EIGHT SIMPLE RULES FOR CREATING
THE ULTIMATE AGENCY

Think with your head and lead with your heart

By Mary Belka, CPCU, ARM, ARe, RPLU, CIC, and Cheryl Koch, CPCU, ARM, AAI, ACSR, AFIS

Life is complicated. Insurance contracts are complicated. But running a successful, profitable independent agency really doesn’t have to be that complex, does it? Perhaps sometimes we overthink things when simpler, more elegant solutions exist. But don’t misunderstand—just because something is simple, that doesn’t make it easy. If it were easy, everyone’s agency would be running like the proverbial top and throwing off cash like there’s no tomorrow. We know they’re not because we receive the 911 calls on a weekly basis from agency owners who are struggling, if not financially then operationally.

We offer the following eight simple rules for creating and sustaining the ultimate independent insurance agency:

1. Hire smart people. That seems simple enough. Again, simple but not so easy, especially today with the Great Resignation and peoples’ seeming unwillingness to invest in their own development. But certainly, there must be people out there who have that unique combination of IQ and curiosity, the drive and passion to succeed, and the innate ability to build and maintain quality relationships, all of which adds up to success in the agency business. So, then the questions become:

• Where do you find them?
• What do you give them?
• How do you keep them?We’ve addressed the issue of finding people in past columns, but it bears repeating—they’re everywhere! Right now, they’re sitting in a high-school classroom, waiting tables at the local restaurant or teaching school. What we have to offer is an incredible opportunity to learn, serve, lead, grow, and contribute in a dynamic industry that’s essential to the economy. There’s a great television ad that speaks of how talent is equally distributed, but opportunity is not. Perhaps we’re not offering the opportunities to the right people.

2. Create a positive culture. We are constantly asked by agency owners how they can change the culture of their agency. Sadly, the answer is often that you need to change the people in order to get a different culture. This might mean saying goodbye to someone who was instrumental in getting the agency to its current level of success, but who might now be an obstacle in propelling it to the next level. Or, it could mean finally dealing with non-performers who take an agency hostage and drain it of money, resources and soul.In a positive culture, everyone knows their job and how it complements others. Salespeople sell and service people provide service. They lift each other up. Their relationship is symbiotic, not competitive. In virtually every other industry, people get that. The person who sells you the car doesn’t repair it. But bad service may result in lost sales in the future. The ultimate agency knows what business it is in and who its target prospects and customers are. They are specialists. They don’t “dabble.” They have a plan, and they know how to execute it.

Create a positive culture so you can actually attract the smart people you want and need to hire;
then, empower them to sell or to service (whichever role you have them in)
by making certain they are trained … .

3. Harness technology. We used to say “embrace” technology, but after four decades of agency automation, perhaps it’s time to stop embracing it and consummate the deal.
   There’s a vast difference between being automated and using technology. Most agency management systems can quickly extract and organize data that can be useful in making management decisions, yet few people recognize what a valuable asset that is and use the information to grow the agency.One of the “tells” in an agency is the number of policies per relationship, which is the extent to which the agency has successfully cross-sold certain coverages such as umbrellas, cyber or flood. Reports can be generated easily and marketing campaigns can be built around missing policies or coverages. Yet, this number remains very low for most agencies.
   Revenue per relationship is another good barometer of how well the agency is doing and provides the basis upon which outstanding customer experiences can be built at the account level. But most agencies do not know what the profitability is (or is not) of each account in their office.In today’s environment, data and information are the coin of the realm.

4. Foster operational excellence. Nearly everyone understands the need for an agency to be a sales organization, and many agencies have full-time sales managers who oversee the creation of new business opportunities. But we find very few agencies, except those that are very large, that invest in an operations manager.Partnered with an effective sales manager, the operations manager usually would be responsible for the entire “back office” of the agency, which consists of the service team, accounting, administration, IT and human resources. Even when some of these functions, such as IT or accounting, are outsourced, someone in the agency still needs to oversee those providers.The operations manager is in charge of the team that creates client experiences, which is the essence of customer service. They also measure productivity, create and maintain the agency’s internal operating procedures, monitor workloads, implement effective workflows and ensure that the agency is operationally profitable while minimizing errors and omissions exposures. A tall order, but so necessary to success.

5. Be a learning organization. This was a popular “buzz phrase” many years ago touted by prestigious writers and academics such as Peter Senge, Rosabeth Moss Kanter, and Charles Handy. But intense competition on a global basis, the veritable explosion of information technology, and the emergence of a knowledge-based economy have all conspired to make this a must-have for business survival.Organizational learning and know-ledge provide a foundation for assimilating rapid and dramatic change, which in turn is necessary for organizational success. But of course, organizations can’t really learn—people learn. And they learn in different ways.Think of how small children learn. They start by asking a million questions because they are curious. They have a sense of openness and wonderment. They experiment with their environment and it speaks back to them. If we can replicate that process within our organizations, encourage curiosity, provide constructive feedback, and support the open exchange of information, we will have much stronger agencies.Success will not be defined in the future as access to information—that will be a level playing field. But organizational knowledge that allows people to use that information will be a game-changer.

6. Empower people. If you hire smart people, create the systems and infrastructure for them to thrive, and constantly encourage them to learn and grow, then management should probably step out of the way and let them lead. Easier said than done.Many agencies use a form of strangle-hold management, where people must be seen to know if they are working. Good luck with that in this post-COVID world of working from home. Why don’t we adopt the Nordstrom rule: Use your best judgment? It seems to have work-ed well for them.Empowering people means giving them both the responsibility and the authority to carry out their duties. It’s the antithesis of micro-management, but it’s also not abandonment. “You’re smart; you’ll figure it out” is not how you empower people.

7. Champion change. We have a colleague who likes to say that the only person who likes change is a wet baby. Everyone else either fears it or resists it—or both. Yet, change is how we grow and get better, especially if the change requires us to stretch and get outside our comfort zone.In their great study-turned-best-seller, First, Break All the Rules, Marcus Buckingham and Curt Coffman lay waste to the notion of “conventional wisdom” and instead encourage people to become not just champions of change, but change insurgents. Too many people don’t like to rock the boat, but sometimes you can’t even tell that they’re in the water.

8. Lead with your heart. What’s in your head as a leader really matters, but what’s in your heart will likely resonate even more with your employees.

The customer really doesn’t come first; employees do, because if you treat them well, if they are rewarded for their great performances, if they are allowed to grow and thrive, they will treat your customers the same way.

We often work with agencies to help develop their strategic plan, which really starts with an assessment of their vision and values. You would think these would be simple concepts that have been carefully crafted over the years the agency has been in business. Yet, when they are asked to articulate them, owners often can’t or their vision and values sound like they could apply to any firm. Worse yet, the agency’s employees are unaware of what the vision and values are, because they are too often just words on a piece of paper.

When you live the vision, it’s obvious to everyone what really matters, and although they may not use the exact same words, they can describe what success looks like.

So, there you have it: Create a positive culture so you can actually attract the smart people you want and need to hire; then, empower them to sell or to service (whichever role you have them in) by making certain they are trained and in doing so, create and continue to be a learning organization. Think with your head and lead with your heart, so that you can be a champion for need-ed change to survive in these and future challenging times. Simple, but not easy, because you can’t eliminate even one and expect to be the ultimate independent agency.

The authors

Cheryl Koch is the owner of Agency Management Resource Group, a California firm providing training, education and consulting to producers,account managers and owners of independent agencies. She has a BA in Economics from UCLA and an MBA from Sacramento State University. She has also earned several insurance professional designations: CPCU, CIC, ARM, AAI, AAI-M, API, AIS, AAM, AIM, ARP, AINS, ACSR, AFIS, MLIS.

Mary M. Belka is owner and CEO of Eisenhart Consulting Group, Inc., providing management and operations consulting to the insurance industry. She also is an endorsed agency E&O auditor for Swiss Re/Westport. A graduate of the University of Nebraska, Mary holds the CPCU, ARM, ARe, RPLU, CIC, and CPIW designations.