by Russell Hutchinson
Now might be a good time to cut costs – nearly everybody is taking that opportunity – like so many strategies, it’s actually obvious. But this is why so much recent management thinking has focused on the challenges of execution.
The difference between a great company and an awful company, is how well they execute their strategies – which are often similar, but crucially different. That even some good businesses will fail is one of the tragedies of tough times.
But some companies are so bad they will even screw up things as straightforward as cost-cutting. In the world of insurance smart cost-cutting might mean hacking away at layers of management, attacking the usual slackness that creeps into purchasing during the good times, and the solid, line-by-line, review of expenses.
But the areas of cost-cutting that don’t make sense are these – declining legitimate claims, or even ‘just’ the delay of legitimate claims-paying, and the cutting back on specialist expertise – such as underwriters and claims managers.
You see, the curious thing about the recession is that it has been a great time for insurance – almost alone in the whole troubled field of financial services. But insurance is, proverbially, about peace of mind. If you can’t be sure they’ll pay out, that reputation will be gone for a long time.
In this case the company’s competitors were busy working the marketplace to tell them that their instructions to claims managers had not changed at all just because it’s a recession. That’s smart.
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