How To Use Consultants

Sooner or later, many agencies realize that they have problems that only an objective outsider can help resolve. Time to work with a consultant. In this issue of the Pipeline, Al Diamond discusses how to find them and what you can expect from them.

Consultants, like doctors, are professionals. Most of them know the basics, can discern obvious illnesses, and can prescribe normal treatments for normal conditions. Unusual illnesses or unusual responses to an agency’s ills also require skilled specialists — who are always in demand and cost more to use. But, if you or your family were in physical peril due to an illness, would you seek the most convenient or cheapest physician, or would you seek the best professional available, regardless of cost? Obviously, our families’ health provides a great enough return that we’d do (or pay) anything to assure an appropriate diagnosis and treatment with a high probability of success.

For most of us, our agencies are our primary source of income. If your business seems to be in trouble you must determine whether you suffer from the business version of the common cold (wait a while and it’ll solve itself), or from an insidious disease that could ruin you. Two options are available to determine the extent of your ills:

1. Have a consultant come in to your agency when:
2. You feel something is amiss (revenue is down, profits are declining, customer retention is poor, etc.), or
3. Once every three years for a checkup and tune-up.
4. Acquaint yourself with standard and exceptional performance standards of agency operations and measure your standards and performance against your peers.

Most agents are insurance experts and professionals — not agency management experts. Regardless of their specialty, most doctors seek diagnosis and treatment from other highly qualified physicians.

LOCATE A QUALIFIED CONSULTANT

The American Association of Insurance Management Consultants (AAIMCO) is comprised of highly regarded, long-term, professional consultants specializing in the insurance industry. They are notwww.aaimco.com or call (800) 779-2430 for more information. associated with any carrier or vendor. Visit their Web site

Many state or national professional organizations maintain lists of consultants that their members have used successfully.

HOW NOT TO LOCATE A QUALIFIED CONSULTANT

'My buddy, another agent, had a similar problem and he’s offered to help me with mine.' This is akin to sharing prescription medication with a friend because you have similar symptoms. Every agency is different. A treatment used to solve the ills of one could fail dismally in another.

'Joe owned an agency for years. He’s retired now, so he’s consulting for me.' This is as ridiculous as permitting an out of work pharmaceuticals vendor to attend you as a consulting physician. Familiarity with the agency business is not equivalent to understanding how to solve an agency’s problems. Most of these people have intimate knowledge of one or a few agencies, or have touched agencies from the outside only. They’re a far cry from consultants whose careers have dealt with hundreds or thousands of agencies on an intimate and problem-solving basis.

WHAT TO EXPECT

• Consultants should help you identify problems.
• They should recommend detailed solutions.
• They should implement solutions in accordance with your desires. In other words, you should be able to implement the solutions without the consultant; it should be your choice to retain the consultant for implementation.
• They should provide follow-up services to assure that the problem is solved.
• Consider a consultant part of your staff once they’re familiar with your agency. Many will provide reasonable telephone follow-up services without further charge.

WHAT NOT TO EXPECT

• Don’t expect improvement without change. Continuing to perform in ways that have failed in the past and expecting different results in the future paraphrases the Chinese definition of insanity.
• Don’t hire consultants to implement changes that you’ve already determined you need, but are difficult or distasteful. Don’t use a consultant as a hired gun. Consultants aren’t assassins.
• Don’t let a consultant change your agency’s culture unless you’re fully committed. You’re setting them (and yourself) up for failure.
• Don’t fight with your consultant. If you hire a good consultant, their recommendations will be sound. If you disagree with them, pay them and don’t accept their recommendations. After all, it’s your agency.
• Don’t blame a consultant for recommendations that you failed to implement or changed during their implementation. Most professional consultants will fine tune recommendations that don’t attain the desired result.

CONSULTANT QUALIFICATIONS

• Consultants must know the area in which they’re consulting intimately. This means they must have experience with numerous agencies, a documented history of problem-solving success, and thorough knowledge of the area of agency or company operations in which they’re consulting.
• They must be able to relate to all agency employees. Successful consultations involve interaction with the entire agency staff — not just with agency owners. Owners’ and employees’ views of an agency’s condition — and the causes of its problems — often vary greatly. A good consultant will listen to and respect the views of owners, managers, and employees.

Besides the expertise needed to consult in the insurance business, the most important ingredient of a consultant’s potential success is their relationship with the owners. As with selling insurance or buying and selling businesses, the most important thing isn’t the deal itself; it’s the chemistry between the key players. Many deals have been terminated because the key players disagree. If a consultant doesn’t mesh well, the best course is to terminate the relationship.