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Systems Thinking in Workers’ Compensation Claims Organizations: Expanding Capabilities for Success

24 Jul, 2023 Claire Muselman

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Sarasota, FL (WorkersCompensation.com) -- In the world of workers' compensation claims organizations, success often stems from the ability of individuals to think beyond the immediate and apply systems thinking to their work. Systems thinking pushes forward the idea that claims adjudication is more about decision-making skills than the old-school mentality of paper pushing. Claims adjudication encompasses thinking outside the box or the checklist approach because of the involvement of human beings. Claims are where significant meaning and purpose can be found within the adjudication process, empowering those who are the claims "handlers" to understand they are life impactors and can change the trajectory of someone's life with each claim they are involved with along the way.

Systems thinking empowers professionals to envision the future, create a detailed mental picture, and diligently work towards materializing that vision. For the claims world, this is framed by realizing the world can be better tomorrow, and we each have the single ability to impact it today by how we treat the individuals with whom we encounter. By steadily building, growing, and achieving workers' compensation claims, organizations can continuously fill in their vision, resulting in great success by providing meaningful, purpose-driven programming facilitating the inspiration needed for their adjudicators to feel the impact they can make.

This article delves into systems thinking as applied to claims organizations today, explaining its fundamental characteristics and illustrating how they relate to the grander landscape of workers' compensation. Additionally, this article explores the five major components of a learning organization and demonstrates how they align with systems thinking. Furthermore, it discusses how systems thinking expands the workforce's capabilities, an area most insurance organizations need help to attract, sustain, and develop. Finally, it highlights the differences between learning organizations and traditional organizations regarding characteristics and functions, which all organizations must address in the present climate of the insurance and risk management world.

Systems Thinking - The Basics

At its core, systems thinking involves viewing an organization as a set of interconnected components working together to achieve a common objective. It is about understanding the intricate pieces that fit together within an organization and comprehending each element's impact on the system as a whole. Systems thinking acknowledges that even small changes made to these units can have significant ripple effects on other components, leading to a greater impact on the entire organization.

Organizational Relation to Claims and Beyond

From an organizational standpoint, systems thinking emphasizes the interdependence and independence of various entities within the organization. Claims have predominately been thought of as the 'red-headed stepchild' of the insurance organization, usually a bummer to invite to meetings, and thought of only as a negative because they do not facilitate income growth for an organization; they spend it. Contrary to popular belief, claims organizations can make or break a client experience as they are customer-facing during the more impactful and vulnerable times of need. Organizational systems provide a clear example of this interdependence, with overarching corporate goals that require the collaborative efforts of smaller subsets to be achieved. Inviting claims for discussions at all landscapes can help find marketable areas and enhance thought behind go-to-market strategies that other leadership or department heads may have yet to consider. Workers' compensation, being focused on human experience, is an imperative area of focus because of its direct impact on human capital.

Each department within an insurance organization connects in some way to others, and any action taken within one department can trigger a reaction that affects the entire system. The ripple effect happens by simply looking at communication within an organization, or rather, the murkiness throughout most insurance organizations. Establishing feedback mechanisms throughout the organization is essential, allowing for a comprehensive understanding of the positive and negative impacts and avoiding any potential snowball effects. Think about this from a technology standpoint or by launching a new marketing approach for an insurance line. How does this impact other areas? Suppose an initiative is to move into the manufacturing space because it is an excellent area to write new business. Does this align with your organization's mission, vision, and values? Do the marketing efforts make sense regarding delivery from the claims adjudication process? Does the underwriting team speak manufacturing language, understanding the nuisances present? Does risk management or loss control understand how to service these types of groups, understand the inherent risks, and how to communicate in a consumable language effectively? By applying systems thinking, insurance organizations can anticipate the implications of their actions before they arise, enabling proactive measures to take. Anticipating implications helps insurance organizations be more proactive; it also helps build trust and transparency through their human capital by adding seats to the table, listening for considerations, and receiving feedback along the way.

Insurance Companies as Learning Organizations

Learning organizations encompass five significant components: planning, strategies, communication, relationship development, and change management. These components align with the principles of systems thinking, as they emphasize understanding the interconnectedness of the organization and its parts. Interconnectedness exists within an insurance organization and the claims team. Understanding how your leadership style impacts this is a cherry on top when looking at how to establish key performance objectives and enhancements to individual and overall performance.

In a learning organization, leaders embrace systems thinking to envision the larger organizational goals and create a roadmap for achieving them. When is the last time a claims leader has discussed with a claims professional how their direct role impacts the organization? How about how their role is a ripple effect on someone's livelihood? And what about how their role affects the world? These conversations happen far less often than they should, and to attract the younger generations, meaning and purpose must be at the forefront of positions within an insurance organization, especially a claims operation. By looking at the bigger picture, claims leaders can effectively plan the journey from point A to point B, not only at the insurance line level but also to establish benchmarks for the insurance organization. Strategies developed to involve all relevant parties and anticipate potential challenges based on trend analysis and predictive analytics. Transparent communication of the organization's vision must be inspiring and not simply to grow more profitable. People want to believe they are part of something bigger, and this space is the best area to showcase an individual claims contributor! Focusing on the processes in place fosters trust and enables leaders to solicit honest feedback from all levels of the organization. Ask claims professionals where help is needed. Take the input and cultivate action! This feedback loop provides insight into the unintended consequences and ripple effects and enhances the understanding of how individual units impact the larger organization.

Relationship development is pivotal in a learning organization, as trust is a prerequisite for successful change implementation and collaboration among departments. Do you have exemplary leadership in place? How well have your leaders built a dynamic team environment through trust, transparency, relationship building, and human capital development rather than metrics and paper pushing? By anticipating potential barriers and proactively addressing issues, change management becomes more fluid, contributing to relationship building through effective communication. Look in the mirror. How do you align with relationship development with your team? Are there any areas to enhance? Strategies are formulated based on the shared vision, allowing the organization to progress toward its mission and corporate goals. Do you do a great job of communicating this fluidly to your team consistently? Words matter, and the language you use either enhances or deflates the progress.

Workforce Expansion

Systems thinking expands the workforce's capabilities by fostering a learning environment within the organization. Personal development has been at the forefront of claims professionals' minds for years. The past decade of the Rising Medical Solutions Benchmarking Studies has showcased this repeatedly. Systems thinking encourages organizations to promote continuous learning among their members, which is one of the great benefits of having a claims team that communicates. Systems thinking allows individuals to gain a broader perspective on their specific roles and the overall organizational environment in which they operate. By comprehending the interrelationships and interdependencies within the system, individuals can develop mental models that contribute to creating a shared vision. This vision expands beyond the simplistic approach that insurance companies are here to make money. Cultivating a vision around restoring the livelihood of humans has a much deeper purpose with an incredibly inspiring ripple effect. Team learning, leveraging individual strengths to enhance collective intelligence, becomes a cornerstone of a learning organization. Through wins, less-than-desirable outcomes, and working with humans in vulnerable positions, claims teams go through a lot together. Focusing these teams on a centralized purpose of making good things happen for one another can stem from how they approach the claims they adjudicate.

In a workforce that embraces systems thinking, the capabilities and contributions of individual members are not isolated. Instead, the organization recognizes its claims professionals' collective talents and expertise. Welcome to the team approach and how workplace dynamics can self-regulate with rewards, an enhanced sense of self, and an engaged team unifying for a purpose larger than themselves. Focusing on claims professionals' collective talents and expertise fosters a culture of constant feedback and open communication, allowing the shared vision to be refined and organic processes to develop. By leveraging the diverse perspectives and skills of its workforce, an insurance organization can adapt more effectively to changes in the external environment and innovate to stay ahead, which, in the present climate, is incredibly beneficial for the organization's viability.

Learning Organization Versus Traditional Organization

Learning organizations evolve by continuously transforming themselves, keeping innovation at the forefront of their viability. Learning organizations encourage their members to develop themselves toward their chosen goals and purposes, resulting in a more vibrant and engaging organizational environment driven by personal mastery. How well are your claims operation focused on developing its people? What type of growth is available, and how have you kept this as an annual review objective? Consistent reflection is a crucial practice within learning organizations, aiming to clarify and improve decisions made and outcomes achieved. How much focus exists on thinking outside the box and enhancing the team members within your claims organization? Building a shared vision among all members cultivates a solid commitment to the organization and its objectives. Learning organizations foster team learning, allowing members to benefit from collective thinking and jointly enhance their capabilities. Finally, learning organizations shift their thinking by embracing systems thinking, focused on understanding the interrelationships and formations that shape system behavior. Shifting focus enables organizations to act more effectively and align their processes with the broader dynamics of a global environment.

In contrast, traditional claims and insurance organizations tend to operate more rigidly and hierarchically. The old-school way of 'we have always done it this way' does not work anymore. It is time to embrace the new and develop better leadership and learning organizations. Decision-making is often centralized, with little emphasis on collaboration, decisions from the C-suite, and collective intelligence. The focus is primarily on individual performance and achieving specific targets rather than fostering a learning mindset and adapting to change. What is crazy about this is that humans are not all the same, and the standard cookie-cutter approach to human behavior is no longer viable. Personalization and the humanistic approach are the bare minimum. Traditional organizations may need to pay more attention to the interconnectedness of their units and anticipate the potential consequences of their actions on the more extensive system. Thinking of a one-size-fits-all approach rooted in profit dollars over human capital is where we have seen the downfall in claims operations and where the most significant opportunity for this industry exists to drive meaning, enhance purpose, and attract the next generation!

Systems thinking serves as a guiding principle for workers' compensation claims organizations, enabling them to navigate complex dynamics and achieve their goals. By adopting a systems thinking approach, claims organizations and insurance companies gain a deeper understanding of perspectives and recognize that the world exists through interrelated forces driving the behavioral patterns of our workforce. This approach expands the capabilities of organizations by allowing them to anticipate and harness the impact of these interrelated forces, looking at proactive means of innovation. Systems thinking fosters a learning mindset, encourages collaboration, and empowers teams to create new patterns, explore new paths, and learn from one another. Ultimately, by embracing systems thinking, workers' compensation claims organizations are better equipped to comprehend the systemic impact of their actions and move forward with confidence and purpose. Claims organizations and insurance companies who embrace these concepts will be the successors as we move into the new face of insurance.


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    About The Author

    • Claire Muselman

      Meet Dr. Claire C. Muselman, the Chief Operating Officer at WorkersCompensation.com, where she blends her vast academic insight and professional innovation with a uniquely positive energy. As the President of DCM, Dr. Muselman is renowned for her dynamic approach that reshapes and energizes the workers' compensation industry. Dr. Muselman's academic credentials are as remarkable as her professional achievements. Holding a Doctor of Education in Organizational Leadership from Grand Canyon University, she specializes in employee engagement, human behavior, and the science of leadership. Her diverse background in educational leadership, public policy, political science, and dance epitomizes a multifaceted approach to leadership and learning. At Drake University, Dr. Muselman excels as an Assistant Professor of Practice and Co-Director of the Master of Science in Leadership Program. Her passion for teaching and commitment to innovative pedagogy demonstrate her dedication to cultivating future leaders in management, leadership, and business strategy. In the industry, Dr. Muselman actively contributes as an Ambassador for the Alliance of Women in Workers’ Compensation and plays key roles in organizations such as Kids Chance of Iowa, WorkCompBlitz, and the Claims and Litigation Management Alliance, underscoring her leadership and advocacy in workers’ compensation. A highly sought-after speaker, Dr. Muselman inspires professionals with her engaging talks on leadership, self-development, and risk management. Her philosophy of empathetic and emotionally intelligent leadership is at the heart of her message, encouraging innovation and progressive change in the industry. "Empowerment is key to progress. By nurturing today's professionals with empathy and intelligence, we're crafting tomorrow's leaders." - Dr. Claire C. Muselman

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