what we are trying to accomplish.”
- “The story is never what she says, as much as we want it to be. The story is always how she looked when she said it”, say the members of Hillary Clinton’s press corps. What does Clinton have to say? She does not fight it anymore; she focuses on getting the job done.
- IMF Chief, Christine Lagarde says be yourself. “Dare the difference”. But do so skillfully. Don’t just let it hang out; and never confuse “being authentic” with “fatal flaws” such as treating people poorly.
So while you work towards breaking the glass ceiling do not give up your originality. Being yourself is diversity too.
The Most Misunderstood Industry (TMMI):
Why is insurance TMMI, consistently across the world? That there is little room for diversity, in the ways it is perceived, remains a mystery. Two professors at Wharton, Howard Kunreuther and Mark Pauly together with Urban Institute researcher Stacey McMorrow, analyze the theme in Knowledge@Wharton Today. The focus of their study is USA, world’s most developed and penetrated insurance market. Yet their findings do not seem to be any different for the rest of the world. It makes an interesting read (http://knowledgetoday.wharton.upenn.edu/2013/02/insurance-the-most-misunderstood-industry/).
An extraordinarily useful tool to manage risk:
- Yet broadly misunderstood by consumers, insurance executives and regulators
- Many do not voluntarily buy coverage against potentially risky & serious losses
- Insurance firms also behave strangely after they suffer a severe loss
- State regulators often constrain insurance premiums because they are concerned that insurance will not be affordable
- Affordable Care Act (ACA) health reform legislation requires sellers of individual and small group insurance to sell coverage to all comers at premiums that do not take into account the buyer’s medical risk
Why do consumers, insurance firms and regulators behave as they do?
- Tendency for those at risk to assume that disaster losses or major health related expenses will not happen to them. Given this view, they feel no need to purchase insurance protection. Only after suffering a loss will consumers voluntarily buy insurance. After a disaster, insurers may decide to restrict coverage, and state regulators are likely to prevent private insurers from charging premiums that reflect the actual risk
- Behaviour of this kind defeats the three principal purposes of insurance: to provide information via premiums as to how serious your risk is; to provide motivation for undertaking financial protection against an event that could produce a significant loss but has a low probability of occurrence; and to offer incentives in the form of premium reductions to reward people who invest in risk-reducing measures
- Incentives, rules and institutions that encourage a constructive role for insurance will ultimately improve individual and social welfare. Several recent pieces of legislation have set the tone for appropriately dealing with risk. Dealing with Terrorism via the Terrorism Risk Insurance Act (TRIA); Biggert-Waters Act proposes major reforms to the National Flood Insurance Program (NFIP). The ACA requires insurers to offer insurance to all US residents who do not currently have coverage through either their job or a public plan.
What can be done to make insurance a better policy tool and to avoid adverse side effects of the well-intentioned programs already in place?
- One way to convince people, prescribe the authors, of the long-term benefits of insurance is to stretch the time horizon over which the event can occur. Studies have shown that people are much more likely to buy insurance or invest in protective measures if an event, such as a hurricane, that has a one in 100 chance of occurring next year is presented as having a greater than one in five chance of happening at least once in next 25 years. And if the disaster does not happen – well, the truth is that the best return on an insurance policy is no return at all. One should celebrate not having a major loss!
- Insurers should construct worst-case scenarios for rare events. They can then determine a premium that reflects their best estimate of their expected future risks factoring in the uncertainty of the events happening. Insurers could also consider offering multi-year policies if state regulators allow them price coverage that reflects risk over that period. A multi-year insurance policy with risk-based premiums coupled with a multi-year home-improvement loan to pay for risk reducing measure may enable policy holders to reduce their overall costs.
Having diagnosed what keeps us into being the most misunderstood industry, the authors demystify our current state and also suggest prescriptions for overcoming this woe. Maybe anti-diverse at the outset but if each market and geography could discover its own remedies; we may soon be a reinvented entity.
My comment on “Still a man’s world” by Sara Mosavi:
Hi! We need to go beyond a pure statistical analysis or judgement on the state of diversity to some softer sides as well.
The stories ought to also cover:
What made the successful women leaders get where they are? Family support, culture, environment, challenges et al. Each one could be an amazingly insightful story, rather than just a statistic.
Likewise, those who really deserved it and never made it – was it the glass ceiling or their choices or a combination of both? Life again need not be judged on a pure SUCCESS = POSITION but success at what price?
There will be several exceptional stories of bright and talented women who chose successful work life balance over a successful career and not so successful personal life. Equally applies to men.
It will be fascinating to hear the life story of Ms Nooyi. To what extent did her living in the US rather than the native country facilitate realisation of fuller potential? The positive roles of husbands/ partners in ensuring that the wives/ partners realise their full potential would be great too. Perhaps this could also become a role model for many a men.
So let us get over a pure left brain approach to a more balanced one, thereby engaging the right side of the brain as well. And look for ways to make it all happen. Not just a statistical reality but a functional metamorphosis of our society.
The Diversity Blog 