Case Study: AIA, Hong Kong

21 January 2016

Author: Kate Whitehead


Case Study: AIA, Hong Kong

Asia’s biggest independent insurer focuses on internal development as it moves on from near-collapse at the height of recession

It takes about 45 minutes to walk up 1,299 steps – allowing for a breather halfway. Shu Khoo, AIA’s group chief HR officer, knows this with some certainty because it was the distance she climbed last October, along with hundreds of other employees, in a charity fundraiser to mark the company’s fifth anniversary as an independent entity listed on the Hong Kong Stock Exchange.
 
The number of steps was significant – AIA’s stock exchange code is 1299 – but the truly “remarkable” thing, says Khoo (above), is that the company is flourishing today. In 2008, American International Group (AIG) was teetering on the brink of collapse and was bailed out by the US government. It was forced to sell off parts of its business, including AIA, and a new era began for a pan-Asian insurance giant that can trace its roots back almost a century.
 
A fresh start called for new practices, but AIA was keen to ensure that it retained a sense of its own roots and historic purpose as well as facing the future. “The senior management team uses the phrase ‘respect the past, renew constantly for the future’. There were many parts that needed to be renewed because of the AIG crisis. And because of what people had read in the press there was damage to the brand and customer confidence,” says Khoo, who joined the company from rival AXA in January 2011, just a few months after AIA’s Hong Kong IPO.
 
The first step was for the senior management team to set out strategic priorities for both the short and long term. Once a framework was agreed, an operating model was put in place to execute the business strategy. This marked a radical change from life under AIG; whereas the business had previously been centrally managed, now individual markets have more control and country management teams can make faster decisions.
 
“The country teams have to be able to respond very quickly to customer needs and the market, as well as changes in regulation, because we are in a tighter regulatory regime now,” says Khoo.
 
The change has been good for business, and the knock-on effect was seen among employees. Those who were familiar with a centrally managed model were used to being told what to do and executing demands. A more empowered model meant making more decisions themselves. “We have to make sure we have the right people in the right role. We provided opportunities, training and development and also brought in new people. Of course, there was anxiety and uncertainty – changes take time. We put in a lot of communication on the ground,” says Khoo.
 
AIA also introduced an operating philosophy: “Doing the right thing, in the right way, with the right people… and the results will come.” It isn’t a blithe message limited to team spirit or collaboration, explains Khoo, but a business imperative: “In your performance appraisal, you are assessed on delivering your performance and goals, but you are also assessed on whether you live the operating philosophy.”
 
The restructuring was felt right across the business. While Hong Kong had previously been a regional office reporting to New York, now it was the global headquarters, and that called for additional capabilities. Khoo helped initiate development programmes designed around what she calls functional capabilities – the qualifications and practices each area, including HR, needs to become more professional. “The actuaries and finance people all have professional qualifications, so I really encourage our HR staff to go for it and get a professional qualification and take the CIPD programme,” says Khoo.
 
AIA is investing heavily in professional development, in part because the financial services industry continues to devour talent and make external recruitment an expensive business. But as the largest independent insurer in Asia, aimed largely at personal protection and savings products for individuals, AIA also says it has a responsibility to set a benchmark. “Yes, we recruit from outside, but when you do that what you get is only as good as what is in the industry. If we develop talent internally, we can raise the bar,” says Khoo.
 
While there is broad-based leadership development, L&D interventions, and funding, tend to be targeted at middle managers, she explains. In the financial sector, many people are promoted because of what they do, but that doesn’t necessarily mean they are cut out to be people managers: “When we promote these people, they may not necessarily know how to lead a team, so we put in a lot of investment into middle managers so they can also be strong leaders.”
 
All employees are affected by the business’s latest twin obsessions: wellbeing and data. AIA has been using data to better understand its customers for several years, which has helped it move from a purely reactive model – where people purchase insurance but have no further contact with the business until they need to claim or renew – to one where AIA knows who is buying its products and can proactively market to them at any point.
 
A new AIA Vitality programme tracks customers’ exercise patterns and activities and encourages them to be healthier, backed by an app and Fitbit handheld device. “We translate our commercial purpose into playing a leadership role in social and economic development in every market we operate in. We want our customers and the wider community to lead longer healthier, better lives,” says Khoo.
 
And that starts with staff: every group employee is given access to the app and product so they can become ambassadors. At least next time Khoo needs to scale the heights, she won’t have to keep count herself.