The one-year postponement admittedly gives insurers more time for the implementation of IFRS 17. Yet, prolongations also entail project risks. The acid test will be how to keep people motivated and how to keep their additional workload associated with IFRS 17 manageable, without losing momentum. These issues must be addressed proactively.
More time – more trouble
IFRS 17, the new insurance contracts standard, was issued by the International Accounting Standards Board (IASB) in May 2017, with a mandatory effective date of annual periods beginning on or after 1 January 2021. In November 2018, this deadline was deferred by one year, the initiative will now become effective on 1 January 2022. At the same time, the IASB has also decided to extend the temporary exemption for insurers to apply the financial instruments standard, IFRS 9, so that both IFRS 9 and IFRS 17 can be implemented at the same time.
The one-year postponement of IFRS 9/17 gives insurers much needed additional time for the implementation of the standard and for the alignment of the internal systems. For many insurers adaption to IFRS 9/17 makes part of running finance transformation projects. For that reason, the postponement can be used as an opportunity to optimise the finance function, which goes further than compliance only. The current roadmap can be re-evaluated, more time can be spent on mitigating the risk of failure to deliver. One more year might also whet an appetite for expanding the scope significantly, with a big impact on costs.
The focus is on how to avoid another full year of escalating costs, and there are many technical papers related to the IFRS 9/17 implementation and its postponement. However, the people involved are one key topic that seems to be considerably lower on everyone’s agenda, albeit a make or break element in your IFRS 9/17 programme. Most IFRS 9/17 initiatives are projects that run over the course of many years. Any extension by one more year might easily be perceived as a never-ending story or a bottomless pit. If this postponement is destined to be a success, the project’s implementation needs to be pushed ahead, costs will have to be reined in, and people will have to be kept motivated at the same time.
Lavish some well-deserved attention on your people
At most insurance companies, IFRS 17 project teams are running their project tasks in addition to their daily jobs. Their additional workload associated with IFRS 17 must be kept manageable. It may be useful, in this case, to dedicate part of the additional year to taking a break from implementation. This might allow teams to take stock of what they have achieved so far and to ask critical questions on how their limited resources are spent. However, decreasing the pace could have a detrimental effect on team motivation and even stall the process altogether.
Whatever the case may be, for project teams an extra year means another year of long hours, dry-runs and even more «what-would-it-be-like-if-we-did» requests. How the workload of these key individuals is expanded by another year will cause significant issues for the overall project success. The concerned companies are well advised to address people-related issues of the IFRS 9/17 initiatives proactively. Four concrete actions help to ensure the successful completion of your project:
Listen carefully and enable delegation
People lose their drive and efficiency when working on a single topic only – especially if this topic is piled on top of their «daily» workload. Listen carefully and take «heavy-workload-complaints» seriously.
- Set up 1:1 coaching workshops for key players to investigate tasks that can be delegated.
- Investigate line substitution options to free up resources by bringing in new people for a certain period of time. Fresh graduates and students can make a big difference.
Facilitate the replacement of project team members
Replacing project team members increases the workload as there will be handovers and training time for the programme, its mission and the content developed.
- Enable smart on-boarding of new staff with the help of welcome packages.
- Explain the scope, design criteria and decision processes in detail.
- These measures will reduce the time you need to get your new staff up to speed.
Do not reinvent the wheel
New project team members bring in new ideas – and they challenge existing decisions. This might ensue many prolonged and unfruitful discussions that might re-open the scope and put approved deliverables at risk.
- Create clear records of scope and decisions taken.
- This is especially important for the programme parts that remain stable.
- There is no need to reinvent the wheel, written sign-offs and approvals can be useful enough.
Treat your key people well
Market demand for experts is increasing as industry players are looking to acquire key talents with deep knowledge and practical experience in the impact assessment and design phases.
- Think about retention bonus based on the project success.
- Think about rewarding project milestones.
Losing important players of a project team is a constant risk in any project. Acting proactively may reduce it significantly.
Keep your key people on board
The one-year postponement of IFRS 17 is giving insurers much needed additional implementation time, but it also entails project risks. The main challenge of the postponement is that the project’s implementation needs to be pushed ahead, costs will have to be reined in, and people will have to keep motivated at the same time. While much attention is directed towards the technical issues of the IFRS initiatives, the most important success factor – your key people – is largely ignored. There are four specific proactive actions in order to keep key figures on board, to mitigate their workload and to reduce people-related project risks:
- Listen carefully to «heavy-workload-complaints» and enable the delegation of tasks.
- Facilitate the replacement of project team members.
- Do not reinvent the wheel.
- Treat your key people well.
Find out more and register for one of our events.