Operational Excellence As Competitive Advantage

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

Property Casualty 360, June 22, 2012, "GEICO Ad Spending Far Outstrips Its Peers"

A lizard, a caveman and now a possum. GEICO spent far more on auto insurance advertising in 2011 than their competition, both on an absolute basis and as a percentage of the business the company wrote. This, according to a new study released last week and reported by Reuters. With aggressive pricing and heavy advertising, GEICO has quadrupled its market share of the U.S. auto insurance market share over the last 20 years. GEICO's advertising budget represented 6.5 percent of premiums written in 2011.

Anyone who watches  even a little television is familiar with the GEICO brand. And Allstate. And State Farm. You can't compete against these giants by increasing your ad budget. You can't consistently compete against them using price as the competitive advantage. So how do you compete?

Many independent agents say it is their superior customer service that sets them apart. Competing on the basis of service in a 24/7, on-demand, marketplace requires a level of operational excellence that embodies efficiency and effectiveness, employee engagement and customer and customer focus, profitability and business value.  Read more about operational excellence as a competitive advantage here. 

From Theory to Practice

Can you say with confidence that the way you do business gives you a competitive advantage?

If the answer is, "YES!" 

Sustain it. Stuff happens. Take a proactive approach to sustained excellence. Continuously measure, test, improve, measure.

Proclaim it. Make sure everyone in your organization understands the value you bring to current and prospective clients. It's part of your culture. Make it part of your ongoing communications. 

If you're not sure, the the answer is probably, "No.

Find the gaps. Make the investment in time and resources to understand what works and what doesn't.

• Ask your employees. Use surveys, focus groups and one-on-ones to tap into the talent you already have.
• Ask your customers. Get employee feedback on customers, use focus groups, and individual and group surveys to understand what customers want and how well you deliver.
• Review your operations. Start with a checklist or ask for help. If you don't feel you can be objective enough or thorough enough, hire a consultant.
• Measure your results. Focus on business value rather as well as productivity and profitability. Compare to industry averages but only as a way to create your own benchmarks.

Fill the gaps. Use what you learn to build a strategic plan to get to operational excellence. You can't do everything at once and you shouldn't try. Set priorities. Itentify accountabilities - who is going to do what by when and how will you measure results. Involve the entire organization and communicate constantly. 

Think of it as a process. You'll never really be done so be prepared to sustain it and proclaim it as you go.

Do your excellent operations give you a competitive advantage? Are your employees engaged in keeping your customers delighted and bringing more in the door? Can your team deliver on time every time, even when things don't go just right? If you're not satisfied with the answers to these questions, call or email pam@transformationadvisors.com..

Insurance Industry Staffing

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?

More about finding and keeping great employees.

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. 

Finding & Keeping Great Employees

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.

Ensuring Consistency

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

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?

Uncover Undercover Boss to Get Better Results

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.

1. 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.
   
2. 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.