CULTIVATING THE AGENCY TEAM
by Carol Hammes
Use these ingredients to build and maintain an effective operation.
Whether your agency's business plan includes growth from internal production, acquisitions, or some combination of both, you will need to have a group of capable and dedicated employees to support that plan. It's best to begin the team-building process by setting up a Personnel Plan to help you attract and hire the right type of people for your organization. But what you do with them once you have hired them will be the ultimate determinant of the success or failure not only of that particular hiring venture but also of the total agency efforts to develop above-average levels of productivity and profitability. People are your greatest assets and yet they are also the greatest expense in the agency. Turnover and/or reduced efficiency due to the discontent of one or more persons can literally make the difference between profit and loss and, in some instances, success and failure.
One of the principal characteristics of thriving agencies in these tough times is that the owners are consciously focusing on employee relations. It takes constant attention, creativity, and lots of luck to build and maintain an effective team of motivated employees. Unfortunately, there isn't an established program that agents can follow that will guarantee positive results. What has been successful for other agencies may be disastrous for you. In fact, what worked out well for your agency several years ago may not even get you to first base now. Team-building is a process with a constantly moving set of rules and parameters. It is not an end result in and of itself. In short, you cannot create the team and then forget it. Once you plant the seeds you will find that you must continue to nurture them through changing internal and external conditions to make sure that they continue to grow.
A good starting point is to assess the current level of motivation and involvement among existing employees. If a morale problem exists, it is essential that you determine its reason and take steps to turn things around, hopefully before hiring any more people. If the general mood is sour, even the most excited and dedicated of new employees will soon begin to tire of his or her optimism about the agency. A bad attitude is the most contagious of all communicable diseases. Sometimes, the cause of the morale situation is readily apparent but more frequently the reasons are elusive and downright puzzling to agency management personnel. Even if you think you know what the problems are, elicit the participation of the employees in identifying the source(s) and in searching for answers. You may be only seeing the tip of the iceberg.
One consequence of the prolonged soft market is that agency owners, producers, and service reps have been forced to work a lot harder than they used to. The average revenue per employee figure almost doubled during the ten years from 1984 through 1994 and yet the commissions per account (particularly in Commercial lines) are once again close to 1984 levels. This means that the people working in insurance agencies are processing much more work than they were expected to handle when most of them entered the industry-and probably when most of them were hired by your agency. As a result, many of them are becoming worn out and very discouraged. The stacks of work are higher and the light at the end of the tunnel seems further away. When coupled with the knowledge or perception that there is little room for advancement in the agency or for significant increases in compensation, the burden can become overwhelming. What helps more than anything here is to have the management personnel and/or owners enter into a partnership with the employees to address the problems and get them resolved.
Ask everyone in the agency (including the owners) to list the most stressful aspects of their job. If they are like most groups of agency employees, they will list the following things: frequent interruptions; lack of advancement opportunities; little chance to have input into decisions affecting their jobs; unreasonable expectations regarding workloads (often expressed as 'not enough people'); delayed, insufficient, or nonexistent answers to questions or resolutions to problems; perceived unfair or unequal treatment of some employees; and poor communication from management.
The investigative and corrective process involves asking a lot of questions:
What can be done in the areas of workload, procedures, office interaction, etc. To relieve the stress factors in your work environment, address every issue your staff has raised even if the executive staff does not recognize some as difficult problems. If the employees believe that the issues are important and that these factors are detracting from their ability to do their jobs well, the concerns (whether real or perceived) are definitely impacting morale and must be resolved or explained to their satisfaction. Remember, the purpose of this exercise is to identify the sources of irritation and to come up with practical solutions that will permit everyone to work more efficiently and happily. If the agency owners/managers react to the employees' comments and suggestions defensively-as though they are personally being criticized for the way they have managed things-they will only complicate matters.
The process of developing and maintaining a positive team spirit begins with the investigation of the current employee attitudes and then expands into the creation of a grass-roots system of feedback that allows management to keep its ear to the ground and to make adjustments to personnel and procedures before the inevitable small fires flare into a crisis. In an agency with only three employees this 'give-and-take' process generally happens without any conscious effort on the part of the owner or employees. The first signs that the ad-hoc approach may be breaking down generally comes when the agency has from five to seven people. By the time the head count has reached nine or ten, the owners/managers must spend a considerable amount of time on personnel issues. If a significant portion of the available time is allocated to feedback and prevention, the agency team will continue to function relatively smoothly through subsequent growth plateaus. These are the firms that are consistently operating with $100,000 or more in revenues per employee and pro-forma profit margins exceeding 15%.
In most agencies, however, the owners/managers are so busy handling accounts and dealing with insurance company antics that they only attend to personnel management issues when they explode. Such an environment is not conducive to the maintenance of the team effort: thereby, what was once a happy little family becomes a hotbed of intrigue and discontent. A 'quick fix' might repair the situation for a little while, but unless you have a consistent plan for handling employee relations and team building activities, the focus will be lost and the group will eventually drift back into unproductive unrest. Every time the group effort breaks down, it sets the agency behind in meeting its growth and profitability objectives. If six months out of every two years are spent dealing with critical morale problems, what would have been a 15% annual growth rate turns out to be 10%. What would have been $100,000 in revenue per employee is more likely running at $75,000, making the compensation costs much higher than they need to be and reducing the profit margin accordingly.
Giving employees a vested interest in the agency's success sustains consistent growth and a profit curve. Create an environment where the existing and new individuals will be motivated to strive for excellence, and where they will not tolerate other employees who are subverting the group effort. There are many tangible and intangible elements that go into the creation of this 'brave new world' out of a traditional insurance agency environment. Based upon our many years of consulting experience with independent agencies, we estimate that perhaps 10% of the existing agencies have found the right combination of factors. This article presents the major elements that seem to be present in those firms that have been successful in establishing and maintaining that elusive team spirit. How you implement them will depend upon your own management philosophy as well as the agency's location, business orientation, and access to the right personnel.
INGREDIENTS FOR A TEAM-ORIENTED ENVIRONMENT
Physical Setting: The layout of the office and the availability of modern equipment can greatly influence productivity and attitude. Frustration at having to walk a long distance to stand in line at a fax or copier that frequently breaks down, waiting for a slow computer system to respond, trying to get an open phone line, and searching for an empty office to meet with a customer because there is no conference room all take their toll. Walking into an office that needs painting, tripping over ripped carpet, getting snagged on an old wooden chair, or climbing over files to get to the desk can put an employee in a rotten mood every day. Money spent on professional office space with sufficiently state-of-the-art equipment is not a luxury- it's a smart investment in the agency's future.
Efficient, Well-Defined Procedures: Make sure that employees know who is responsible for what part of each transaction. Review the current procedures to identify places where efforts are being duplicated or where people are stepping on each other's toes. If we had a dollar for every time a CSR and a producer got into an argument over who was supposed to complete the application, we'd be very wealthy indeed! When experienced people and new computer systems are brought into the organization, a hodgepodge of procedures can develop that combine the way things are done in other agencies with suggestions from the computer vendor. The resulting procedures, while ultimately effective in getting the work done, may be creating a lot of unnecessary steps. Ask each of the employees to question everything that they are doing. Is it necessary? Can it be done more simply? Should this be handled by another job position? How much time is spent correcting errors (company or agency generated)?
By encouraging employees to question their actions, you will also learn if they truly understand what they are supposed to be doing and why. Most agencies have difficulty finding the time to train new hires. If these people are conscientious, they will muddle through without training, but they may be doing things the hard way or for the wrong reasons. Finding this out and correcting the behavior will reduce the pressure on these employees and will help improve the general workflow and morale in the agency.
Effective Time Management: The impact that just one disorganized person can have on the productivity and morale of the entire staff is amazing, particularly if that person is a producer, manager, or owner. If employees listed 'interruptions' as a source of stress, ask them to record each interruption for a week. Who bothered them, when, and for what? How long was the interruption? How long did it take to recover and get back to what they were doing? How many of these interruptions were true emergencies? Could the items have been saved and discussed together at one meeting during the day (or week)? How many of the interrupted tasks were left unfinished at the end of the day? Quantify the amount of time wasted by interruptions in a week and then multiply that by 50 weeks. The amount of person-hours spent on interruptions that did not need to be made will open your eyes to the economic importance of managing time more effectively. And the improvement in morale because people are able to do their jobs without being constantly bothered will have a dramatic impact on productivity levels.
Rules and Regulations: Even the smallest organization must have specific agency rules for all employees to follow. There should be a written description of hours to be worked, lunch/breaks, holidays, vacations, sick time, etc. And a definition of what job positions must adhere to what policies and why. If there are exceptions to the rules, everyone should be aware of them and the reasons should be clear. Letting one department have flex time without explaining why the others cannot, giving one person extra sick days, or allowing someone to leave early may all be within your prerogative as the owner. But are you willing to accept the consequences?
Employee Participation: Identify supervisors and middle managers and give them the responsibility and authority to help you manage. Make sure that everyone has someone to whom they can go with problems and suggestions. Establish formal and informal ways of having employees at all levels provide input into the decision-making process. Set up committees, project teams, planning sessions, and brainstorming meetings to deal with various procedural issues as they arise. Since these are the people who are handling the front-line work in the agency, they will often have a very good insight into solutions. And the more that you can get employees involved in identifying problems and solutions, the more they will appreciate how difficult it is to manage an insurance agency!
Shared Vision: Many agency owners have a definite idea of what they would like to accomplish but never get around to sharing those thoughts with the other people in the agency. If you want them to actively participate in reaching the goals you need to let the employees know what the objectives are and how each of them, both individually and as a group, can help you accomplish them. Agency objectives should be communicated in an agency meeting or year-end report. Individual expectations should be spelled out in an annual written performance review that not only 'grades' the employee for past performance but encourages improvement through setting workload, education, and training goals for the next year.
Predetermined Reward System: What will happen if the agency goals are accomplished? Will there be a bonus or a contribution to the 401(k) or Profit Sharing Plan? How will the total amount be determined and what are the rules for distributing it among the staff and producers? If an employee performs at an above-average level and meets most of his or her objectives, what kind of raise or bonus can be expected? What has to be done to receive a promotion or a corporate title? In agencies where ownership has been or will be made available to key people, what are the criteria for being considered for ownership?
The Right People: Sometimes an organization grows beyond the capabilities or comfort zone of employees who were key players in the past. Some people cannot or will not change and even one such person can prevent or delay progress for everyone in the agency. By constantly communicating their negative attitude or by not being able to hold up their end of the workload, Old Mary or Old Harry can bring the entire staff down to their own unproductive levels and can keep them there until the owners do something about the situation. If certain employees cannot accept and embrace the new program once it has been defined, the agency cannot afford to have them around. Decisive action is particularly important-and yet that much harder-if the 'dead wood' is currently an agency owner.
In the future, carefully hire the type of people that you have identified to be successful in your agency and immediately establish individual performance expectations and a training program for them. Communicate the agency rules and procedures as well as the common goals and objectives. Assign a 'mentor' for the first six months to help bring them into the fold. And if it turns out that they are not what you had expected, terminate the relationship as soon as possible, hopefully within the probationary period.
Appreciation: Never underestimate the power of a pat on the back. One of the primary needs of most people is to know that what they have done has 'made a difference.' Remind them as often as possible of the impact that their efforts are having on the success of the agency. Positive feedback should be liberally dispensed both individually to employees who have demonstrated extra initiative and to the agency producers and staff as a whole when certain group objectives have been met. Remember, a simple thank you, a public announcement, an impromptu celebration party can often mean more than a raise or bonus.
Leadership: The most important ingredient for developing and maintaining a team's spirit is the leadership provided by the agency principals. The owners have to set the stage by putting in place the right kind of employees and by giving them autonomy and room to grow. An atmosphere of integrity, consistency, and inspiration must exist in order for the future of the agency. If the members of the team know that the leader truly believes in the mission and in their ability to pull it off, anything is possible. We create our own reality by our expectations. Expect the best, invest in the employees both individually and as a group, and reward their efforts appropriately. Your reward will be higher levels of productivity, greater profits, and eventually a higher value for the agency. An additional benefit is that your office will be much more pleasant to come to work in the morning!
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.