Failure Demand

July 14, 2008 Comments Off on Failure Demand

There’s a depressing fad in our industry: We publicly boast about how we go beyond the call of duty when a gaffe is uncovered, refunding money, fixing things free of charge and so on. Indeed, many advertise their plans to redress wrongs in advance. I don’t understand why we think the public will be better disposed towards us just because we freely acknowledge our industry’s imperfections. This is not Hollywood or politics. Serving people who have suffered a property loss is serious business. Shaky standards, focussing on fixes instead of flawless service, and Teflon-coated accountabilities aren’t going to endear anyone to their chosen markets.

Professional standards aside, there are other issues hidden in unreliable service. Here’s a look at a problem that eats into resource expenditure and professional reputation like no other. This is the demand on resources caused by an organisation’s own failures, or failure demand.

Contractors rely on customers to hire them for services. Typically, the contractor gets a call from an adjuster; someone records the details (location, contact numbers, and so on) of the damaged property and passes the information to someone to go out and inspect the property and assess the damage; an estimate is created. Once the estimate is approved, restoration work commences, often with sub-contractors involved, sometimes not; the job is completed, the paperwork is filed, the contractor is paid, subs and other suppliers are paid, and the file is closed.

Now suppose the location details are not recorded properly in the first instance or someone fails to show up at the agreed time. Suppose the estimate is incomplete or is challenged by the adjuster. Suppose the subs don’t show up on time. Suppose the materials’ order is inaccurate. Suppose there are defects in the work performed. Suppose the site isn’t cleaned up properly at the end of the job. Suppose the subs don’t send in accurate invoices. Suppose the contractor’s back office doesn’t send properly documented final invoices to the insurance company within an agreed time frame.

How often does one or more of the failures described above occur? My guess, based on years of observation, is 95% of claims contain one or more of these failures. An organisation may pride itself on correcting its mistakes every time they occur but they are eating up resources in managing failure demand. Consider this: How much time do you spend dealing with issues that arise solely because your processes are incomplete, inadequate, inappropriate, or poorly embedded in your organisation? Track calls made to you and record the percentage that relate to failure demand. Check the list for repetition. You will likely see the same issues appearing time after time.

A high level of failure demand is a major reason that adjusters avoid a contractor. It’s an incredibly wasteful way to run a business and when combined with a cheerful “we fix our faults” attitude, it’s a recipe for disaster. There is often a horrible attitude that poor standards are defensible as long as an organisation fesses up and fix their faults. Not so! Every occurrence of failure demand erodes profits directly (by consuming resources) or indirectly (by way of reduced confidence levels in the organisation). Let’s be clear: There is nothing wrong with placating an irate customer. One has to remedy their failures. However, please don’t be smug or nonchalant about it. There is no excuse for a professional to fail. They are paid to perform perfectly. Their covenant with the customer is to deliver every promise contained in their marketing material. Flawless customer service is not a privilege, it’s a right!

The true professional treats failure like poverty – there’s no disgrace in it but it’s best avoided and never trumpeted.


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