Filed Under:Claims, Education & Training

"Moneyball" and Winning An Unfair Game

Applying Sabermetrics to Claims

In the new movie Moneyball, the art of sabermetrics takes center stage, as this real-life saga of Billy Beane and the Oakland A’s unfolds. Sabermetrics is the analysis of baseball through objective, empirical evidence, especially baseball statistics that measure in-game activity rather than industry activity, such as attendance. By focusing on actual contribution to a team, use of this formula theoretically enables teams to hire undervalued players, in turn bringing salaries in line with affordability.  

In Moneyball, author Michael Lewis examines the disparities between big market teams, such as the New York Yankees, who can fund a roster of big name, high-paid, free agents, and small market teams struggling to fill the stands. A prime example was the 2002 season, where the Yankees had a payroll of $126 million, and the A’s had a payroll of about $40 million. Despite the disparity, the two teams tied for the best record in baseball, each winning 103 games, though both lost in the playoffs. The A’s, as it happened, lost to the small-market Twins, who paid their players just an iota more than Oakland.

Salary Evaluation

In any industry, sports or otherwise, there are invariably big-name players and those trying to make a name for themselves. In any organization, salaries are a large part of operational budgets, often exceeding the 50-percent mark in terms of capital outlay. So it makes perfect sense to evaluate salaries, provided there is no detrimental impact to quality or outcomes.  As I discuss in Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary, the quality of a claims staff is often driven by far more than just salary. 

In this week’s expose, we will discuss what steps can be taken to put together the winning team.  

In addition to compensation, we will examine the following key characteristics of the successful team:

1.      Passion

2.      Attitude

3.      Intuition

4.      Innovation

Like the new film starring Brad Pitt, concepts similar to sabermetrics can be applied to any profession, including claims. By using objective evidence, it is possible to selectively identify the characteristics of “A” players, “B” players and “C” players, with the latter being the greatest impediment to success. 

As basketball coaching great John Wooden once said, “I’d rather have a lot of talent and a little experience than a little talent and a lot of experience.” In translating this during my own career when challenged with growing a claims organization, I found that hiring talent with little experience provided a wealth of opportunities to train, develop, and motivate a pool of employees to consistently exceed expectations. 

This can be equated with using the draft as opposed to a free agent acquisition. Like any organization, there is a time and a place for the latter, but when looking for consistent, long-term results, there is no substitute to effectively using the draft model.  

In my experience, there was initial resistance from a hierarchy that was accustomed to hiring experience in lieu of absorbing training costs. After all, why train a talented individual to go work for someone else? Then again, what better way to provide young talent with an internal path to long-term career opportunities than building bench strength and having a strong succession plan in place? 

When applying sabermetrics to claims, there are a few considerations. First, consider that an organization’s roster may be composed of 20 percent “A” players; 60 percent “B” players; and 20 percent “C” players. Second, recognize that 80 percent of organizational challenges—such as delays, excuses, absenteeism, and lack of compliance—will come from the latter. 

Third, it is worth noting that the largest pool of people, the B team, will either move up or down, depending on strength of leadership. 


Don't Mistake Judgments for Results

One key fundamental of sabermetrics is to not mistake judgments for results. A judgment would dictate that a two-year claim professional cannot be an effective manager. A result would reflect that a two-year claim professional that moved into management most likely had a work group that consistently exceeded expectations. This is a key fundamental difference. 

This is not to say that there aren’t “A” players with extensive tenure; there are. However, what it does reinforce is that tenure should never be the sole determiner of quality. Rather, the effective organizational model moves away from tenure; it focuses on the quality of the individual and his or her ability to deliver consistent results.

So how does one determine whether a person has those qualities? In some organizations, personality testing is used. There is no question that this can be beneficial in claims where it clearly takes a certain type of person to be successful. For those who have spent time in the trenches, be it in the field or in management, there is a ubiquitous recognition that claims is not for everyone. Nor should just anyone be considered for this type of career.  

When not using external testing, consider all of the qualities that the person brings to the table.  What is his background? Has he worked in chaotic environments, requiring snap decisions?  Has she attended big, bureaucratic schools where simply changing classes could be an exercise in futility? Has he been forced to multi-task and think outside the box in environments where exceeding customer expectations is a requirement for job continuity? Has the candidate had direct interaction with, and influenced decision makers? 

These are just a few of many questions that should be asked when looking to develop a team built for success. It is important to remember that failure is not fatal, but failure to change very well might be. It is the little things that make the bold goals attainable. It is this level of focus from above that can fundamentally transform any team from ordinary to extraordinary.  


Featured Video

Most Recent Videos

Video Library ››

Top Story

Interpreting dwelling clauses in homeowners' policies

While insureds are riding a winning streak in these disputes, insurance companies continue to deny claims on the basis of residency.

Top Story

Top 10 cities attracting millennial homebuyers

When they want to start settling down, many millennials are opting for the quieter life paired with plenty of career opportunities.

More Resources


eNewsletter Sign Up

Claims Connection eNewsletter

Breaking news on disasters, fraud, legal trends, technology, and CE initiatives for the P&C claim professional – FREE. Sign Up Now!

Mobile Phone

Advertisement. Closing in 15 seconds.