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aspx The Shackleton Approach: Effective Leadership Throughout the Claims Process August 2002 Daniel Torpe relates leadership lessons from a historical figure and an e!ecutive facing disaster in discussing the comple!ities of large insurance claims and the importance of good leadership to effect smooth settlement" by Daniel T. Torpey Ernst & Young !!" #hat $in% o& lea%er %oes it ta$e to help %irect your company through the claims process' This article ta$es lea%ership lessons &rom a chapter o& history. (ere is the story o& )ir Ernest )hac$leton an% how his great lea%ership s$ills o& his &amous *ntarctic a%+enture can be use% %uring the claims process. *lso %iscusse% are the complexities o& %ealing with a large insurance claim stressing the important role that goo% lea%ership plays to e&&ect a smooth settlement. To conclu%e a real li&e example o& how an executi+e who applie% the )hac$leton approach to a business interruption an% property %amage claim. Comple! Claims #e$uire Comple! Planning ,any businesses in -ew Yor$ are now %ealing with the ar%uous process o& complex claim resolution. .urrently many o& the larger claims still remain open an% issues ranging &rom the scope o& property %amage to how to apply certain business interruption en%orsements remain unresol+e%. /n 0#orl% Tra%e .enter Terrorist 1usiness /nterruption: .laims #ill .hallenge "olicyhol%ers 0 /2,/.com 3ebruary 2002 note% the challenging issues that &ace corporations in han%ling groun% 4ero claims such as: multiple occurrence issues +aluation o& +aluable papers/computer &iles ci+il authority ingress/egress i%le perio%s contingent business interruption exten%e% in%emnity perio%s permanent relocation an% asbestos cleanup. 3inancial ser+ice companies that routinely close multi5million %ollar %eals o+ernight now must %eal with open claim items an% issues 66 months a&ter the e+ent. The %epth o& this col% an% lonely process is enough to &rustrate any claims team. /t will ta$e great enthusiasm character an% lea%ership to help companies maintain &ocus an% wor$ through claim resolution without entering a litigation &orum. A%out Leadership Thri+ing un%er pressure is what separates lea%ers &rom &ollowers. "icture yoursel& as a lea%er o& an expe%ition across *ntarctica at the turn o& the 20th .entury. /t7s you a state5o&5the5art -or%ic ice brea$ing +essel 28 men 28 %ogs an% rations &or 680 %ays. You must &in% a way to lea% these men through the next 68 months at 90 %egrees below 4ero loc$e% in the ice isolate% an% with o+erwhelming o%%s against your sur+i+al. *ny

rational person woul% say it coul%n7t be %one. 1ut that is :ust what )ir Ernest )hac$leton &ace% an% o+ercame so long ago. *ll his men sur+i+e% an% ne+er %oubte% his lea%ership or their ability to sur+i+e. This great &eat has been recogni4e% the worl% o+er as one o& the most ama4ing examples in lea%ership. There are a lot o& lessons to be learne% &rom Ernest )hac$leton that will help you i& an% when you are &ace% with your own %aunting challenge. Shackleton: A &reat Leader The tale o& )ir )hac$leton7s +oyage aboar% his ship the En%urance is a most inspiring an% exciting tale %uring a time when man %are% to explore one o& the last an% most remote places on Earth. *ccor%ing to a recent boo$ Shackleton's Way by ,argot ,orrel an% )tephanie .apparell: (e has been calle% 0The greatest lea%er that e+er came on ;o%7s earth bar none 0 yet he ne+er le% a group larger than 2< he &aile% to reach nearly e+ery goal he e+er set an% until recently he ha% been little remembere% a&ter his %eath. 1ut once you learn the story o& )ir Ernest )hac$leton an% his remar$able *ntarctic expe%ition o& 6=6>56=6? you7ll come to agree with the e&&usi+e praise o& those un%er his comman%. (e is a mo%el o& great lea%ership an% in particular a master o& gui%ance in crisis. During those tough an% col% months he hel% his crew together inspire% them an% moti+ate% them. (e ma%e sure they un%erstoo% their ob:ecti+e an% what role each must play to attain their goal. (ere is another accounting: Ernest Shackleton's ()(* vo age to the Antarctic" @ust one %ay7s sail &rom the continent the ship En%urance became trappe% in sea ice. 3ro4en &ast &or 60 months the ship was crushe% an% %estroye% by ice pressure an% the crew was &orce% to aban%on ship. *&ter camping on the ice &or 8 months )hac$leton ma%e two open boat :ourneys one o& which 55 a treacherous 8005mile ocean crossing to )outh ;eorgia /slan% 55 is now consi%ere% one o& the greatest boat :ourneys in history. Tre$$ing across the mountains o& )outh ;eorgia )hac$leton reache% the islan%7s remote whaling station organi4e% a rescue team an% sa+e% all o& the men he ha% le&t behin%. A3rom the *merican ,useum o& -atural (istory #eb5site.B The Po+er of &reat Teams and Leaders )ir )hac$leton was un%eniably a great lea%er. (owe+er a lea%er is only as goo% as his or her team. (ere are some o& his tips on &orming groups &or tough tas$s. .onsi%er these concepts when %e+eloping your own claims team:

Shackleton's ,a of -orming &roups for the Toughest Tasks

.onsi%er smaller group meetings where more &ocuse% an% pro%ucti+e con+ersations can ta$e place in an e&&ort to resol+e claim issues as they %e+elop. The best way to han%le the biggest tas$s is o&ten to %i+i%e the sta&& into teams. .reate units that are sel&5su&&icient but un%erstan% they won7t all be eCual. /t is more important that the teams are balance% when consi%ering the big picture. (ire top5notch consultants chec$ re&erences an% implement regular up%ate or status meetings. ,a$e sure you ha+e some 0.rac$er @ac$0 groups that can han%le the toughest challenges. They can also help others to ensure no team &alls &ar behin%. 3igure out who %oes what tas$s well. ;i+e the te%ious assignments to the wor$horses who %on7t complain. !et them $now you are aware that you are gi+ing them an outsi4e% tas$ an% that you count on their goo% will an% exceptional &ortitu%e to get the :ob %one. !ea+e the %etails to the groups that $now the sub:ect matter ma$e them &igure out certain problems on their own ma$e them report their &in%ings to you. Empower the team lea%ers so they ha+e the authority to han%le their own group but $eep an eye on the %etails. -e+er let yoursel& be surprise% by problems %own the roa%. Dse logic to a+oi% emotional surprises an% in&orm your insurer an% management be&ore you ma$e changes to the claim. Don7t be a&rai% to change your min% when you see your plan isn7t wor$ing. You won7t loo$ in%ecisi+e i& you show the logic o& your changes. Dse the claim pro:ect to mentor sta&&. ;i+e a show o& con&i%ence in those acting in your stea%. /t7s important that your support sta&& maintain the same le+el o& competency you set in your absence. "raise in public critici4e in pri+ate. -e+er point out the wea$nesses o& in%i+i%uals in &ront o& others. E&ten it7s better to let e+eryone share in a reme%y aime% at a &ew. .hances are e+en the strongest will bene&it &rom it.

)ource: .oncepts &rom Shackleton's Way by ,argot ,orrel an% )tephanie .apparell page 6<<. Emphasis by this author.

,ho's in Charge of .our /usiness 0nterruption Claim1 * claim pro+i%es a company with a uniCue opportunity to rein&orce the importance o& goo% ris$ assessment ris$ e+aluation an% management within a company. @ust as )ir )hac$leton ha% to pro+i%e goals &or his men to accomplish a claim lea%er nee%s to moti+ate the organi4ation &or the long o&ten %rawn out claim process. This may mean going beyon% the concept o& 0#e nee% to collect the entire claim amount0 to your corporate +ision statement. *s$ yoursel& how you can tie in your company7s goals or +ision statement into a goal5setting exercise &or the claim. De+elop a claim philosophy. The claim process can ele+ate a company7s ris$ manager controller or outsi%e expert to a +ariety o& roles. E&ten the ris$ manager can lea% the company through the claims process because he or she is the most $nowle%geable person within the company7s organi4ation in %ealing with the insurance program han%ling the claim an% un%erstan%ing the operational ris$. #ith this $nowle%ge comes the responsibility to muster the right troops aroun% a complex claim to bring the company7s best resources to bear on protecting any capital at ris$ an% reco+ering any capital or re+enue stream lost by the claim e+ent. *n e&&ecti+e lea%er recogni4es the +alue o& bringing in the right resources an% is not threatene% by outsi%e experts. *naly4ing an% resol+ing a complex business interruption claim reCuires extraor%inary e&&ort. 3or larger claims an% especially claims relating to )eptember 66 many companies ha+e &orme% teams o& the best outsi%e experts along with internal resources to ensure an% protect claim reco+ery. To achie+e success it is critical that all the parties in+ol+e% un%erstan% property an% business interruption insurance as well as the technical accounting issues that will arise. The only way this can be %one properly is to ensure that the right resources are %e%icate% to the pro:ectFnot only proper sta&&ing but $nowle%geable an% seasone% pro&essionals who un%erstan% what is in+ol+e% in preparing a well5%ocumente% an% logical claim. (owe+er these steps will only get you so &ar. The most &un%amental step is o&ten o+erloo$e%. .ompanies must i%enti&y a lea%er who will gui%e them through the claim process to an e&&ecti+e an% &air settlement. To pic$ an e&&ecti+e lea%er you may imagine yoursel& or your claim lea%er in the &ollowing roles: The Politician is responsible &or han%ling issues an% communicating results to constituents in the other corporate %epartments such as accounting operations legal an% so on. The Client is the $ey contact &or the bro$er an% the insurer both o& whom want to $eep their client happy while executing the responsibilities o& their companies. The Employee has the %uty is to in&orm the treasurer controller or chie& &inancial o&&icer o& ris$ management issues. The Boss moti+ates sta&& an% any outsi%e experts such as accountants an% engineers hire% to stay on top o& the claim.

The Negotiator argues the claim on behal& o& the party they represent. The Technical Advisor is the most $nowle%geable on ris$ insurance an% claim issues. The Task Master executes tas$s %irecte% by others. The Commander lea%s the o+erall e&&ort. #hat role %o you play %uring the claims process' #ill you be the in%i+i%ual that will execute certain tas$s an% chec$ them o&& a list waiting an% anticipating the next or%er &rom your boss' Er will you be the person who lea%s the claims process as a comman%er who pro+i%es %irection to the troops' 3ew o& us are either one or the otherG most people &all somewhere in5between. Commander or Task 2aster1 The comman%erFi.e. the claim lea%er whate+er the title is within the organi4ationF can lea% through %elegation while maintaining control an% super+ision an% &ocusing on core acti+itiesG the claim lea%er %e+elops a +ision o& the ultimate outcome or claim resolution an% &ocuses on the %etails nee%e% to %ocument an% support the claim. This may soun% li$e a para%oxG yet i& %one right it can be +ery rewar%ing both in terms o& :ob satis&action an% importance to the organi4ation. !ea%ers succee% because they %e%icate teams o& people to one pro:ect treat all team members li$e clients ensure results an% thin$ critically. 1ut one trait that we ha+e not mentione% is that goo% lea%ers ha+e a heart. )ir )hac$leton was $nown to ha+e a huge heartG many say it was because he grew up with eight sisters. (e was a &ierce warrior yet +ery much in touch with his emotions. !ea%ership reCuires courage. /n &act the wor% courage comes &rom the 3rench wor% .oeur meaning heart. * lea%er must ha+e the heart to communicate his +ision no matter how absur% it may soun% to others to ris$ %e&eat in the &ace o& bitter o%%s to put himsel& an% his reputation on the line an% to reach out to others in or%er to ta$e them on the :ourney. *&ter all a lea%er7s courage is ultimately not &or himsel& but &or all the people %epen%ing on him to lea%. AThe Right to ead! A St"dy in Character and Co"rage @ohn .. ,axwell publishe% by @. .ountryman page 9>.B The )hac$leton story illustrates the power o& lea%ership an% the importance o& %esignating e&&ecti+e tas$ masters. *n integral part o& any organi4ation tas$ masters ha+e the ability to &ocus on a tas$ an% execute goals with pristine precision. This is a talent hel% by only a &ew. *n in%i+i%ual may be a tas$ master %ue to his or her technical ability years o& wor$ experience or :ob %escription within an organi4ation. *n e&&ecti+e claims team o&ten inclu%es se+eral tas$ masters to help resol+e or complete certain tas$s. Tas$ masters %i&&er &rom lea%ers as they are usually &ocuse% on only one aspect o& a pro:ectFnot on the o+erall organi4ation. "roblems arise when the appointe% tas$ master is ill eCuippe% &or the assigne% pro:ect. * tas$ master who is unsure o& the next

mo+e an% becomes paranoi% is one to be wary o&. #e call this person a 0worrie% tas$ master.0 Dse the chart below to gauge yoursel& as a comman%er or tas$ master.

The Traits of Commanders and Task 2asters


3earless .omman%er

#orrie% Tas$ ,aster

6. ,anaging Expectations

#e nee% to meet with the chie& &inancial o&&icer to in&orm him about this claim an% how we inten% to han%le it.

/ hope they %on7t as$ me to wor$ on this claim.

2. .laim *ccounting

*ccounting says they nee% outsi%e help with this claim. !et7s &in% out what &irms speciali4e in this area an% ha+e them meet the controllerHsI.

/& accounting can7t &igure out the claim we will simply sen% the har% %ocuments to the insurer an% ha+e the a%:usters &igure it out.

9. !egal

!et7s get our in5house counsel to re+iew this co+erage item.

!et7s not get legal in+ol+e%G they will try to ta$e this thing o+er.

>. )cope o& Damage

#e nee% to recommen% to the plant There7s no nee% to +isit the plant manager to engage an outsi%e engineering &irm to help with the scope o& %amage. siteF/ ha+e all the in&ormation here besi%es it7s not something /7m really loo$ing &orwar% to.

8. 1ro$er

#e nee% to get our bro$er wor$ing on the a%+ance payment.

!et7s not roc$ the boat.

?. *ll o& us are smarter than one o& us

#e nee% to meet with the top executi+es &rom other %epartments an% &in% out how they can help with the claim.

,ore political meetings that coul% get this out o& my control.

<. .ontrol

#e can orchestrate a presentation o& our %epartment hea%s with the a%:uster an% their experts to in&orm them about our claim.

The a%:uster sets5up meetings without you.

8. "ro%ucti+e ,eetings

#e nee% to reCuest any analysis by !et7s ta$e notes as the a%:uster7s the a%:uster or their experts prior to any meeting in or%er &or a more pro%ucti+e con+ersation. experts tell us why our claim analysis is wrong an% theirs is correct.

=. .o+erage

!et7s as$ the a%:uster to summari4e #e :ust le&t a meeting not their opinions on co+erage in a letter to us. $nowing what is co+ere% an% what is not.

-ow imagine pursuing a complex business interruption claim where the a%:uster has alrea%y Cuestione% both co+erage an% Cuantum o& a claim that your management may belie+e is worth se+eral million %ollars. You &ace limite% resources within your own company to actually in+estigate an% prepare the claim. #here %o you start' The success&ul analysis o& a business interruption claim will reCuire an un%erstan%ing o& accounting operational an% policy issues. (ere are some $ey Cuestions that will nee% to be a%%resse%:

6. #hat is the most realistic metho% to pro:ect what sales woul% ha+e been %uring the in%emnity perio%' 2. (ow long is the estimate% perio% o& restoration' 9. To what extent can any portion o& the claim be mitigate%' >. #hat %ocuments will be use% to +ali%ate the claim' 8. #hat margins woul% be experience% ha% no loss occurre%' Essentially be prepare% &or an extremely %ocument5intensi+e process that will reCuire interactions with a +ariety o& groups within a company. Erchestrating the right talent to tap the best in&ormation &or an e&&ecti+e claim presentation will ta$e the ability to moti+ate many people to a common goal. (ere is where lea%ership plays a $ey role in the claim process. The abo+e areas can be re%uce% to three &ocal points %uring the claim.

Claim acco"ntingFDe+eloping a well5%ocumente% an% comprehensi+e claim that is consistent an% can be explaine% to a thir% party. Claim management#processF,anaging the o+erall communication process with the a%:usters your operations people etc. Policy interpretationF2e+iewing an% un%erstan%ing the policy.

These three claim areas may reCuire %ecisi+e lea%ership an% technical expertise to complete an% resol+e the claim on a timely basis. The e+ents o& )eptember 66 are a&&ecting ris$ managers e+erywhere. Don7t be a&rai% to use these s$ills outsi%e the claims process such as %e+eloping a contingency management plan or renewing your insurance policy. !ea%ership can be use% in many aspects o& your wor$ or personal li&e. To learn more about lea%ership learn more about a person who you respect as a great lea%er. 1elow is a &airly recent example o& how a goo% lea%er han%le% a serious business interruption claim. An E!ample of Shackleton Leadership Skills in Practice *n example o& )hac$leton7s !ea%ership s$ills are presente% in Dennis -.T. "er$ins7s boo$ eading at the Edge. ,r. "er$ins tells the story o& a comman%er an% how he &ollowe% the )hac$leton !ea%ership )$ills %uring his trying time as the presi%ent o& a company on the +erge o& collapse. The 0comman%er0 was *aron 3euerstein presi%ent o& ,al%en ,ills /n%ustries a textile company that manu&actures "olar&leece an% "olartec. /n 6==8 the sales &or "olartec were more than J200 million an% the %eman% &or ,al%en ,ills7 pro%uct was continually increasing. En a col% night in December 6==8 three o& ,al%en ,ills7 &our plants erupte% into &ire an% the >05mile5per5hour win%s that night were threatening to engul& the &ourth plant.

That night ,r. 3euerstein was Cuote% as saying 0#hate+er technical progress we ha% ma%e was in those buil%ings an% whate+er specialty processes we ha% %e+elope% were in those buil%ings.0 "resente% with the Cuestion o& how ,al%en ,ills woul% be able to stay in business with the &ire burning in three o& the buil%ings an% the &ourth on the +erge ,r. 3euerstein respon%e% with an unrelenting %esire to sa+e his business an% the :obs o& his 9 600 employees. (e reali4e% that the only chance he ha% in sa+ing his business relie% on the ability to sa+e the &ourth buil%ing. /& the &ourth buil%ing were sa+e% it woul% pro+i%e a basis on which to rebuil% the company. ,r. 3euerstein instructe% his employees 0Do anything you nee% to %o :ust sa+e that buil%ing.0 (e later recalle% 0They were in that buil%ing all night an% they sa+e% it an% there&ore the company &rom certain %estruction.0 To stop the &ire an% o+ercome the many obstacles that remaine% %uring the long :ourney o& rebuil%ing the company ,r. 3euerstein ha% to implement many o& the )hac$leton !ea%ership )$ills. (e ne+er lost sight o& the ultimate goal: to sa+e the company. (e also &ocuse% his energy on the short5term ob:ecti+es: sa+ing the &ourth buil%ing. 1y &ocusing on the short5term ob:ecti+es ,r. 3euerstein sa+e% the buil%ing an% was able to sal+age a base on which to rebuil% the business. Ene o& the next challenges encountere% was to pre+ent his employees &rom becoming %iscourage% about the company7s ability to reco+er. To meet this challenge ,r. 3euerstein rein&orce% the team message constantly: 0#e are oneFwe li+e or %ie together.0 (e %emonstrate% this by continuing to pay his employees %espite their inability to return to wor$. * thir% challenge was to o+ercome the ris$ o& losing customers i& ,al%en ,ills was not &ully operational in time to meet the winter %eman%. To satis&y the customers ,r. 3euerstein ha% to instill optimism an% sel&5con&i%ence but stay groun%e% in reality. (e calle% his customers an% assure% them that he coul% be in pro%uction in 90 %ays. Through sheer willpower an% strengthene% by the renewe% con&i%ence o& ,r. 3euerstein the pro%uction crew ma%e the &irst test run o& "olartec within 60 %ays o& the &ire. *lthough there were still tremen%ous challenges ahea% this symbolic e+ent cause% the wor$ers to belie+e that they might achie+e their goals. 1y the en% o& December ,al%en ,ills was pro%ucing at 20 percent o& normal output e+en though the &ire ha% %estroye% <8 percent o& ,al%en ,ill7s operations. 1y the en% o& 3ebruary ,al%en ,ills was pro%ucing at =0 percent o& pre5&ire le+els. /n the &ollowing months ,r. 3euerstein encountere% many more challenges. These range% &rom the insurance companies7 unwillingness to pay the claims that %epri+e% ,al%en ,ills o& its nee% &or cash to the emergence o& a number o& new &leece manu&acturers. Despite these setbac$s he re&use% to gi+e up. @ust o+er one year a&ter the &ire an in+estigation cleare% ,al%en ,ills o& any negligence an% the insurance companies slowly pai% the remaining millions %ue to the company. 1y early 6==< ,al%en ,ills began to reach pre5&ire re+enues.

2e&lecting on the %isastrous experience ,r. 3euerstein state% 0You7re out there all alone in the worl% an% in the last analysis you7+e got to %o something. /n those situations / stan% &orwar% an% / %o what nee%s to be %one.0 Conclusion Dn%erstan%ing )hac$leton7s lesson is your &irst step to impro+ing your lea%ership s$ills. /mplementing 0)hac$leton7s #ay0 will ta$e time but will reap rewar%s. There are li$ely to be bumps along the roa% that you will nee% to maneu+er past an% o+ercome. (owe+er the rewar%s o& employing lea%ership throughout the claims process are plenti&ul. You will create teams across your company that will wor$ together an% you will enhance the claim in&ormation a+ailable by ha+ing greater accountability. 3inally you will ha+e a sense o& accomplishment an% closure as you comman% the o+ersight o& the many stages o& reco+ery. 1e &irm in your +ision an% un%erstan%ing with your team. 2emember the traits o& )ir Ernest )hac$leton. .hallenge yoursel& an% you will raise the bar &or others an% e+en surprise yoursel&. The $ey is to ta$e an acti+e role in the claims process an% in lea%ing your team. *s another lea%er ;eorge #. 1ush state% in a time o& crisis: 0#e will %e&ine our times we will not be %e&ine% by them.0

Epinions expresse% in Expert .ommentary articles are those o& the author an% are not necessarily hel% by the author7s employer or /2,/. Expert .ommentary articles an% other /2,/ Enline content %o not purport to pro+i%e legal accounting or other pro&essional a%+ice or opinion. /& such a%+ice is nee%e% consult with your attorney accountant or other Cuali&ie% a%+iser.

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