Are you working at the “top of your qualification”?
In other words, are you actually doing work you’ve trained for and are qualified for? If you’re a credentialed actuary, there’s a chance that a large portion of your time is spent doing lower-level work, such as data preparation, file management, or technology troubleshooting. When you’re performing those lower-level tasks, either because of your technology stack, outdated processes, or just not enough hands on deck to take those responsibilities off your hands, it can be a problem.
An analogy with a racecar might be outfitting it with high-end wheels, suspension, steering, and engine, and then driving it down the street to the convenience store. That’s not what the car was designed for, so you’ll be very, very wasteful to apply it in that manner.
How it affects actuaries
The idea that working below what you’re qualified for is not new, nor is it isolated within the actuarial profession. It’s a readily-identified problem, specifically in the health care sector, where inefficiencies for patient care mean lower-quality outcomes. The ideal is “practicing at the top of license”:
[Practicing at the top of license] … is often used to express the idea that it is wasteful for physicians and other medical professionals to do work that involves procedures or tasks that he or she could have been allowed to do without the ‘top’ certification attained.
Heidi Moawad, MD (HCPLive.com)
In other words, it’s not appropriate for doctors to be fetching ice chips or getting an extra blanket. There are others who are qualified to do that, and having doctors spend their time on those kinds of tasks leads to overall lower-quality patient outcomes. Because when they actually do get around to charting or examinations, they’re rushed for time and quality can slip. Ultimately, this is not a good experience for anyone involved.
Let’s rewrite that for actuaries, then, and give a couple of examples. If actuaries were to always “practice at the top of their qualification,” they would recognize that
It is wasteful for actuaries and other finance professionals to do work that involves procedures or tasks that they could have been allowed to do without the ‘top’ qualification attained.
What might actuarial work “below the top of qualification” look like? It’s anything that doesn’t require a specific set of knowledge or skill developed either through exams or experience. You’ve certainly seen those kinds of tasks, if you’ve been in the office any amount of time.
We have first-hand knowledge of a Fellow who, as part of his job responsibilities, was to print out a sheet of paper, hand-write some numbers on it, and then walk that paper down to a different department. Inefficient? Heck yeah. Way below a qualified actuary’s skill set? Double heck yeah. This was all back when the office was open, of course. We’re so sure that such inefficiencies are rectified now that everyone’s working remotely. [In case you can’t tell, the previous sentence is just dripping with sarcasm.]
Another example might be all of the data transformation or output management tasks actuaries are required to perform just to get results out of their models. In our Actuarial Wasted Time Survey, we saw that over half of credentialed actuaries felt that data and model management tasks had a significant impact on their productivity. Which means that when they’re doing such activities, they’re not working at the top of their credential.
How did we get here?
There could be several reasons for this phenomenon. Some of them include:
Outdated technology
We get it, that pricing spreadsheet that’s everyone’s been using for ten years is what everyone is used to. But is managing that spreadsheet, with all its quirks and foibles, really a good use of an FSA’s time? Perhaps it’s appropriate to move those calculations to a different, task-specific application which allows for automation.
Fear of change
Maybe it’s the admonition to “manage risks” that turn actuaries into some of the most risk-averse professionals around. Or it could be that the sheer time it takes to get through the qualifying exams that saps all the energy for future risk-taking. Regardless, it should be no surprise that actuaries don’t have a reputation for readily embracing change. There’s an old joke that goes, “How many actuaries does it take to change a light bulb?” Answer: “How many did it take last year?”
The point is, actuaries may fear change because it’s strange and there are risks that come along with anything new. This fear then pushes many actuaries to default to what was done in the past as good enough, creating such sticky, inefficient processes.
Hidden costs
This one might be the actuaries’ fault. Suppose there are some low-qualification, inefficient tasks in a process. Maybe actuaries don’t say anything because instead of pointing out that it’s a problem, some professionals tend to just work around the issue. They stay late or work on weekends to meet a deadline, because “that’s just the way it is.” And because they just do it, deadlines aren’t missed and so there’s no visible cost of that inefficiency. Regardless of how much it costs the actuary from lost sleep, lower job satisfaction, poorer quality friendships or relationships, and so on. When the deadline is hit, outside observers would rightly conclude that the current process is an acceptable way to produce that output. Having a missed deadline, however, would make very plain the previously invisible cost of that inefficient process.
This phenomenon has a big impact
Obviously, it’s a misdirected application of skill for qualified actuaries to be working on things that are beneath them. Manual data-handling takes away their opportunity to really dive into what model results mean. Spending time working at the bottom of the skill set also takes away from identifying emerging risks and designing systems to manage those risks. This not only keeps them unproductive, it can lead to lower job satisfaction, because most actuaries didn’t sign up to be data transformation specialists. They signed on to solve interesting problems in insurance and risk management.
When actuaries aren’t given the chance to do what they want to do, they may even go to the extreme of searching for a new job, increasing turnover and adding to replacement costs. In fact, one of the creators of SLOPE was in precisely that situation. He didn’t want to deal with inefficiencies due to ancient software any longer, so he decided to fix it.
What you can do about it
Obviously, just pointing out a problem doesn’t make it any better. Below we offer practical steps you can take to begin rectifying this problem and moving back up the ladder of qualification.
Identify mis-aligned responsibilities
This can be done either in a formal or informal way. It could be a comprehensive survey of all the steps involved in all your processes, or just a quick inventory of “Where are the biggest pain points?” It may also end up getting quite granular, because for each of the processes you’re responsible for, there might be intermediate steps that would be appropriate for other levels of qualification. Compare the list of responsibilities assigned to the people who they are assigned to. If your Fellows are doing a bunch of data transformations that could be done by the analysts, or perhaps eliminated with targeted automation, there’s your list of top priorities.
Reassign what needs to be reassigned
Hopefully you’re already doing this on a regular basis, when you compare job responsibilities to the skills and qualifications of the people performing them. But then again, if there’s not a clear identification of all the little things that go into getting the XYZ report each month, then there’s not going to be any kind of incentive to reassign those responsibilities when they’re being performed inefficiently. It becomes imperative that all levels are involved in this process, to both ask for tasks to be reassigned away from them and to them.
Add or remove technology where appropriate
As above, if your low-qualification effort is required because of outdated technology, implement new technology! If your spreadsheet-based processes are unwieldy, find a replacement. Here’s a quick list of alternative tools for various tasks. If your actuarial modeling software is what’s holding you back, take a look at a what’s out there in the market. [Of course, we’re biased, but we think you should check out our demo.] When you find an appropriate replacement, put in the work to reimagine and rework those processes so that actuaries can actually spend their time on the problems facing them.
Monitor the results
Like everything else in the actuarial profession, this too should be monitored, even if it’s just an informal check-in every couple of weeks. “Hey, now that Trevon is doing the XYZ report, does that give you more time to complete the quarterly new client analysis, like we expected?”
What might actuaries see as a result?
Should actuaries spend a more significant portion of their time on top-of-qualification tasks, there’s a good chance that you’ll see multiple benefits, such as:
- Greater productivity. This is a no-brainer, and comes from aligning the requirements with the tools and skill sets available. It’s basically making everything more efficient, because the right tasks are being handled at the right level.
- Greater job satisfaction. This follows from having greater productivity. When people are doing the things they’ve signed up to do, they will by definition be having a greater alignment between what they want and what they are responsible for. Greater alignment naturally leads to greater satisfaction.
- Even greater productivity. Multiple studies have shown that higher job satisfaction results in even higher productivity. Many HR departments know this and engage in various efforts to increase job satisfaction. One consultant said, “The single greatest advantage in the modern economy is a happy and engaged workforce.” Don’t you think actuaries working at the top of their credential are going to be happy and engaged? You bet they will.
Now, instead of the wastefulness of working at tasks below their qualification, actuaries will have developed a virtuous cycle. The positive feedback between productivity and satisfaction builds on itself. Higher productivity from more time on appropriate tasks leads to higher satisfaction with the job, which will lead to higher productivity on those tasks, and so on. Just like the mantra to make personal improvement a little bit each day, actuarial work should be (and can be!) a little bit better each time. Eventually allowing actuaries to perform at the top of their qualification.
If you’re not working at the top of your qualification yet, perhaps it’s time to fix that. Make small improvements regularly and, over time, you’ll get there. If you need some help modernizing your actuarial modeling software, send us a note. We’ll be happy to offer advice and guidance about how you can make that happen using cloud-based, modern actuarial software.