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5 Reasons the Insurance Industry Needs Cross-Functional Teams

Posted by Darleen DeRosa April 23, 2019


In the past, many companies had hierarchical structures with top-down decision making and limited collaboration between functions. While this type of structure worked effectively in the past, today’s dynamic environment requires companies to make decisions and react to changing circumstances faster than ever. As organizational structures flatten to reduce barriers, cross-functional teams have become increasingly prevalent across different industries.

While many insurance companies retain their traditional, hierarchical structure, others are making efforts to use cross-functional teams to introduce greater flexibility into their operations to realize substantial benefits.

5 Reasons the Insurance Industry Needs Cross-Functional Teams

1: Better Customer Experience

Insurance companies are ultimately in the customer service business. While providers may offer different products and compete primarily over price, most people end up staying with their insurance company because they have a positive customer experience. From dealing with insurance agents, using an automated phone service, or navigating the company’s mobile app, there are a number of ways that customers interact with their provider. If those experiences are positive, chances are good that they’ll remain a customer in the future. When they’re unpleasant or inconvenient, people may consider switching providers.

These customer experience touchpoints require high levels of collaboration between departments. Product development teams from various functional areas must work together to develop these services to ensure consistency across channels. If services aren’t sufficiently coordinated and rolled out as part of a collaborative process, they may not be able to meet the needs of customers. With a cross-functional structure, insurance companies can provide a better overall customer experience and avoid implementation problems that can result from rolling out haphazard services.

2: Improved Communication

Large, complex organizations like insurance companies can easily become compartmentalized, with different departments focusing only on their specific responsibilities and processes. This is especially true in the case of mergers and acquisitions that bring together departments from different organizations under the same proverbial roof. Communication channels and practices can vary quite a bit between departments, sometimes preventing important information from flowing through an organization effectively. When information has to go through multiple gatekeepers, it can severely impact decision making at the organizational level.

Cross-functional integration can help to overcome these problems. Since the team is comprised of members from disparate departments, they can share information quickly and effectively without having to wait for it to pass through multiple intermediaries. This allows cross-functional teams to react quickly, often reaching decisions and developing innovative solutions much faster than the traditional hierarchical structure could manage.

3: Innovation and Change

Different departments within an organization can often become quite stuck in a certain mode of thinking. This could take the form of a risk-averse culture, an adherence to long standing procedures, or a general resistance to change. When there is little contact between departments, they may have difficulty adapting to new situations or adopting a new perspective on a problem. On an organization level, this can result in a company that lacks the flexibility to adjust to new circumstances.

Cross-functional integration is an effective means of shaking up the status quo. By bringing new perspectives and influences to bear on a situation, these teams can help build a culture of innovation. Cross-functional teams make it easier to secure buy-in for new initiatives and innovative solutions because they represent a diverse range of input and influences drawn throughout the organization.

4: Productive Collaboration

When different departments within an organization need to work toward a shared goal, it can be difficult to keep everyone focused on that goal. Each department may put a great deal of time and energy into their portion of the task, but if they’re not working in a collaborative fashion, their final results may not be compatible with another department’s efforts. Changes in one part of a project might impact another area that another department is responsible for.

Take, for example, a mobile application that allows customers to request services from an insurance agent. If the IT department developing the app begins designing the software interface only to later discover that the sales department has a different perspective about what the app needs to do, the entire project will be delayed and over budget. Implementing cross-functional teams to facilitate shared cross-organizational objectives can help to avoid these problems by allowing key participants to engage with one another throughout the course of the project.

5: Build Better Leaders

The insurance industry is currently undergoing a significant demographic shift, with as many as 400,000 employees set to retire within the next few years. When these employees depart from the workforce, they will take with them decades of valuable institutional knowledge that is difficult, if not impossible, to replace. Mergers and acquisitions also continue to reshape the insurance sector. The first half of 2018 alone saw 247 M&A deals announced for a total value of $28.6 billion. In such a volatile environment, insurance companies need to develop a new generation of agile leaders to confront the challenges of the future. Distinguished by their ability to connect, adapt, and deliver, agile leaders excel at balancing often conflicting organizational challenges to maximize investments without compromising long term goals.

Implementing cross-functional teams can provide high-potential leaders with the opportunity to work with experienced leaders while also getting broad exposure to different parts of the organization. Successful agile leaders understand how different systems and departments within an organization interact, which helps them to anticipate how changes in one area might impact another. Working in a cross-functional organizational structure provides hands-on experience with different departments and processes, which will help them make better decisions in the future. They also can begin building relationships with the people in those departments, creating connections that will lay the foundation for trust in the future.

Cross-functional integration may be challenging to implement, but their potential benefits are substantial. From delivering a better customer experience to developing the next generation of agile leaders, cross-functional teams can break down boundaries within insurance companies and position them to thrive in a dynamic future that requires creative, innovative solutions.

Cross-Functional Team Building

Topics: insurance industry

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