Implementing plans within an agency is certainly not unheard of and often works as well as the planning and organizational skills of the agency owner allow. Whether you use a consultant or do it yourself, Al Diamond provides the steps you'll need to take.
The end of a calendar year also marks the end of the fiscal year for many insurance businesses. Those agencies that plan ahead are deep into analysis of the current year and the creation of budgets, objectives, and plans for next year and into the future. Those agents who haven't yet formalized their plans are once again asking themselves, their friends (who are in the middle of the process), and us, “Why are you bothering with formal plans? We sell insurance and we work hard every year to excel. What difference does it make to spend all this time to formulate plans, forcing yourselves to perform in accordance with your goals?”
There are no satisfactory answers for some agents. They feel that they succeeded in the past “flying by the seat of their pants” and that writing objectives, action plans, and budgets won't make a difference in their performance. Planning is a lot like following a sensible diet and exercise routine to lose weight and enhance health; if you don't believe that you can lose weight, you certainly won't! Similarly, if you don't believe that proactively pursuing targets and objectives will give you a better chance of achieving those objectives, you certainly won't participate in a planning process, and, if forced to do so, will disregard it when the opportunity arises.
Of course, the same people who refuse to believe that business planning is an effective tool for enhanced performance will spend weeks and months planning a vacation in order to assure its success without a hitch. The reason that they plan vacations, and not for the success of their business, is Fear of Failure.
The planning process is meant to remove roadblocks from successful attainment of goals. If an agent fears that performing the activities required to sell more insurance and to retain more of their existing business would lead to failing to do so, they might shy away from the process completely. The agent believes that their past successes are simply luck and that past failures can be blamed on others or on the circumstances. They will certainly enjoy the successes of their business (whether due to their efforts or to accident), but if they don't assume responsibility, they don't have to blame themselves for any failures.
Another problem that causes agents to avoid the planning process is Fear of Success. Many agents don't spend enough time managing and operating their agencies. Although few will admit this about themselves, all will agree that other agents suffer from this syndrome. They (or their parents or predecessors) have built their businesses to support them in a manner that they find comfortable. They feel that the business will continue to keep going. What incentive is there for them to begin planning? If they truly pursue a plan, they must put forth efforts beyond those needed to support themselves in their businesses. Agents who are honest enough to admit this syndrome as the reason that they don't plan have a legitimate reason not to create plans.
However, if you believe that planning your business efforts specifically to assure success is a viable process, if you'd like a larger and more profitable agency whose intrinsic value is building, and if you don't fear working toward your goals — now's the time to get started!
Whether you're a one-person operation or the head of a multi-location business with hundreds of employees, the process is exactly the same. If you've never strategically planned before, and want to assure the success of the process in the first year, seek professional help. Would you trust the repair of your car to someone who has read a book on car repair, or to someone who's a car repair specialist? A bad brake job can cost you your life or those of your loved ones. A bad plan can cost you time, frustration when desired events don't occur, the respect of your employees, lost growth and profits, and, in the worst-case scenario, your agency.
Most agents who use professional planners to get them started find that they can operate and manage their own planning within a few years. However, many continue using consultants to provide new insights on methods of achieving their goals.
THE PLANNING PROCESS
Implementing plans within an agency is certainly not unheard of and often works as well as the planning and organizational skills of the agency owner allow. Whether you use a consultant or do it yourself, the steps are the same:
1. Create Mission and Vision Statements. The owners and key managers gather to discuss what they would like the agency to be in five years. The discussions lead to two written statements:
- A Mission Statement that defines the business goals of the agency.
- A Vision Statement that defines how the agency wants to be seen by its owners, employees, clients, carriers, and by the community that it serves.
While the Mission Statement defines the success of the agency in objective terms including size, profitability, area served, customer base, product and specialties, the Vision Statement tells the agency how it wants to change its appearance to the people most important to its success. This could be defined in terms of professionalism, speed and friendliness of service, underwriting capabilities, marketing aggressiveness, responsiveness to community activities, etc.
2. To reach the goals stated in each area of the Mission and Vision Statements, you need to define Strategies. To do this, focus on those sections of the Mission or Vision Statement that don't define the agency's current performance (there's no need to strategize performance that already exists). Determine what your agency must do differently during the next five years to reach the position of the action step in the Mission or Vision.
3. Strategies define what must be done differently. The next step is to identify objectives for every strategy during each of the next five years. Setting Long-Term Goals in this step begins the process of “reality testing,” during which the agency realizes what's reasonable to accomplish during the five-year period and what's simply out of reach due to lack of time, money, or human resources.
4. Once each Strategy has a set of long-term goals based on the Mission or Vision (five years out) to the current year, the agency is ready to create its Tactical Plan for the next year. In most agencies, this step requires the participation of other staff members (managers and employees). It's been proven time and again that any objectives created by the people expected to achieve them will succeed far better than goals created by someone else and “given” to the employees for implementation. Inclusion also helps employees “grow” into greater and more important roles in the agency and helps agency owners identify potential successors.
5. The Tactical Plan begins with setting Objectives. The Objectives for the next year are the lowest level of Long-Term Goals set for each Strategy identified. Each objective must have an “owner” (an owner, a manager, or an employee who will track the progress of that Objective through the year). The Objective owner does not have to be the same person who implements that Objective. Creating Objectives based the Strategies avoids the pursuit of Objectives that are “hot” at the moment, but that have nothing to do with the Mission or Vision Statements of the agency.
Many agents are “turned on” by opportunities that come their way. As entrepreneurs by nature, they enjoy the challenge when a potential new venture crosses their paths. Some of these opportunities are worthwhile and advance the course of their business. However, because you will have many opportunities during your lives, you need to pick and choose the ones that adhere most closely to your core goals (presumably, those identified in your Mission and Vision Statements). Avoid opportunities that, while exciting, will take your eye off the ball of your business development plan.
6. Once the Objectives are defined, it's essential to create Action Plans. Objectives define the end result desired by the end of the year. Action Plans state the “how” of achieving the objectives. Action Plans can be singular actions that are accomplished throughout the entire year, or quarterly activities whose successes will permit attaining the Objective.
7. Finally, each objective needs a series of monthly Benchmarks that tell the owners and managers whether the action plans are working in accordance with the projections. The Benchmarks must be objective (as opposed to subjective), measurable, and realistic.
IMPLEMENTING THE PLAN
Once you've published the Plan, the management team (all those responsible for Objectives) should meet at the close of each month of the New Year to compare their results with their Benchmarks. Don't allow any changes to Benchmarks, Action Plans, or Objectives during these meetings. Use them to communicate whether or not the action plans have been implemented and, if they have, whether they're meeting expectations.
At the conclusion of each quarter, instead of the Monthly Meeting, hold a Quarterly Meeting that discusses monthly and quarterly results and reviews Action Plans or Objectives that haven't met expectations. If an Action Plan hasn't been implemented, the Objective owner must tell the group why, and what will be done to achieve the desired results during the rest of the year. Reasons, rationales, and alternatives must be designed before the meeting, not at it.
Every step in the Plan must support a Budget created by the financial manager, who has a good grasp on historical revenues and expenses. The operating departments will alter the budget based on their growth, new business, and retention objectives — as well as the financial needs for equipment, personnel, or marketing costs to assure success of the Objectives. At each Monthly Meeting, the financial manager reports on actual results for the month (and year-to-date) compared with budgeted revenue and expense projections (and historical monthly and YTD results from the prior year).
The goal of Planning is to project your agency's year-end financial results as closely as possible, and as early in the year as possible. By the fourth or fifth year of planning, you might need to adjust the budget once (at the end of the first quarter), but otherwise, you should be quite close to your realized results within your budgeted expectation.
Whether you use a professional to facilitate the planning process, or do it yourself, the first and foremost step is to get started! Success breeds success. Once you find the effectiveness of this business tool, you'll include Planning as an integral part of your business life.