Transformation Advisors

Insurance Industry Staffing

2012-02-28T16:08:00.000-08:00

Let's talk about what's keeping you up at night.

"NU Online News Service, Feb 9: Industry Adds Jobs in Dec."

Total insurance-industry employment grew by 5,000 in the last month of 2011. During the same period agents and brokers shed 200 jobs. 200 jobs out of a remaining 646,000 doesn't seem like very many. And the previous month, jobs were added in the agent/broker sector, so there shouldn't be much sleep lost over the employment situation. Unless, of course, it's your agency being affected by the additions and reductions in staffing.

How about your agency? Did you lose staff last year? Was it intentional? If not, did you lose the "right" people? Staff reductions can have a positive effect on the bottom line. But only if you lose a poor performer or someone in a non-critical job. Losing a strong performer or someone in a key position puts you in a dilemma. Do you hire a replacement and forgo an expense reduction or do you ask the remaining employees to take up the slack, knowing you will likely experience a deficit in sales or service ability? Whether the economy is good or bad, you want to make sure that improvements in productivity don't result in the loss of effectiveness.

The difference between productivity and effectiveness is that one is about the numbers and the other is about the people. Improvements in productivity with no loss in effectiveness requires accountability. As the boss, that makes you accountable to ensure that competent, skilled, accountable, individuals want to be a part of your business and you're accountable to ensure that those who don't measure up are the ones to go.

Competent, accountable, employees want to know what "good performance" looks like. They also want to be clear about how performance is measured. They want regular feedback. Employees who meet or exceed expectations want to be recognized. They want a positive consequence. When they fall short, there should be a negative consequence. No measurement, no consequence, no accountability.

What about employees who are incompetent or unaccountable? The only way to ensure that your organization is accountable is to ensure that there are no positive consequences for poor performance. Rewarding everyone the same hurts two ways. First, you won't see any improvement. Worse, you'll lose the respect, and likely the good performance, of good employees.

Remember that recognition and rewards come in all flavors, some with intrinsic value and some not. There are some few people who take sufficient reward from a job well done. Most of us, however, want something a little more tangible, even if it's just acknowledgement. Since people do things for their own reasons, it's likely that different people will respond to different types of recognition. It just needs to be fair and consistent. So...

As the boss, you're accountable to make sure there is a formal process for evaluating performance.One that is consistently and meaningfully followed.

Or is that what's keeping you up at night?

Contingent Income Rising

2012-02-08T10:29:00.000-08:00

Let's talk about what's keeping you up at night.

"Agency Compensation Expected to Rise in 2012: Ward Group"

Well, that's good news. No sleeplessness on account of that. Right? Right!

Unless, of course, you're counting on your contingent income to cover operating costs. It's been a couple of tough years and many agencies are reporting low or no growth. Without those profit sharing checks, profits would be down significantly instead of just a little. And there is a reason it's called "contingent" income. It depends on several factors -- some of which you control and some you don't. Catastrophic losses are not predictable. Premium volume and growth you can predict. And while you can't know exactly how your growth and volume will convert to contingent income, you can predict operating revenue and expense. Making sure the former covers the latter is critical when there are so many negative factors driving the economic forecast. It's enough to keep you restless if not outright sleepless.

In the study referenced above, reported in the Insurance Journal on line, there are also some potential trade-offs to go along with what are expected to be increases in agency compensation. Requirements for premium volume and growth are likely to increase for some of the companies in the study, as are loss caps. So, both the controllable and the uncontrollable may be more challenging to manage. All the more reason to make sure your contingent income is only used for contingent outgo.

Forecasting and budgeting for the independent agent has become for challenging than ever. If you're not already doing contingent projections, you may want to start. It's a good way to look at your finances, regardless of the economy. Start with a baseline budget and project no change in income or expense. That probably means cutting back on some things just to stay even. Then create a second budget for growth, projecting realistic revenue increases based on realistic but aggressive sales projections. And, last, create a third budget projecting worst-case revenue projections and a worst-case expense budget. You can then look at what you will have to do to make each budget a reality and set your plans accordingly.

While we're on the subject of projections and budgets, if you're having trouble making ends meet, be sure you distinguish between revenue problems and expense problems. Whether your income projections are positive or negative, if you haven't already addressed your expense problems, the time to do it is now.

How many ways are there to measure profitability? At least four. Check out our Models of Profitability. And if you would like some objective third party help with projections and budgets, call or email and let's have a conversation.

And if the expected rise in agency compensation predicted for 2012 is great news for you, is there something else keeping you up at night?

Soft Market or Soft Economy

2012-01-19T08:54:00.000-08:00

Let's talk about what's keeping you up atnight.

"MarketScout: P&C Rates Rise forSecond Straight Month in December"

"Marsh: The Two Speed InsuranceMarket"

"Moody's: Measured Rate Increases toContinue, but No Hard Market"

"Berkley:Market is Hardening; Good Companies Can Seize Opportunities"

"Best: 2012 Insurer Market a MixedBag"

Is the soft market finally turning?

If you've been watching the industry pressfor the last couple of months, you may be optimistically confused. Most sources seem to see signs of priceincreases, but the extent of the shift and the timing are uncertain, at best. Selectedclasses and lines of business look better than others. So when you ask,"Is the soft market finally going to give way to a hard market?" theanswer is going to be, "It depends."

But, so what? What will that mean for yourcustomer? What will it mean for your business?

Regardless of how the market shifts – hard orsoft – your success depends on the effectiveness of your sales organization,your skill, your expertise, your value-add, your competitive advantage. And ifyour competitive advantage isn’t clear, a market shift won’t help you attractmore customers and retain the ones you have.

Competition is the new normal. If you’vesuccessfully grown your business over the last few years then you’ve had tosell through the soft market, around the soft market, in spite of the softmarket.

Regardless of how high prices go, for yourcustomer, it's still about finding the best protection for the best price. Sincethe consumer has learned so well to shop for the lowest price, you’ll work hardto try to keep the cost down in order to retain the business. And if the cost of insurance goes up fasterthan the state of the economy, the trade-off for the insurance buyer may becoverage.

When the insurance company describes theirpricing structure and willingness to underwrite in terms of "fear andgreed," as in the Berkley article, it's easy to see why the typicalinsurance buyer doesn't understand why his price soars or drops regardless ofwhether there have been claims or not.

You have to understand where the market is. Youhave to be able to offer cost-effective insurance coverage to protect yourcustomers from financial loss. And you have to be able to bring appropriatecustomers for the carriers you represent. You can’t control the insurancemarket any more than you can control the economy.

So what if the market is getting harder?Will you be sleeping better because of it, or in spite of it?

Customer Satisfaction in the Insurance Industry

2011-12-19T13:48:00.000-08:00

According to NU Online NewsService, December 15^th, the most recent American CustomerSatisfaction Index shows property and casualty companies get highersatisfaction scores than life and health insurers. The survey lists scores for the five largedirect writers, i.e., State, Farm, GEICO, Progressive, Allstate and Farmers.The factors cited for causing better results in the P&C companies: lowerpremiums and, get this, fewer customer interactions.

So, in order to keep theircustomers satisfied, large direct-writing insurance companies should strive to keepcustomer contact to a minimum. Fewer contacts mean fewer conflicts. Lessfrustration.

Well, I guess that makes sense. Have you tried to do businesswith a large company (of any kind) lately? Automated voice trees that delay andconfuse. Sales and customer service representatives reading from scripts. Noone with the knowledge or authority to make a decision.

Seems to me that the surveyjust emphasizes the value added by the independent insurance agent. And the hugecompetitiveadvantage this gives you if your sales and service models have an emphasison personalized, professional relationship building.

Retention & New Sales

2011-11-29T11:58:00.001-08:00

Let's talk about what's keeping you up at night.

We need more new sales. Retention has been better than expected, so westayed almost flat, revenue-wise, but new sales are harder than ever to make.No one wants to change and there are no new accounts. How do we get back on apositive growth path?

Start by asking yourself a few questions. The answerscan tell you what you're doing right and what you could do better.

Why did your toughest account renew their account?
Why did you lose that great account?
Why did your newest account move their insurance to your agency?

If you can answer these questions,thoroughly and analytically, then you know what your competitive advantage is.And that's the key to sales success - leveraging those things that you dobetter than the competition. If you can't answer those questions, then yoursales team - in fact your entire business - is at a disadvantage.

Business and personal insurance buyershave a lot of choices. And there is always someone who is willing to provide alower price. When you can demonstrate that the lower price comes with a costand you can provide added value in terms of something important to thecustomer, you have something to sell.

For growth and profitability, it's all about competitiveadvantage. Make sure every member of your team is able to talk convincingly about why customers buy from you and stay with you.

If you don't know what sets you apart from your competition - if you can't answer those critical questions - let's have a conversation.

Planning for A Tough Year Ahead?

2011-10-27T06:56:00.000-07:00

Let's talk about what's keeping you up at night.

2011 has not been a good year. Business isslow. Customers and carriers are not optimistic about the future. And it lookslike more of the same on the horizon. How do I get ready for the third toughyear in a row?

Don’t! Get ready for a better year in 2012! It canbe, but it’s up to you. Your carriers won’t make it so. And the stock marketwon’t make it so. Certainly the government won’t make it so. It will be up toyou. The big questionyou’ll need to ask yourself – and your team: “What can we do differently in2012?

As November 1stapproaches, start by asking: “What can wedo in the next 60 days to make a positive difference?” 60 days doesn’t seem like a long time – andit isn’t. If you could do one or two things during the next two months, inamongst all the usual madness of holidays and year-end, what would it be? One change – big orsmall – that will make you or your business more productive. Maybe the thingyou decide to do is to stop doingsomething unproductive.

Use the remainder ofthis year to position your business for a productive next year. If you’vealready completed your planning cycle for next year, take another look at bothwhere you’ve been and where you want to go. If you’ve given up on planningbecause it all seems so pointless, maybe that’s the one thing you really needto do.

For a powerful start to the new year, identify – and execute – on one or two things you can do to end the current year on a positive note.

More about finding and keeping great employees.

2011-04-06T16:44:00.000-07:00

People do things for their own reason. I never run out of opportunities to remind myself and others that this is true. Frustrated business owners tell me, "My staff just doesn't care." The unstated part of that is "...about my business the way I care about my business." Well, of course not. But there are things they care about. Plugging into those things is how you keep people engaged. I'm not talking about personal things. Most employees don't expect the boss to try to solve their personal problems. I am talking about the kind of things that make work feel like accomplishment. From BNET, here's a neat little story that makes a BIG point about what motivates people.

Planning for Improvement

2011-02-17T11:04:00.000-08:00

If you and your team are hunkered down waiting for the market or the economy to turn around, you may have a long wait. Now is the time to look for opportunities. You can have your best year ever!

Focus! Focus! Focus! Plans often fail because too many issues are addressed at one time, not because there is anything inherently wrong with them. How does the coyote eat the buffalo? One bite at a time! There is always a lot to do. So to ensure that you and your team stay focused, identify those things that are imperative to fulfilling the vision of your business. Ask, “What conditions must exist for us to be who and where we want to be?” Think in terms of necessary and sufficient. Concentrate your efforts on the most important issues or Critical Success Factors. Tackling your goals one at a time, you will find your business plans much easier to achieve.

For most businesses, Critical Success Factors center around people and product. What about your organization – your staff – is critical to your success? What must they be able to do well to ensure your competitive advantage? What about your customers is critical to your success? What are their expectations and how can you exceed them? What about your product/service is critical to your success? If insurance is just another commodity, what sets you apart? A clear understanding of what is most important makes it possible to set realistic, achievable, smarter goals.

Success breeds success. Improvement generates more improvement. With every achieved goal, your (and your team’s) confidence grows. These incremental successes will inspire and encourage you and your team. You have the knowledge, experience, drive and enthusiasm to achieve your vision. You can have your best year ever!

Finding & Keeping Great Employees

2011-02-09T15:40:00.000-08:00

Is it a buyer’s market for employers when unemployment is in the double-digits? Is finding and keeping the best employees easier when so many people are feeling vulnerable? No. And no.

Challenge the assumptions. Now more than ever, it’s important to take good care of your employees. You might be working with fewer numbers, so your team needs to cover more territory. If somebody leaves, you want it to be the right people who stay.

At bare minimum, to engage your employees in your business, you need to ensure your employees have meaningful work to do, and a vision for how that work fits into their world in a meaningful way. Good employees also need the tools to do the job, which includes more than just hardware and software. And good employees expect and deserve respect.

Of course, you need to pay a fair wage. Don’t assume that you’ll be able to hire quality people for below-market salaries. Don't expect your best employees to help you achieve your financial goals if you're unwilling to help them achieve theirs. It's disrespectful. But it’s not just about the money. Take this fun quiz to discover what is important to your employees.

Don’t get lazy. If you are in a position to hire, does this seeming employee glut turn into a bonanza of qualified help for you? No. And no. The best and the brightest were not the ones downsized. So it will still be challenging to find the best qualified people the personality and skill sets to fit into your culture. If you are looking to hire, you’re going to have to put forth the same sincere and diligent effort you always have to find the right individuals.

Again, challenge the assumptions. Individuals who have performed marginally in other organizations will most likely be marginal in yours. Assuming retreads have the experience and job knowledge you need is a mistake. Now may be the right time to look outside the industry for your next producer or account manager. “Hire for fit and train for job knowledge,” is solid hiring advice. All the insurance knowledge in the world doesn’t ensure sales from someone without the fire to sell, or quality customer service without a customer orientation. Sales and customer service are required in most industries. So you may be able to take advantage of the fact that there are good people looking for work. It’s not a buyer’s market, though. Finding and keeping great employees presents the same challenges – and provides the same rewards – regardless of the market or the economy.

Sales and Growth

2011-01-25T09:19:00.000-08:00

Let’s talk about what’s keeping you up at night.

"This agency is not growing and it’s because the producers aren’t selling. How do I motivate the sales team to sell."

You may need to ask and answer some difficult questions about the individuals you call producers and the team you call a sales team.

? Is each producer’s individual book of business profitable, including expenses associated with servicing the book as well as sales expense and compensation? If not, why not?

? Are you organized for growth? How much sales support do producers have, e.g., carrier marketing, proposal generation? How involved in renewal processing are the producers?

? Does technology support the sales process as well as customer service and accounting?

The answers to these questions may help you identify obstacles to sales. Also look at the culture of your agency. Is “sales” even a word you and your staff use? Is everyone in your agency on the “sales team?”

Take a critical look at your sales team. Identify changes that will get everyone working to increase sales, not just producers.

Critical Success Factors

2011-01-18T15:49:00.000-08:00

Want to drive success in your business? Focus your energy and your resources on those things that are the most important. Sure, you'll have to deal with a lot of urgent activities that don't contribute significantly to the achievement of your goals. Don't let the urgent get in the way of the important, however. If you're only working in your business, and never on your business, you are far less likely to take your business to the next level.

Setting Goals for 2011

2011-01-04T14:32:00.000-08:00

I’m leading an ExecSense webinar on Wednesday January 5th on “Best Practices for Establishing 2011 Goals for Your Team as an Insurance Executive: Case Studies of Goals, Benchmarks, Tips & Techniques Set by Other Insurance Executives”, you can get more information at http://bit.ly/ePtXYR

Growing in a slow economy

2010-12-28T09:00:00.000-08:00

Let's talk about what's keeping you up at night.

"Commercial revenues are down because of the economy and the soft market. Revenues are flat and it doesn't look like there is much improvement expected any time soon. How do I grow in commercial lines when business is contracting, not expanding?"

There are no easy answers because so much depends on the strategic decisions
you've made until now. But start by looking at your customers.

There is always tension between specialization - niche marketing - and
differentiation. It's risky to have all your eggs in one market basket. On the
other hand, we know that being an expert in your customer's business adds
value.

So make sure you're an expert. And make sure you're an adviser. Sell your
expertise, not your ability to shop a policy across a large number of carriers.
This not only sets you apart from the competition but also mitigates the price
shopping that is part of every insurance buyer's instinct.

Being an expert also helps you cover all risks for every client. Personal lines
as well as business insurance. Life insurance to protect both their families
and their businesses. Benefits to cover employees. There is a lot of
uncertainty right now, which means there is a lot of opportunity. Look at your
customers' needs creatively and fearlessly.

Begin a review of clients to identify opportunities for additional sales.
Follow through with letters, calls and visits!

Need help growing in a slow economy?
Let's have a conversation. No strings, no charge.
Call 530-295-1083 or send me an email.

Choose Your Customer

2010-12-21T04:00:00.000-08:00

Competitive advantage requires that you know who your customer is. And who your customer is not.

Business owners are often afraid that choosing who their customers are and are not will limit their profitability. The fear is that, if you narrow your customer demographic, you’ll miss out on a lot of business. The opposite is true, though. When you don’t target a specific demographic, your staff wastes a lot of time and money going after business that will not be profitable and, probably, won’t stick. In fact, choosing who your customers are and are not will free your staff to respond to your most profitable customers and get more customers like them.

Choosing who your customers are and are not doesn’t confine or lock you into a strategy. Rather, it keeps you steady, focused and able to respond -- rather than react -- in an ever-changing environment.

Competitive Advantage

2010-12-14T08:00:00.000-08:00

It’s pretty clear that the economy isn’t going to bounce right back. But this doesn’t mean that 2011 will be a bad year for business. Now is the time to make the most of your strengths in the marketplace to keep your customers and bring in more.

Why should they buy from you?

Everyone needs insurance. But why should they buy from your agency rather than the agency down the street or online? When you can answer that question - and consistently deliver - you have a competitive advantage.

Change is Good - Up to a Point

2010-12-10T06:36:00.000-08:00

One of the most often, and often most challenging issues faced by managers is getting change to "stick." A change in process or procedure is agreed to and implemented. Now everyone will do it that way. Right? Well, often, not. Pretty soon, one or more have reverted to the old way of doing it. No apparent reason. No "I don't like the new way so I'm going back to the old way." Folks just slip back to the prior way of doing things. The change doesn't "stick."

Here's a (kind of) scientific explanation for why this is true and why it's so hard to change. Self-Control is Exhaustible

That's why we always encourage follow up as part of implementation. Once the training is done and the change is made, there needs to be provision to regularly - and consistently - check to see if the change is still in place. If there is no expectation of follow-up and follow through, then there is no requirement for self-control - no requirement to stick with the change until it is the new habit.

If you want your changes to stick, you'll have to stick to your changes.

Ensuring Consistency

2010-12-01T07:45:00.000-08:00

Let’s talk about what’s keeping you up at night.

“I can’t get my staff to follow instructions. There are procedures in writing but they’re ignored. They always have some excuse for doing things differently.”

Start by looking at the five T’s.

Training. Has the necessary Training been done?
Time. What is the effect on available time? Will something have to give?
Task. Have you communicated clearly about both “what” and “why?” How does it fit into your big picture. How is it going to benefit them?
Traction. Change is hard. It is as difficult to form a new habit as it is to break an old one.
Tracking. Follow up is crucial to implementation. How will you measure the results?

Next, look at your operations. To get the work done, you need to focus on process not personalities. Do they have the tools they need to do what you’re asking? The training? The time? Are there real obstacles to performing a task?

Select a task that doesn’t get done correctly and ask why. Ask those who do the work to tell you how to improve the process.
And then do it!

Need help building consistency into your operation? Let’s have a conversation. No strings. No charge. Call 530.295.1083 or send me an email.

Finding & Keeping Great Employees

2010-11-23T07:00:00.000-08:00

Do your view your employees as your biggest asset or your biggest expense?

"All that separates you from your competition are the skills, knowledge, commitment, and abilities of the people who work for you. Companies that manage people right will outperform companies that don’t by 30 to 40 percent."

-- Jeffrey Pfeffer
Author of The Human Equation:
Building Profits by Putting People First

As an insurance agency, the focus of your business is on developing new customers and retaining the customers you have. You need new business and retention to grow, and growth is key to profitability.

However, if you spend all your time and energy on sales and service, you may be overlooking one of the critical success factors for growth and profitability.
When asked what their biggest challenges are today, agency owners invariably place “finding and keeping quality staff” high on the list. It’s true for large and small, urban and rural agencies alike. So perhaps a good portion of your time and energy should focus on developing new employees and retaining the employees you have.

The workplace has changed and continues to change. With a keen focus on profitability, employers want more for their employment dollar. And those employees who are willing to give more also expect more in return.

One thing that has not changed is that the insurance industry continues to have a poor image as a place to work. As a group, insurance agencies hire fewer college graduates, pay lower wages, and invest less in training and developing staff.
If you’re not thinking differently about the relationship between your employees and your bottom line, it’s time to start. Do your view your employees as your biggest asset or your biggest expense?

Workflow That Works

2010-11-16T14:22:00.000-08:00

When things go wrong, it's easy to assume that some person or people have made a mistake or didn't follow procedure. Often, though, it's not about the people. It's about the process.

When you find errors or mistakes recurring, the first question you should ask is "Why?" How effective are the existing processes and systems? Is everyone following the same process consistently? Or, are there obstacles to do the job right?

Even if it appears that people are causing problems, understanding the root cause is important. You can't fix people. You can't even change people. You can provide better tools or training. You can improve a process.

Read more about fixing process, not people in the latest newsletter. B.I.G. Strategies for Business Excellence - Build Consistency.

Customer Care and Sales Calls

2010-11-10T09:10:00.000-08:00

Let's talk about what's keeping you up at night.

"I can't get my account managers to make customer contact calls. Staff says they are too busy. I've even committed to give them extra compensation but the calls still don't get made."

Here's a fairly common issue. There is no question that making calls to customers can improve retention and provide opportunities for account rounding. There are lots of reasons to make them but service staff will come back with lots of reasons not to make them. So the question isn't, "why won't they...?. The question you must ask is "Why would they...? People do things for their own reasons. So you need to make sure they see how your goal or your task synch up with their needs. They have to share your vision.

Also think about what motivates employees in primarily service position. It's not necessarily money, especially if the task seems difficult or risky. Here's a fun way to look at employee motivation and how well you understand what's important to your employees.

And one more thing. The time issue is real in most agencies. If our staff cannot clearly see why these calls are a priority they will work on other things.

If you are really serious about having these calls made as a regular part of the job, you will need to clearly identify the importance and priority of the task, and make sure everyone understands - and has the tools and training necessary to do it. And then make sure you share the results.

Communicate. Follow up. Communicate. Follow up. Communicate.

If you need help getting staff to take on new or different assignments, let's talk. No strings. No charge. Call me or send an email.

The Bottom Line Contribution of Satisfied Employees

2010-11-05T09:39:00.000-07:00

Do you know what's most important to your employees when it comes to job satisfaction? Here's a quick, fun, way to find out.

Why does it matter to you whether or not your employees are 'satisfied?' You just want them to do their jobs. You don't care if they like it or not. Right? Well, you should care. It matters to your bottom line.

Your employees -- producers, customer service representatives, marketing staff, assistants and clerks, accounting staff, and your receptionist --all contribute to the bottom line in very tangible ways. They help you find new customers and keep the ones you have. Knowledgeable, personable and satisfied employees are a very real asset. When you fail to nurture and protect this asset, the cost is high . . . perhaps higher than you realize.

If employees aren’t given the right tools to do their jobs effectively, for example, or if they’re treated unfairly or are overworked and stressed out, they can become frustrated and unhappy. This has a negative impact on their productivity.

More importantly, disgruntled employees can be disruptive to the entire organization, sharing their discontent with whomever will listen. Their attitude rubs off on others and brings the morale of the entire organization down.

Low morale also takes its toll as your staff attempts to provide customer service. You can hear it in their voices. It shows in their attitude. A demoralized staff does not focus on looking for ways to delight your customer. Nor do they attempt to cross-sell accounts or upgrade coverages.

There’s also a compounding effect. Studies have shown that increasing client retention by just 5 percent can boost an agency’s profitability by 50 to 100 percent or more. But the reverse is also true. Dissatisfied employees can cause retention to drop significantly. Lower retention equates to dramatically lower profits.

Last, but not least, when morale drops, turnover goes up, causing costs to go up dramatically as well.

And by the way... Take the quick management survey and see the number one satisfaction criteria for employees. That's the point of the last blog post. If you missed it, go here.

Share Your Vision

2010-10-29T07:56:00.000-07:00

Times are tough. To achieve the best results, everyone on your team has to be working together. But they can't read your mind. It's up to you to make sure that all employees know what your plan is and how they fit into it.

For sustained performance, you need employees that are committed to your vision, not just hunkered down doing what's required to get by. For this you need 'shared vision.' To commit to your success, employees must be able to commit to their own success. Creating a shared vision is all about understanding that people do things for their own reasons.
Read more about sharing your vision here.

Planning to Plan

2010-10-22T16:45:00.000-07:00

How about some different perspective on the whole broad subject of planning?

For those of you who are less than enthusiastic about planning, you might relate to Mike Tyson, the boxer. He said, "Everyone has a plan - until they get punched in the face."

I think that's exactly why Dwight Eisenhower said, "Plans are worthless, but planning is everything." He went on to explain this seeming contradiction. "There is a very great distinction because when you are planning for an emergency you must start with this one thing: the very definition of 'emergency' is that it is unexpected, therefore it is not going to happen the way you are planning." What are you expecting if you are going in to a fight with Mike Tyson?

This from Tom Landry: "Setting a goal is not the main thing. It is deciding how you will go about achieving it and staying with that plan."

Another football coach, Bear Bryant, said, "Have a plan. ...a plan for everything. A plan for practice, a plan for the game. A plan for being ahead, and a plan for being behind 20-0 at half, with your quarterback hurt and the phones dead, with it raining cats and dogs and no rain gear because the equipment man left it at home."

Bryant also said, "Follow the plan, and you'll be surprised how successful you can be. Most people don't have a plan. That's why it's easy to beat most folks."

And, finally, this from Henry David Thoreau. "In the long run, men hit only what they aim at. Therefore, though they should fail immediately, they had netter aim at something high."

Do you have a solid plan for coming year and beyond? Let's have a conversation.

Planning to Succeed

2010-10-14T14:01:00.000-07:00

Let’s talk about what’s keeping you up at night.

“We’re going into the fourth quarter and we’re not achieving any of the goals we set at the beginning of the year. Our plan was worthless. In this market and this economy, what good is planning anyway?”

This quote is fairly representative of what I'm hearing from many agents. There are really two parts to this question. First, when you plan, your efforts are never wasted. No plan, no matter how well it is developed, will ever work out exactly as conceived – even in a stable economy and a hard market. President Dwight Eisenhower said that plans are useless but that planning is everything. The planning process prepares you to meet challenges and find opportunities when things change. And things always change.

The hidden question here is what can you do when you’re not achieving your goals. It’s time to look at your plan again. It’s not too late to make adjustments to both your expectations and your results.

Identify two things you can do for rest of the year that will have a positive effect on your results. And do them!

If you need help with your planning or your results, let's talk. No strings and no charge. Call me or send an email.

Planning to Succeed

2010-10-03T17:11:00.000-07:00

In spite of a tough economy and continued soft pricing, Investors Service Industry Scorecard reported that property/casualty insurance brokers were profitable in 2009. Further, those same brokers have maintained profitability into 2010, again, in spite of marginal or even negative organic growth. How about your agency? Did you plan for a tough year? Are you exceeding your expectations, or struggling to stay even. As we move into the fourth quarter, are you clear about where you are and where you want to be?

Often, people fail because they lack the persistence to create new plans when plans fail. Your Strategic Plan should always be in a state of evaluation and adjustment. It’s not too late to make this a successful year. And 2011 is just around the corner.

Read our most recent newsletter on Strategic Planning here.

Momentum Matters

2010-09-17T10:51:00.000-07:00

Saturday we watched the Marshall University Thundering Herd get beat in overtime by West Virginia. I'm not the football aficionado in the family but even I got caught up in the emotion of this game where the underdog (Marshall) led by 15 points until the last seven minutes of the fourth quarter. The announcers made much of the history of the Marshall team and the "100-year rivalry" with West Virginia. You may remember the 2006 movie "We Are Marshall" about the tragic loss of the entire Marshall team in a 1970 plane crash. But the reality is that no one really expected anything but a win for West Virginia.

What struck me as I watched the game turn around was how dramatically the momentum changed. The Mountaineers quarterback did a great job rallying his team in the fourth quarter but what seemed even more important to the outcome was the fact that the Herd got defensively timid. By the time the regulation clock ran out, Marshall had allowed the West Virginia to score twice and then couldn't score in overtime.

But this isn't just about football. What happened to Marshall happens in business, too. It's very easy to lose momentum - and it's not so easy to get it back. Getting your team on a winning streak takes work. Keeping your team pumped up and scoring takes constant attention. And if there's a shift in the marketplace and the competition appears to gain the momentum, what are you doing to get it back? Well, for certain, that's not the time to get defensive. It's just the time to get back on offense. Those businesses that are struggling to maintain momentum in this economy are the ones who are not playing offense. Now is definitely the time to keep your eye on the ball.

With the uncertainty about future revenue, I've seen a number of businesses pull back on their marketing efforts in an attempt to save money. This may be just the wrong thing to do if you want to maintain the momentum. And successful businesses are taking advantage of the defensiveness of their competition to gain momentum.

Are you playing offense or defense? And how's it working for you?

Producer Compensation – Profitability Drivers

2010-07-05T12:06:00.000-07:00

“I’m paying producers too much and it’s causing a problem with bottom line profitability.” Well, maybe. Sometimes it’s not just simply the percentage of commission going to the producer. Sometimes there are other factors that impact profitability.

Part of our Producers as Profit Centers tool looks at servicing costs for each producer book of business. You should expect to see some disparity, especially where CSRs are assigned to business based on producer. Since producer books vary in size, so with CSR books. If those disparities are too great, however, you may need to look at realigning teams to even out the workload. Everyone hurts when some are overworked and some don’t have enough to do.

Sometimes the workload disparity is magnified when there is a big difference in average account size. Account size is probably the most significant of the productivity drivers. Where producers have books made up of mostly small accounts, not only will the book likely be unprofitable but the servicing costs are likely to be high unless a conscious effort is made to treat these accounts differently.

Producer Compensation - 3 Keys

2010-04-29T08:18:00.001-07:00

Having a conversation, that almost turned into an argument, with a producer about compensation. He was adamant that all it took was to pay a high percent of commission. "Any good producer is going to be motivated by money - and nothing else matters." Well, he should know, shouldn't he? He's a good producer. But it's been a tough year and he didn't get a raise - meaning his commissions were flat. He didn't feel he had worked any less but he lost a couple of large accounts and all his new business production just went to fill the void left by lost business and lower exposure bases. I think his situation is not all that unusual.

This producer wants a bigger piece of the pie - he wants the agency to increase the percentage of commission paid on new business. "It would be a good investment," he says. The agency owner, on the other hand, is looking at expenses and flat production and thinking he needs to lower the new commission rate, pay a level commission to encourage net new growth and only pay higher commissions when the book grows. He is convinced that the agency can't afford the current plan, let alone a richer one.

I'm going to help them update their producer compensation plan and try to help each meet his goals. Because I think that's what a good compensation package does. It balances the costs with the benefits (revenues) and the agency's goals with the producer's goals. In fact, I think there are three requirements for an effective sales compensation plan.

Affordability. If you pay too much, the financial health of the business is vulnerable. That doesn't help anyone.
Competitiveness. If you don't pay enough, you can't attract the best people and keep them satisfied.
Alignment. Producers should be incentivized to producer business that is aligned to agency goals. And, compensation plans should be flexible enough to ensure that producers can meet their personal goals as well.

If the compensation plan meets those three requirements, it should be a winning proposition all around. That won't cause the market to harden or the economy to improve. But it could improve the situation in this agency. Maybe others as well.

I recently recorded two webinars for "The Inside Track" on the IMMS website. Watch the Webinar here.

Celebrate and Share Success with Employees

2010-03-04T14:19:00.000-08:00

We’re at the beginning of March already. Is 2010 shaping up to be a lot like 2009 for you – and is that a good thing or a bad thing? If things are looking up – or if you have been able to thrive in spite of all the bad news – be sure you and your staff celebrate your success. Even the small ones count. Tell your staff what’s gone well and what you plan for the New Year to make it even better.
Sharing success is part of sharing the vision for your business with those who will help make it happen. It’s all part of the 7 BIG Strategies for managing your business from a strategic perspective. These seven strategies can mean the difference between whether you survive the run-off from the economic upheaval or thrive and grow in the new decade.

Read more about the 7 BIG Strategies here…

Profit Improvement

2010-02-25T11:47:00.000-08:00

There is nothing more important to your bottom line than attracting and keeping great people. It can mean that your business is more profitable – as much as 30% to 40% more profitable.

Even if you think the economic downturn puts more employment chips on your side of the table because jobs are scarce, the best people will have opportunities to move on if they are not happy. If you’re like most business owners, you’re asking people to work harder with less. There is no money for extra rewards – you may have cut back or freeze salaries. It’s more important than ever that your employees are committed to the job they’re in – and working hard to keep it successful.
For tips on finding and keeping great employees see our recent newsletter. Read it here.

Uncover Undercover Boss to Get Better Results

2010-02-16T08:13:00.000-08:00

I must admit, I'm not a fan of reality TV. It's way too contrived. So I ignored all the hype about "Undercover Boss" as just another in a long line of cheap television. I guess I shouldn't have been surprised to see how may of my friends and business associates actually watched. I was surprised to see write-ups and reviews and posts and comments in many of the business blogs and journals following the first program. And as I read about the program - after the fact - I'm pretty sure I wouldn't like it. Too contrived. And the implication that a good manager was 'set up,' not in the name of improving company performance but as a cheap entertainment trick, is disturbing. But conceptually, the ideas of the boss dropping back into the ranks to do the jobs that employees are asked to do and try to overcome the obstacles that employees are expected to overcome - now that is appealing. As a line manager in s large insurance office, it's something I used to do regularly. And it almost always paid off.

First, the process got an objective look. As someone who was trying to follow procedure, and who didn't do the work all the time, I was able to see things about the process that didn't work or didn't make sense. Employees are often too busy to even think about how to what they're doing better or faster or more accurately. And if they do come up with an improvement, they're hesitant to bring it forward.
Second, and in some ways even more important, the relationships grew stronger. There was always a good exchange between me and the employees sitting around the desk I occupied. I asked them questions and engaged them in my effort to understand their issues. They responded, sharing frustrations and sharing ideas for improvements.

I wasn't undercover. Being right out in the open, working side by side with people doing the work I usually supervised, had the potential to be constraining - to make them uncomfortable. It almost never did. They felt more respected. It gave me a chance to show them that I valued their effort as well as their ideas about the job itself - much more so than just saying it.

An engaged workforce is worth more to your bottom line than pretty much anything else you can have in place. People are much more likely to care about you and your company and your goals, if they believe that you care about them - as people not just as assets or liabilities. When your employees care, your customers benefit.

If "Undercover Boss" catches on, will we see more business owners and managers snooping around? If they're paying closer attention to what's really going on in their business, that would be a good thing all around.

Contingency Planning

2009-12-12T11:58:00.000-08:00

After 36 hours without electricity, I know that my contingency plan, which is supposed to ensure emergency preparedness for the business, is not up to snuff.

It's not up to a foot of snow and 20 degree temperatures.
It's not up to hauling firewood from the back of the property (not quite 50 yards) in a bushel tub.
It's not up to a generator with a pull starter that I'm too puny to pull (thank goodness for helpful neighbors).
It's not up to a cable Internet connection without power to run the modem and the router.
It's not up to conducting business from a cell phone that is email enabled but not Windows enabled.
It's not up to .... okay, enough whining. You get the picture.

My contingency plan needs re-working. My clients were all sympathetic and understanding. We rescheduled a few phone calls and changed a few due dates. How about your contingency plan? Placerville, California, a town of less than 10,000, had at least a couple of dozen insurance agents - none of whom could open their offices. There were downed tree limbs all over the area - some across roadways, some on power lines but others on the roofs of homes. According to the local paper this morning, there was a "moderate" increase in vehicle collisions reported to the local California Highway Patrol Office. You know there were a lot of folks trying to reach their insurance agents or the company claims office, or both.

How would you have fared in this situation?

Need help bringing your contingency plans up to date? Here are a few good things to help you in your planning. If you would like additional help, please feel free to e-mail me to discuss the status of your contingency plans: pam@transformationadvisors.com

Ultimate Sales Planning

2009-11-16T15:45:00.000-08:00

Sales Planning is both strategic or tactical. It is indeed a critical part of any strategic plan but the plan itself has to include all the tactical elements as well.
Frequently

The sales planning process should help each producer set personal goals and the action plans to achieve them. And, each individual sales plan should support the overall agency goals and objectives.

Sales isn’t a department–it’s an attitude!
The most profitable and successful businesses are highly focused on new business sales. In the face of economic turmoil, increased competition, and alternative distribution systems, every business needs a genuine sales focus built into its culture. Business development should be part of every individual’s job description. This is the ultimate in sales planning.

Read more about Sales Planning here.

Share Your Vision

2009-11-11T15:24:00.000-08:00

Strategic planning isn’t a solo enterprise. At least, it isn’t if you want to achieve your highest goals. Planning without sharing your plan is like building something all by yourself.
Sure, there is some satisfaction in the work itself – and in the finished product. But think about how much easier it goes if you have some help. And there is something much more rewarding about enjoying the fruits of your labor if you share it.
Who you share the work with depends on what kind of organization you have. Managers and key employees, board members or trusted advisors. Look for help from those who can provide input and perspective.
Who you share your vision with goes right to the heart of the plan. Your employees can't help you accomplish your goals if they don't know what your goals are. And they need to know what's in it for them.
Creating the vision isn’t enough. Working the plan isn’t enough. Documenting the plan isn't enough. Sharing the plan – and getting others engaged in your vision – that’s how vision becomes reality.

Planning is Indispensable

2009-10-20T10:38:00.000-07:00

Dwight Eisenhower is credited with saying, "Plans are useless, but planning is indispensable.” This makes some people uncomfortable - especially when quoted in the context of not planning. To some, this seems contradictory. It's not. Think about Eisenhower's most famous plan, the D-Day invasion in June of 1944. An enormous amount of planning went in to the preparation to take back France and the rest of Europe from the German's. But D-Day was originally planned for June 5th. Bad weather almost forced the Allies to revise their plan considerably.

A thorough understanding of what it would take to postpone the invasion until the next favorable season, and a real understanding of the risks associated with delaying and proceeding, put Eisenhower in a position to make his decision.

For most of us, the fate of the free world does not lie in our ability to get through the indispensible planning that prepares us to take advantage of opportunities or avoid the risks. It does matter, however. Don't let circumstance dictate your well-being and the well-being of your family and your employees and your customers. So what if your plan becomes useless. And it might. It's the process of planning - the practice of planning - that prepares you to take action when action is needed and to hold back when holding back is the smart thing to do.

We're coming into the time of the year when many businesses start their planning cycle for the coming year. Some of you are probably pretty far along. This has been a year when plans had to be revised. A lot of people were caught off guard - with their plans down, so to speak. For those of you who turned the corner, it was the planning - not the plan - that made it possible.

Change Management and Sales

2009-06-15T08:20:00.000-07:00

An insurance agency is a sales business. Sure there is definitely a service component but nothing happens until somebody sells something. If you're feeling the economic pinch, and we all are, then sales - to new customers and to existing customers - is more important than ever. If you're not doing something to improve sales effectiveness then you are going to struggle to make it to the other side of this market.

One of the keys to the effectiveness of any sales organization is total commitment. Every one of your employees needs to be on the sales team. Are they? Is "sales" a department or a state of mind in your agency. If not the latter, then cultural change may be in order. And what does that require? Well, more sales of course.

"The key to successful leadership today is influence, not authority." As much as I would have hated it as a line manager in corporate America, this quote by Kenneth Blanchard says it all. Of course, if you're the business owner you have the authority. But that's not how you get the best from your organization. You have to sell it. My friend Marsh Egan said it very well in this article on "The Convincing Side of Change."

Employees are customers, too. If you don't think so, remember back to the recruiting and hiring process. You (or someone in your organization) spent a good deal of effort selling that prospective employee on the benefits of working for your business. Just as you don't stop selling to customers, if you want buy-in and commitment to new ideas, you can't stop selling to employees.

It never ceases to amaze me that some of the very best sales people in the world, don't use those skills where they would do the most good. Right in their own businesses.

Accountability and Hiring and Firing

2009-06-11T07:46:00.000-07:00

Building and maintaining a business where everyone owns their own job takes discipline. An agency owner told me he had recently terminated two employees. Not because he was cutting back but because he needed to upgrade his staff. These two individuals just wouldn't follow procedure. They weren't bad employees. They just couldn't sign on to doing things only one way - the agency way. "I tolerated it for too long," he told me. "And I realized last week that if I was ever going to have an organization where people were truly accountable to do things the right way, then I had to do something different. It wasn't easy but it needed to be done."

So now he's recruiting to fill two jobs. For the job market, it's a wash. For his agency - short term - there is some big expense. Hiring and training take time. For the long term, however, it could mean higher productivity and better performance. So, better profit. Higher return on investment. For the economy, it's a win.

Apparently this strategic thinking agency owner isn't alone. Check out this article in the National Underwriter: "Insurance Hiring Continues Despite Poor Economy, Says Expert."

If you're looking for help to make a touch decision about a marginally performing employee, the bad economy might be a blessing for your business. One of the good things about a bad economy or a soft market is that it forces us to be more disciplined.

Measures of Success

2009-05-18T07:46:00.000-07:00

Is your business successful? How do you measure success? In this economy - in this market - how do you feel about your business results? Are you "satisfied?"

We hear:

"Revenues are down.
"Rate continues to be low."

"I'm losing accounts because they are going out of business."

"Revenue per account is down."

So does that mean your business is "in trouble?" Last year you had a successful insurance agency. How did you measure success? By that measure, are you still successful? If you answer, "No," then why? What has changed? Maybe nothing has changed. And maybe that's the problem.

There is no question that some businesses will fail - are failing - in the current environment. Many of those business owners would have said to me less than a year ago, "If it ain't broke, don't fix it." Well, there's "broke." And then there's blase. Business as usual is a business killer if the only measure of success is this year's profit.

That said, what do we do about it? Start by looking at how you measure success. Operating profit, how well operating revenue (without contingent income) covers operating expense is a critical indicator - much more reliable than pre-tax profit. Also take a look at the percentage of fixed vs. variable expense. During periods when income is down, do expenses stay high? If so, it becomes even more important to maintain tight expense control even when times are good.

Two other solid indicators of performance are 'hit ratio' and account retention.

Hit ratio measures sales effectiveness - the number of sales made to the total number of sales opportunities. And when you look at this one, be sure to compare your total opportunities to prior years. If you're not going after as many new accounts, you may see a false positive here, i.e., hits will be measured against a smaller base.

Account retention tells you how many customers you retain. It's a little more difficult to measure than revenue persistency, which is what we usually refer to as "retention," but is a better measure of service effectiveness. If revenue per account is down, it's more important than ever to keep the customers you have.

Everyone is feeling the effects of economic downturn. And the lingering soft market. Businesses that are not "in trouble" are the ones that measure their success consistently and critically - regardless of the economy or the market cycle.

The Revenue Paradox

2009-05-01T06:00:00.000-07:00

If you haven't seen the Insurance Journal article Bad Economy Not Impacting Essential Insurance Coverages it's worth looking at if only as a bit of encouraging news amid all the bad.

The results of this survey shouldn't be surprising - and I'll bet a similar survey of businesses would produce similar results. It highlights what I call the "Revenue Paradox." You must be willing to reduce revenue to retain accounts. And, in fact, you must expend resources to reduce revenue to retain accounts. Ouch!

Managing expenses is more important than ever. There just isn't any room for waste. We're working on tools to help with expense review and reduction as well as a rolling cash flow tool to highlight critical issues before they get to be disastrous.

The good news continues to be, if you manage your business well in tough times, as things get better, you have a distinct advantage over companies that think business as usual is good enough.

Differentiation

2009-04-20T16:14:00.000-07:00

"When you fail to differentiate yourself from another service firm, the competition is reduced to choosing between commodities. But, law firms, accounting firms, management consulting firms, financial service firms, insurance firms, and the like are certainly not commodities – unless those in the industry commoditize themselves by failing to differentiate their offering from that of another."

The author went on to say that any buyer, faced with competing firms that all seemed "near clone-like," will either stay with what they have or make their decision based on the best price.

The above quote and reference is from a long blog dealing with the process of responding to RFPs in writing. You can read the entire article here. The message is applicable whether the "proposal" is in response to an RFP, in writing, or verbal. And the point is clear - your ability to differentiate yourself from other insurance agencies and, perhaps more importantly, from Internet carrier and consolidator sites, is what will enable you to survive and thrive in this economy or any other.

It's NOT all about the economy

2009-04-20T15:16:00.000-07:00

Even in this difficult economic environment, is price the driving criteria for any purchase? When you've lost an account, it's easy to assume so - especially in the absence of a more definitive reason. When clients tell me it's all about the economy, I'm more than a little skeptical. Our own unscientific research shows that, whether it's insurance or groceries, price is almost never the only reason why anyone selects one product or service over another.

And now there' s research that supports my theory - and the "buyers" in this case are insurance agents. "When it comes to an agency's satisfaction with its personal lines insurance companies, commissions do not rank as tops. Nor do commissions rank second. In fact, out of six satisfaction factors, compensation from an insurer ranks dead last, according to a new industry study. "

You can read the article on the Insurance Journal website but it's not surprising. You select your carriers based on a whole package of customer needs and preferences, knowing that it's value, not price, that will influence their purchasing decision.

A good thing to remember if you're losing business and wondering why.

Keep Your Eye on the Ball

2009-03-12T16:47:00.000-07:00

It's baseball ball season coming on fast and soon Little League will be starting up again. I'm not so much into baseball as I am into watching my grandson play. I'll sit in the stands and watch him swing for the fences - missing a few - while his father stands on the sidelines yelling for him to "Keep your eye on the ball!" That's what I'm suggesting to my business clients, too.

There are so many distractions now - and most of them negative. The market is still too soft. Retention is off. Revenues are down. It's oh so easy to get caught up in the media frenzy about companies laying off workers or closing their doors.

Now, more than ever is the time to keep your eye on what your business is all about. Now is not the time to thrash around looking for some new strategy or some silver bullet program that will distract you from doing what you do best. Now is the time to take a look at your strategic vision and the plan you have in place to reach your goals. Do the tactical details need adjustment? Or do you just need to focus - to keep your eye on the ball?

Can't see the forest for the trees?

2009-02-04T13:51:00.000-08:00

Strategic perspective - the ability to manage everyday problems within the context of your mid-term and long-term goals - is often impossible to maintain without a little help.

The ability to help business owners maintain that strategic perspective is what I want to bring to the table. The fact that we have had the opportunity to work with hundreds of successful insurance agents, and we know how the business works - from both the company and the agency side - means we can bring perspective along with practical knowledge and advise.

My biggest kick is being able to help an agency owner see another way to solve a problem.

2009-01-23T07:34:00.000-08:00

Transformation Advisors provides strategic management consulting to independent insurance agents and brokers who want to take their businesses from good to great – and keep it there. We are intimately familiar with the challenges you face and we design strategies and tools to help you create winning teams for sustained, excellent performance.