From his classic book, Out of the Crisis,
here's a brief review of his comments on this point:
- What an organization needs is not just good people; it needs people
who are improving with education.
- There is no shortage of good people. Shortage exists at the high levels
of knowledge—and this is true in every field.
- One should not wait for a promise of reimbursement for a course of study.
Moreover, study directed toward immediate need may not be the wisest course.
- Advances in competitive position will have their roots in knowledge.
I'm tempted to say, "What more need be said?"—and stop right here. However,
each of these points and subpoints needs to be applied to the insurance profession.
This will have special relevance to those of us who see our "industry" as a
- Customers' needs are paramount,
- Insurance principles, practices, and processes are understood in depth,
- Ethical behavior is consistently practiced … in our business that's
been based on "utmost good faith and trust" for centuries.
Let's take Dr. Edwards Deming's subpoints of #13 one at a time.
What an organization needs is not just
good people. It needs people who are improving with education.
If you've been following this series, you'll recall that Dr. Deming's Point
#6 was "Institute Training."1 It's critical to draw
a clear distinction between training and education. The differences are
major! One distinction I've always liked
and view as highly valid is this:
- Training teaches you HOW you do something.
- Education teaches you WHY you do it.
The other distinction I like is that education gives you a solid foundation
in insurance principles—principles that
rarely, if ever, change. On the other hand, what we learn in a training session
are the practices that emanate from these
principles—practices that can change literally overnight—become obsolete and
of no long-term value.
Both education and training have value, of course. It's simply a matter of
difference in purpose. The key is to use both—as
Deming recommends—but do so appropriately.
One common criticism I frequently hear is insurance
education is too theoretical, while insurance
training is highly practical. The fallacy
of this criticism is fairly obvious. There are practical theories and impractical
theories. Theory and practice are not opposites. A good education program, for
example, CPCU, teaches practical theories.
An old friend from the Institutes, Evan Clingman, is remembered for his coining
of a word about practical theories, one you may never see in any other publication
(as Evan would be quick to agree):
Theopractiretical. [Pronounced: Thee-o-prac-ti-ret-i-cal]
It emphasizes the importance of understanding theories and principles that
underlie what it is we do day in and day out. Whether it's a claim problem or
a coverage issue, understanding "the fundamentals" is essential.
Understanding the principles on which insurance is based enables us to think
through and solve thorny problems, even those with new and unprecedented circumstances—problems
that others may not be able to solve. For example, if everyone involved in the
Hurricane Katrina aftermath understood these principles, much litigation could
have been avoided, not to mention the adverse publicity for a significant segment
of our industry.
Finally, formal education tends not to vary by job function as does training.
Anecdotal information "heard on the street" includes an ever-growing knowledge
and skill gap, a gap between what underwriters, adjusters, brokers, and others
need to know and what they actually
According to Arthur Flitner, senior director of Knowledge Resources at the
Institutes (American Institute for CPCU and Insurance Institute of America),
the knowledgeable insurance workers are
the baby boomers. As more and more boomers retire, the remaining "old pros"
become increasingly scarce and therefore more valuable. A skilled underwriter
in a specialty area can change employers at will, earn six figures, and receive
a substantial signing bonus to stick around for a few years.
Mr. Flitner also comments that younger workers who should be filling the
positions vacated by the "old pros" are, as a group, more likely to be pursuing
formal education (typically MBA programs) than insurance-specific programs such
as CPCU. Moreover, after pursuing formal education, younger workers may not
want to spend additional time in insurance-specific educational programs, at
the expense of spending quality time with their families. Consequently, as the
"old pros" continue to retire, the insurance industry is likely to experience
an insurance knowledge drain.
Mr. Flitner also comments that agents and brokers who must satisfy state-imposed
continuing education (CE) requirements are finding that low-quality programs
are the easiest, cheapest, and/or quickest to do. These attractive options crowd
out time for real insurance education that takes more time and, in some cases,
will not even satisfy CE requirements.
His concluding comment is this: Having to read and comprehend a college-level
textbook seems to be a major obstacle to many insurance workers today. But some
levels of knowledge cannot be attained without the willingness and ability to
read and understand intellectually challenging material.
When I read Mr. Flitner's above comments, I have great respect for insurance
professionals who want and need to enjoy more family time, as they should. However,
there's such a strong correlation between formal education and the ability to
provide well for one's family over time that these needs should not be viewed
as mutually exclusive. Responsible family members should seriously consider
"balancing" both needs and pursuing both goals.
Moreover, I really worry about the reports I see about increasing numbers
of younger people demonstrating behavior patterns characterized by some as the
essential elements of narcissism. This "me, me, me" generation will require
a different management attitude and approach to professional development and
leadership training. Time will tell if these strategies and tactics of insurance
company management and educational institutions will succeed in this effort.
There is no shortage of good people. Shortage
exists at the high levels of knowledge, and this is true in every field.
We also hear and see that insurers today are more focused on giving employees
"mere training" as opposed to "real education," as distinguished above. Unless
employees can see—on their own—how "real insurance education could help them
move beyond their current occupation niche, they may start believing, erroneously,
that what best serves their employer's short-term needs (mere training) also
best serves their own personal desires for career advancement.
These trends are not unique to insurance. They tend to reflect trends within
most if not all of contemporary society. For example, a recent Conning Research
study of 15 insurers regarding their claims operations found the following.
- All 15 insurers are experiencing a shortage of personnel and are unable
to retain people after hiring.
- However, training and development do not make each insurer's list of
performance drivers over the next 5 years. Instead, such lists typically
include technology, regulatory compliance, segmentation of process, and
centralization. Nothing about professional development and education except
as included in technology and compliance training (not education).
According to Donna Popow, the Institutes' senior director of Knowledge Resources
in the claims area, a 2001 study by the Institutes' Center for Performance Improvement
and Innovation found:
- 37 percent of respondents gave employees 2-4 weeks of training each
- 35 percent gave more than 4 weeks.
- 12.5 percent gave 1-2 weeks.
- 7.5 percent gave less than 1 week.
- The balance offered no training at all!
So, as we can see, 72 percent offer at least 2 weeks—which is excellent;
however, the wording used is "training," not "education." That may or may not
be the reality of these employers' programs. Perhaps "real" education is included
as well. Let's hope so.
One should not wait for a promise of reimbursement
for a course of study. Moreover, study directed toward immediate need may not
be the wisest course.
What I especially like about Dr. Deming's philosophy is he clearly places
responsibility on the individual to pursue
his/her professional education and development—and do so without any promise
of employer reimbursement. That's the proper source of personal motivation:
internal, not external, motivation!
It's certainly okay for employers to encourage education and reinforce its
value to everyone through payment for texts, tuition, examination fees, etc.
Yet Deming's point is that self-motivation should come first and financial reimbursements
or rewards second.
According to Ms. Popow, a 2006 Survey of Institutes' AIC (Associate in Claims)
program completers revealed the following.
- The majority of respondents used the self-study method to prepare for
exams, and 45 percent of the respondents preferred that method.
- Self-improvement and increasing their chances of employment or advancement
were the primary reasons for undertaking the designation.
- 77 percent said their employer considered designations when hiring or
Anecdotally, we have learned that even though some insurance companies may
still offer rewards and encouragement to employees who pursue real insurance
education, the actual culture that exists in many companies does not reinforce
the company's official stance on insurance education. For example, if most of
your supervisors and managers have not themselves pursued real insurance education
and one or more professional designations, that will speak louder to you than
the words of official incentives.
Dr. Deming's third subpoint also focuses on the (career) horizon in which
employees take education courses that fulfill both current and future requirements—not
just something needed "next Monday morning," as Peter Drucker was fond of saying.
That just-in-time course is the role of training. It's not the role of education.
According to Chuck Nyce, also a senior director of Knowledge Resources at
the Institutes, employers are more willing to reimburse for formal education
programs leading to undergraduate or graduate degrees within federal tax guidelines.
Employers seem to be much more flexible in allowing the average employee to
choose his/her own degree programs without recommending any schools or programs.
This is good, of course, because it is long-term, and leads to lifelong learning.
Mr. Nyce also commented that the biggest trend is in the Executive MBA programs
where companies target specific E-MBA programs for their managers and fast track
employees. This trend is not as specific to the insurance industry. Any answer
regarding formal education needs to discuss the E-MBA trends.
A similar emerging trend is the integration of MBA programs with CPCU studies
and examination preparation, so both an MBA and CPCU can be earned concurrently.
This collaboration needs to be encouraged wherever an accredited MBA program
On another front, a survey conducted by the Institutes in 2006, shows dramatic
growth of formal education within the insurance industry. Only 58 percent of
respondents over age 55 have a bachelor's degree or higher, yet almost 80 percent
of those who are age 34 or younger do. Here
are the results of their study within this context.
Advances in Competitive Position Will
Have Their Roots in Knowledge
As a broker for the past 45 years (with a recent conversion to risk management
consulting), I've always looked for (at the very least) empirical data to prove
this Deming subpoint; however, there's none available that I can find. There's
a lot of anecdotal information that most of us see on a regular basis. Therefore,
I simply consider this subpoint a "self-fulfilling prophesy." An attorney may
(somewhat loosely) use the legal term "res ipsa loquitor"—the thing speaks for
Lots of platitudes and sayings attest to the general understanding that "knowledge
is power." The extent to which, if at all, insurance buyers attach value to
a broker's knowledge is not really the issue here. What
is the issue is how competitive a broker
can be when armed with "more knowledge" than is a competing broker. All I can
say is an unequivocal "Yes!" Certainly there are instances when political or
unique pricing conditions alter the outcome, but even those conditions can and
do emanate from "superior knowledge" on one side of the competitive battlefield.
The same can be said for underwriters, adjusters, and others who want to
advance in their careers. Knowledge trumps lots of other selection criteria—not
all, of course, but certainly most.
So, what conclusions do we draw from all these data and anecdotal information?
- It's critical to understand the difference between education and training.
- What we learn in an education mode are practical theories and principles
that will be of value long-term—and help us solve problems—even those in
previously unexplored complexities.
- Training is still needed (see Dr. Deming's
point #6 in this series). But what we
learn in a training mode can become obsolete in the short term.
- The "war on talent" continues in all fields. Yet, even talented people
need continuing education and professional development … on a lifetime basis.
- Employers should continue to support (financially and otherwise) an
employee's professional development; however, absence of such support should
not deter anyone from pursuit of formal education degrees and designations.
- Self-study and study in small self-directed groups appear to be the
preferred methods today for education. Classroom with "spoon-fed" information
seems to be preferred for training.
- Education and professional development planning need to be focused on
the long-term, including study of leadership principles and practices as
well as those of technical insurance topics.
- Such planning needs to consider the current lifestyle needs of younger
generations who need to balance their family life with their professional
- "Knowledge is power" applies to one's competitive posture, whether in
sales or career advancement.
To conclude, John F. Kennedy said, "Leadership and learning are indispensable
to each other." That also "says it all"—almost as well as Deming's Point #13.