Editor's Note: This case study was written by Ernst& Young LLP and in no way does its publication here constitutean endorsement on the part of PC360 or its parent company of EY orits business services. However the story it examines, of WestfieldInsurance's occupational change management saga, takes on nearlyuniversal themes from the business world and is something thatevery insurance professional, especially those in leadershippositions, needs to read. 

The effect that large-scale change could have on morale andengagement of employees is a major concern and potential risk foroperational leaders. A decrease in morale and engagement may impactcustomer service, which is also a significant risk. Additionally, aworkforce that is not highly engaged will resist change — takinglonger for expected benefits to be achieved.

Managing these risks is a priority for insurance leaders todayas the industry drives through an era of extensive change. Manyinsurers are undertaking major change initiatives to transformtheir operational capabilities, modernize technology and adjust tonew market realities. New target operating models enabled by newsystem implementations have been especially prevalent in theindustry, as outdated legacy systems prevent many carriers fromdelivering the flexible and personalized service today'sconsumers demand. Not managing organizational change management(OCM) properly as a part of an operations transformation programcan impede the realization of anticipated benefits, with the causefrequently tied to organizational or people-related factors.Specifically, lack of employee engagement results in people andteams across the organization resisting strategic change andrefusing to adopt new tools and processes. The impact onperformance can be significant, as customer service is disruptedand the expected value from very large investments nevermaterializes.

Our experience has shown that a robust OCM program caneffectively aid in managing these risks by proactivelyaddressing key employee-related needs throughout the initiative.Westfield Insurance ("Westfield"), an Ohio-based P&C carrier,has leveraged a holistic OCM approach to deliver impressive resultson a multi-year claims transformation program. In fact, Westfieldaccomplished a very rare feat: actually boosting employeesatisfaction and engagement during a time of significantchange.

The biggest change

Westfield Insurance undertook an initiative that included thedeployment of a new claims management platform, the redesign ofcore business processes with a focus on the customer experience,and a complete restructuring of the claims organization with newleadership. "When we first started the program, change managementwas my number one concern," commented Mike Prandi,National Claims Leader for Westfield.

While the broad-based nature of the change would challenge manyorganizations, Westfield's leaders, using a coordinated andmultifaceted OCM approach, have actually increased employeeengagement.

Key strategies that have enabled the program's success have beenhigh-profile executive sponsorship, cross-functional stakeholderalignment, regular and tailored communications, comprehensivetraining plans, and an extensive "change champion" network.

This article will highlight Westfield's experience in keepingits associates engaged through a robust OCM program tailored to itsspecific needs, transformation methodology and culture.

Business need for transformation

At Westfield, the need for change in the claims organization wasclear. The company had not upgraded its legacy claims technology ina decade, and a decades-old mainframe-based system limited itsability to optimize claims performance. Westfield identified a coreset of objectives for the program, such as enhancing the customerexperience, boosting the company's analytics capabilities andimproving process efficiency in claims.

To instill new capabilities required to support thetransformational effort, the company chose a new claims technologyplatform. But Westfield recognized the need to go beyond newtechnology, and it worked to restructure the claimsdepartment around functions instead of geography. Selecting andonboarding a new leadership team and devising significant processre-engineering efforts were the other core components of thetransformation plan.

"The new technology was a big part of our change effort, but wewere planning more fundamental changes to the way our businessoperates," said Kerri Weaver, the program's Organizational ChangeManagement Leader. "Because of the broad impact, we knewsignificant investment in organizational change management would berequired to hit our transformation objectives."

Ultimately, the proposed changes impacted the 600-person claimsunit, along with 500 other users outside of the claims organizationacross 30 US service locations. To provide Westfield leadershipwith a solid understanding of the impacts on all employees, thefirst step was to conduct a change impact assessment. Thisassessment produced a road map to define appropriateactivities and incorporate them into the comprehensivechange plan.

The first major change implemented as part of the transformationeffort was selecting and placing a new claims leadership team. Onceinstalled, the leadership team helped design the new businessunits, including defining new roles, processes and performancemetrics to manage future operations. With the new organizationalstructure defined, existing employees were encouraged to apply fornew jobs. There was considerable risk that widespread attrition andloss of institutional knowledge would damage the near-termprospects for the transformation program and hurt the company'sservice to its agents, policyholders and claimants, but Westfieldmade a conscious decision to deploy the new operating modelstructure and transition employees to their new roles in advance ofthe new technology being deployed to help mitigate this risk.

Recognizing the power of OCM

The company's recognition of the value of OCM grew from asuccessful experience on a previous project, which involveddeploying a new business intelligence toolset. In fact, seniorleadership recognized effective change management as the number onepriority in moving the claims transformation strategy forward.

"The people side of change can easily get lost in the technicaland operational complexity we were facing. Yet it's people whoultimately determine success by embracing or resisting change,"said Rob Bowers, National Claims Strategy Leader. "We beganaddressing our change strategy before tackling many technicaldetails – that's how high a value we place on changeleadership."

Backing up the commitment, Westfield allocated significantbudget for OCM. More tellingly, the company hired experiencedchange management leaders, including Kerri Weaver and Patti Miller,Deployment and Training Leader, even before hiring an IT programmanager. External change management professionalsfrom Ernst & Young LLP also joined the team and playeda key role in designing the strategy and execution plan to meetWestfield's specific needs, complementing other EY resources whowere engaged with the process design and technologyconfiguration.

This proactive approach enabled the company to avoid a commonthreat to transformation success: waiting until too late in theproject to address change risks. Often, OCM teams find themselvesin a reactive mode, having to focus the majority of their attentionon "putting out fires" rather than proactively planningfor and addressing the concerns of employees. This insight andendorsement of OCM was important, given the scope and nature ofthis major change initiative, according to Weaver.

"Westfield is very much a traditional company, but marketchanges and competitive imperatives have forced us to greatlyincrease the pace of our decision making and our ability to respondto change in a flexible and adaptable manner thataddresses the needs of each of our unique audiences," Weaver said."The key to becoming a more change-capable organization has beenthe support we offer our people through OCM. In that sense, our OCMefforts have been very much in line with our people-centricculture."

Comprehensive strategy, targeted tactics

After completing a comprehensive assessment of the changeimpacts, the OCM team focused on the opportunities and challengesassociated with stakeholder alignment. All claims leaders andstakeholders met with a change management expert to determine theexact impacts within their business units.

With specific risks mapped and plotted in line with the overallchange timeline, the OCM strategy detailed specific mitigationactions in line with critical milestones. Once the roadmap was clear, the team implemented a formalized change championprogram. Specific change champions were chosen from each impactedbusiness area to support the transformation program team andassumed a key role in communicating the benefits of the program totheir peers, gathering feedback from the field and sharinginputs with the central OCM team. "We stood up the change championnetwork very early in the process, which enabled a cascadingapproach to leadership communications," Miller pointed out.

Monitoring the readiness of the overall organization and eachindividual stakeholder was a critical component of theOCM strategy. Using proven tools and coordinating inputfrom the change champions, the OCM team engaged directly with keyleaders and stakeholders to understand ongoing concerns, assesscommitment for the change and highlight specific changes to come.Key metrics for measuring change readiness were definedand reported as project and deployment planning gatheredcritical mass.

The team embraced a proven, goal-oriented change managementapproach that focused change management teams and project staff onspecific results and outcomes aligned to business objectives.

The approach was notable for its early "heavy lifting" phase,with extensive change-readiness assessments and impactmodeling.

Communicating the vision and addressingconcerns

Senior leaders provided a considerable amount of "face time"through preliminary question-and-answer sessions with theirimpacted business areas. The central OCM team supportedcommunications efforts by providing standard, consistentcommunication packets, which they utilized to cascade informationthrough the organization. The leadership team used thesecommunication tools to genuinely communicate with their teams,effectively building trust in the organization. Impacted employeesrecognized and appreciated the sincerity of the communications.

All communications were tailored to the specific needs of eachaudience. Messages focused on the benefits of the program for bothindividuals and the entire organization. The messages were timed tobuild initial awareness of the program and then later to drive theadoption and ownership necessary to help successfully deploy thenew recommendations. "It was very important for our leadership teamto reinforce the benefits of the program for all, because employeeswanted to know if their job or team would still have a role in thenew operational model," said Weaver. "We hit this themeconsistently and shared information as transparently as possiblewith every communication even when we didn't have all the answers."Consistent messaging was critical to mitigatethe potential for major disruptions that are commonlyassociated with such large-scale organizational change. Thisapproach also helped frame the information most important to theimpacted audience by communicating the "what's in it for me"messages.

To create further visibility, the claims transformationinitiative was "branded," with an official logo and name. Theprogram's name, IMPACT, stands for "Information Management ProcessAnalytics Customer Technology," representing the various elementsof the business case for change.

The branding was designed to attract the attention of associatesand underscore the strategic importance of the change. It wasshared through presentations, newsletters and novelty items (e.g.,notepads, mouse pads and coffee cups). These "novelty items" weredistributed at numerous large group meetings with impactedemployees, where the program team provided new technologydemonstrations and gave presentations about the future claimsoperating model.

To support the communication effort and give the programleadership team insight into the issues and concerns of the keystakeholders and impacted audiences, regular checkpointswere set up with the change champion network. These checkpointsshared "water cooler" perspectives about the change from across theorganization.

Another new effective tactic for gathering input was theplacement of anonymous "suggestion boxes" in visible locations atcompany facilities. Associates were invited to submit theirquestions and concerns about the program through the boxes, whichwere labeled with stickers that featured the branding of theprogram. These inputs, which project teams gathered at regularintervals, served as the basis for the development of frequentlyasked questions (FAQs) documents that were shared broadly acrossthe organization.

Deployment planning stresses collaboration withIT

The ongoing deployment planning effort was driven by the OCMteam and included various functional areas related to theimplementation of the new solutions.

The plan included activities related to training, communication,deployment of the new processes, and the selection and placement ofemployees into the new organizational structure.

The deployment planning builds on a clear set ofwinning practices in insurance transformation programs and isperformed in close coordination with the IT organizationthat will oversee the configuration and implementation of thesoftware. To some degree, it's a matter of all impactedgroups – IT, the business and the project team– learning to speak the same language.

"As the focus of the project shifts from organizationrestructuring to incorporate more technology-centric activities,including implementation, we will rely more on IT'sexpertise," said Miller. "Their input is essential in shaping thedeployment plan and defining training requirements. And we mustensure they understand the people impacts and overall businessvision for the program."

Cross-project coordination with the business and IT is alsopaying dividends by explaining, promoting and demonstrating theproper sequence and priority of change, as well as howdifferent initiatives fit into a bigger strategic picture, for thebenefit of the whole organization.

A foundation for success

While initial deployment of the new claims platform is slatedfor 2014, the potentially disruptive organizational restructuringis largely complete. Significant process changes have already beenmade. It's clear that Westfield is already reaping the benefits ofits OCM effort.

Overall attrition rates have been lower than expected. This isan important result, especially given the concerns about loss ofinstitutional knowledge.

More importantly, there has been very high awareness of theproject, and employee engagement scores have risen significantly.For instance, about 77% of associates indicated that the Westfieldorganization is "changing at a pace that ensuressuccess in the industry," up from 61% in 2011. Similarly,there has been a 10% increase in the number of associates whobelieve "senior leaders provide a clear sense ofdirection" and "senior leaders are interested in thewell-being of employees." Other results demonstrated that employeesfeel informed about the changes and have the equipment, tools andresources to do their jobs.

"People feel empowered by the change and are looking forward toworking more productively and effectively," said Miller. "That maybe the significant value produced by our OCM efforts so far. We'reconfident that we have a strong infrastructure and program in placeto support and manage change proactively going forward into thenext phase of our transformation."

"Despite our well-executed change plan, I was concerned abouthow our people would rate us from an engagement level with so muchchange going on," said Weaver

"The holistic change program — jointly designed by Westfield andEY — delivered appropriate strategic messages, prepared keyexecutives in the art of change leadership, and provided insightinto stakeholder engagement," said Anthony Tempesta, changemanagement lead for Ernst & Young LLP in the Westfieldprogram.

"All of these steps, plus the development of effectivecommunications materials that helped everyone understand thespecifics of change, were critical to maintaining high levels ofengagement and adoption."

Today, other change initiatives at Westfield have adopted manyof the OCM tactics used by the claims transformation program,including the suggestion boxes and the cascading communicationapproach.

Westfield is well on its way to preparing claims to meet theneeds of its agents, policyholders and claimants well into thefuture. After the transformation wraps up in 2014, Westfield willhave a modernized technology infrastructure,rationalized processes and streamlined organization forits claim function. Additionally, the company is emerging from thistransformation with a workforce that is more engaged than when thetransformation began. Those are the attributes required to succeedin today's intensely competitive insurance industry andfor Westfield to meet its future-state customer serviceand business goals.