Organizing To Support The Sales Effort

ORGANIZING TO SUPPORT THE SALES EFFORT

by Carol Hammes

At some point, it becomes essential to step back from the situation and evaluate whether the organizational structure and job descriptions are effectively supporting the sales effort.

Over the past several years, many insurance agencies have changed their organizational structure and workflow response to automation requirements. They have, in effect, organized their service personnel and procedures to support their computers. During the period of installation and familiarization, there may be no other viable option than to accept the vendor's suggestions for handling transactions and adapting workflow to 'fit' the new system. The processing of business does not conveniently stop for six months so that the people in the agency can figure out the most efficient method of installing and using the system. The necessity of finding any way to get business in and out the door takes precedence over spending the extra time to find what might ultimately be the best strategy for this particular agency.

At some point, however, it becomes essential to step back from the situation and evaluate whether the organizational structure and the job descriptions are effectively supporting the sales effort. The primary purpose of every job position in the agency from president to file clerk is to meet the needs of the customer and secondarily, to demonstrate an ability to meet the needs of the prospects. Without these two objectives, the agency has no future. The producers are the first line of contact, but the rest of the agency personnel can make or break the sale of both new and renewal business. It is the responsibility of agency management to provide the personnel with the tools to do the best job they can in responding to the needs of the customers, prospects, and producers.

An organizational review should be conducted at least every two years, more often if the agency is growing faster than 10% a year or if there have been significant changes in personnel (especially producers/owners), types of business written, insurance company underwriting or processing procedures, or agency computer systems. A motivated group of employees will respond and adapt to these changes as necessary, but the result can be an ad-hoc structure and set of procedures that hurt productivity and service response time. Designate one of the least active months for everyone to take a fresh look at the operation. We can guarantee that the time spent for the evaluation will be more than made up in improved efficiency and additional sales.

THE REVIEW PROCESS

If possible, have an agency meeting to launch the review period. In agencies with multiple locations it is beneficial to include branch personnel when logistics permit it. You should take advantage of every available chance you have to involve the producers and staff in agency planning and decision making, since they will be the ones helping you execute it. The organizational evaluation process is a prime opportunity to obtain valuable input, reward individual effort and achievement, and observe management and leadership potential in newer members of the staff. Depending upon your management philosophy and agency culture, it might be a good idea to conduct a formal 'cleanup' campaign with prizes for the most creative, time-saving, and cost-saving suggestions.

Begin the meeting with a statement of what you are trying to accomplish, making sure that you do not give them the impression that you are trying to find ways to get rid of existing people or that it is their fault that business may not have been handled as well as it could have been. This process is meant to improve morale, not destroy it! Outline the program in such a way that gives each employee an opportunity to provide individual input. In larger agencies you will need to handle the review using one or several committees, but these committees must gather information from everyone. In setting up the review groups, there should be at least one person with the responsibility for overseeing the entire agency structure and procedures and one person for each major department.

However you choose to do it, clearly define the objectives and parameters of authority of the participants. And set some specific time frames. Who is supposed to accomplish what, by when? The review can be conducted entirely by insiders or you can opt to get some outside input. One very good source of information is your existing group of insureds. Find out from them how well your agency is meeting their needs with its current structure and procedures. A simple and quick way to obtain information is to conduct an informal telephone survey of major clients in commercial lines, personal lines, and group health. Possible open-ended questions to ask are:

• Is there anything that we are doing that you particularly like?
• Is there something else that you would like to have us do for you? Or is there something that you would prefer we not do?
• Are you receiving enough feedback on the status of your policies? Too much?
• Not enough?
• Have your claims been handled well? How could the experience have been improved?

A more formal approach would be to conduct a short survey of all the agency's customers. This is much more time-consuming and many agents who have done consumer attitude surveys have been disappointed with the low response rate. If you are serious about it, you might want to offer some incentive for them to return the questionnaire. In any case, there should be no more than 10 simple questions, either short answer or multiple choice. Avoid using insurance jargon and don't lead them or use giveaway words that will slant the responses. Before sending the survey out to thousands of people, it is a good idea to pretest it against a small sample to see how well the questions are understood and whether the responses are meaningful.

Perhaps a better use of your time and money would be to contact accounts and prospects that have been lost (if you do not do so at the time they leave) and find out exactly what the problem was. People who are unhappy about something seem to be much more willing to communicate informative details than those who think that all is going well. And this contact has the added advantage of developing potential new business!

Another place to get information on how well the agency is doing is to ask the underwriters and field reps from your major insurance companies. Explain that you are trying to determine whether the agency is currently providing the best and most effective level of service to its insureds. You would like to find out from them what the agency is doing (or not doing) that may be making it harder for company personnel to respond promptly and accurately to the insureds' needs (as communicated by the agency personnel).

Outside input can also be obtained by bringing in someone who is not familiar with the agency to facilitate the process of reviewing the existing structure and procedures. This can be a member of the owner's family, a friend, or professional management consultant. What you want is someone who will not take anything as given and will continually ask why a transaction is being handled the way it is, even if the answer seems patently obvious to those of you who do it every day. It's surprising how much duplication and redundancy can surface when you are asked to defend what you are doing and why!

Some outsiders will only be able to help you discover problem areas and may not be in a position to offer solutions. A consultant who specializes in insurance agency operations should be able to go further and recommend specific changes. But no matter how much you pay him or her for the input, the decision of whether to make the recommended changes as well as the actual implementation will still be up to agency management and staff.

In most agencies it is probably better to go through the review process internally first before paying for outside assistance. After the internal review, if you still have the sense that things are not going as well as they could and that the staff is not supporting sales as much as you would like, then it might be beneficial to get involved with a consultant. Exceptions to this 'try-it-yourself-first' approach are situations where there is definite disagreement among owners regarding personnel, organization and/or procedures, family members in questionable roles, or serious morale problems. In those cases you could make the problem worse by trying to address it without disinterested third-party involvement.

AGENCY ORGANIZATIONAL ANALYSIS: ONE APPROACH

The following discussion represents one approach to analyzing the property-casualty departments of an independent agency. Since this is a highly individualized process and since all agencies are unique, you may find that this recommended approach does not exactly fit your situation. Use it to the extent that it can help, then improvise. Do whatever works.

1. Review the input from the insurance companies. Are agency personnel responding to requests in a timely manner? Are letters, memos, applications, and other documents coming from the agency clear, concise, grammatically correct and neat? Are all of the contacts made by agency personnel necessary and handled in the most efficient manner? Are submissions as complete as they would like them to be or is a lot of time spent on both sides tracking down additional account information? How do they feel about your marketing and placement setup? Would they prefer it if you would centralize (or decentralize) the agency contacts with underwriters? Do they feel that you are sending accounts to too many companies and therefore not paying immediate attention to the applications that they receive?
2. Review the input from current and past insureds and prospects. Are the contacts with agency personnel productive? Do they get a prompt response when they call the agency or are they frequently passed from one person to another, made to wait on hold, or put off for a call back? Is correspondence easy to understand and grammatically correct? Do they want more or less attention from the producer and/or CSR at renewal? Do they want copies of all endorsements requests in addition to the actual endorsements? Would they prefer to have one contact person in the agency or do they like having different people to call for various needs?
3. Ask each of the people in the department (including producers, placers, CSRs, claims reps, managers, and supervisors) to prepare a detailed list of the tasks that they currently handle, in order of priority. Then ask them each to prepare a second list with those tasks that they think others could be handling more effectively. A third list would be those items that they believe could be included in their job description that are not currently in that position-perhaps with some additional training or guidance. The committee or person in charge of the review should take all of the lists and combine them, noting variances by people in the same positions. For example, does one CSR prepare certificates while the other has the assistant do it? Does one producer fill out applications with the other having the CSR handle that function? At this point in the analysis no judgment should be made regarding where and by whom the tasks might best be handled. You are simply trying to gather information on the way the work is being divided up currently.
4. Analyze each major transaction handled by the department and draw a rough workflow chart of where it goes in the agency from the time that it comes in until it goes out to the insured. How many times is it touched by how many people? Look for duplicate work that may be created by the computer system (for example, a CSR or producer writing down a car change, then sending it to the assistant for data entry, which goes back to the CSR to send to the company and finally repeating the process when the processed endorsement returns from the company). Try to determine how well the manual procedures interface with the system and whether data and word-processing assistance is being used at every possible juncture.
5. Using the output from the computer and/or a manual information gathering process, develop data on the agency's book of business and, where possible, divide this out by line of business or type of account. By doing this, you are trying to find out what your most profitable lines/accounts are by analyzing the servicing requirements for each. Include such factors as: number of accounts by line/type of business; average account size by commissions; average commissions per transaction; number of endorsements/claims; billing options; number of markets used and frequency of remarketing efforts; insurance company processing methods available for that type of coverage, etc.
6. Calculate the commissions per producer, discounting for those that have been with the agency less than five years. Personal/small commercial producers should have at least $135,000 in commissions. Commercial lines producers of medium-sized accounts should have $200,000 to $250,000 in commissions. Producers with large or jumbo accounts should have books in excess of $300,000. Divide the total agency revenues by the total number of producers including the appropriate portion generated by managers and owners if they are also involved in sales. The result should be at least $250,000 in revenues per salesperson. Determine the percentage of total agency personnel that are considered to be salespeople. In most agencies (regardless of size), 24% to 25% of the people will be producers. Exceptions to this rule are those agencies specializing in one type of business such as personal lines or professional malpractice where support people make up a higher percentage of the total number of employees.
7. Calculate the commissions handled per support person in each of the departments. Include managers and everyone else (except for producers) in the head count and divide the total commercial commissions by that number. The following are some general standards for agencies that are doing slightly better than the average overall in productivity measurements. These standards apply for agencies that have a Claims Department that is separate from the servicing and marketing departments. Agencies combining claims handling with the CSR position, should adjust the measurement downward by 25%. Agencies that are on-line with most of the major carriers and that have been using transactional filing successfully for at least a year should increase the measurements by 25%.

COMMERCIAL LINES

PERSONAL LINES

Once all of the information has been collected, the committee in charge of the evaluation should organize, compile, and review all of it to determine in what areas the agency and its personnel are currently doing a good job for the insureds, the companies, and the agency (as measured by profitability). The review may reveal certain types or sizes of accounts that could be handled differently than others, or by other job positions, or perhaps not at all. It will also isolate areas where current procedures are not as efficient as they could be. It may also point out that the organizational structure itself could use some fine-tuning. For example, if all of the producers and CSRs are handling transactions differently, service levels, productivity, and E&O loss prevention may be in jeopardy. More management direction could be necessary, either from the top or by the introduction of a supervisory level.

In some agencies the review committee will also be charged with developing recommended solutions to the weaknesses that have been identified. In other firms top management will take the compiled data and decide what, if anything, to change about the operation. There is no universally right way to organize personnel or to handle business, but there is probably a best way for your agency at this stage of its development. The current economic and market conditions, the book of business (type and size of accounts), the abilities of the employees you now have (or can obtain in your marketing area), and your own management style will dictate which system is best for you at this time.

With every decision that is made, think about the sales opportunity involved first. Improved productivity will follow. Procedures and workflow that free the producers from servicing and the technical personnel from routine paperwork will provide the people with the expertise and the time to devote to meeting the needs of insureds and prospects. Retention rates will improve, the new sales hit ratio will increase, and the overall revenue per employee in the agency will go up.

The late Carol Hammes, principal of The Middleton Group, was one of the Independent Agency System’s most widely respected management consultants. She will be sorely missed.