Insurance Industry News from ProgramBusiness.comGetting to the Next Level
Agencies tend to grow to a certain size and then plateau. On occasion, they don’t move past that plateau. Getting to the next level, getting past the lull, usually requires an agency owner to do some soul searching on his or her strengths and weaknesses. I have found most agency owners can be categorized one of two ways: they are awesome salespeople or they are great managers. Each approach has its own strengths and weaknesses, and these strengths and weaknesses are sometimes magnified or muted by the owners’ leadership abilities. To take an agency to the next level, the solution must take into account the owners’ inherent traits.
When the owner is a gifted salesperson, very often his or her solution to almost every issue is to sell more! I have worked with a few agency owners whose solution to even E&O problems is to sell more because with more sales, the deductibles for E&O claims aren’t so painful.
Selling more works up to a point. Much depends on the owner’s leadership style. If the leadership is laissez faire, the agency probably has huge problems being hidden by the motto, “We just need to sell more!” In these situations, the agency is usually a keg of dynamite waiting for a spark. These agencies tend to grow quickly, and then blow up.
A sales focus with laissez faire leadership also makes an agency less profitable because the focus is on sales, not profitable sales. Any sale goes, so producers chase everything that has potential. Additionally, work on accounts is often less professional with poor up-front underwriting. Such owners also often believe contingencies are out of their control.
On the other extreme, if the owner is a hard charging leader, the agency environment is apt to not be good either. The owner probably reacts quickly—perhaps too quickly—to issues facing the agency. The office environment is often poor and turnover may be high. Chances are the agency has few, if any, good producers other than the owner. Probably one producer after another has failed. Such an environment is obviously tough on the staff, their morale, and the agency’s reputation.
I have met a few owners whose leadership style lies between the two extremes. They are generally benevolent and yet provide enough leadership that the agency maintains a sense of discipline. These types of owners are rare to find. While their outward philosophy is that “sales cure everything,” their personal leadership is such that no one in the agency follows that strategy without first following the agency’s rules and the owner’s example of writing high quality accounts. Many of us might not have that leadership charisma, but setting the rules and procedures, and ensuring both are followed can work just as well.
Almost invariably, I find these owners also practice prudent financial management. They usually have solid balance sheets. They are almost always in trust. They pay themselves a bonus only after the balance sheet is made whole, the employees get their bonuses, and the agency’s infrastructure is addressed. To them, these things are usually automatic. They may not think much about them, but instead focus more on sales. What they practice is excellent management with an emphasis on sales. That is the best and the rarest of combinations.
Management is Everything
The opposite approach is that management is the be-all, end-all. Good management is indeed less ample in insurance agencies than good sales ability, but this does not mean management solves everything either. After all, there is nothing to manage if there are no sales.
I have not met too many agency owners who believe that management solves everything, but there are quite a number who emphasize management over sales because they are not great salespeople. Since they are not great salespeople, they focus on their strength, management. The best ones recognize their inability to sell is a hindrance to theiClick for the whole story...