THE FOUR PILLARS OF AGENCY MANAGEMENT
by Bill Schoeffler and Catherine Oak
There's no single ideal way to set up and administer your agency. Management isn't a static procedure, but an artistic interpretation of a scientific process. In this document, Bill Schoeffler and Catherine Oak offer four key management elements that are vital for successful agencies.
Today more than ever, agency owners are facing tough times.
When looking for ways to improve or streamline agency operations, many owners overlook refinements to agency management and administration. This is because people tend to follow the old adage “if it ain't broke, don't fix it.” — an attitude that might cause significant problems down the line.
1. OPEN COMMUNICATION
This is the most important element of management, since all other aspects of managing people depend on open communication. Keep in mind that open communication does not mean full disclosure. It does mean keeping your staff informed of vital information so that they can perform with confidence. The vacuum of no communication will be filled with rumors and misunderstanding.
Communication begins on a personal level. The best way to start is through written job descriptions. Sit down with each employee to discuss what management expects from them — this also lets you know what your employees expect from management.
Let employees establish their own performance goals, then hold periodic reviews to ensure that they're on track. The next step is to involve employees in the annual planning of goals and objectives. Ask your employees for their input. Use their personal performance goals as a building block to create your agency's goals. It's important to get them to sign on to the final plan.
Finally, hold regular meetings to update the staff about how the agency is progressing toward its goals. Discuss triumphs as well as failures, but always show how to improve the situation. Allow an open-floor session for questions and concerns. Maintain communication between meetings by sending employees memos and bulletins.
2. AN EFFECTIVE MANAGEMENT HIERARCHY
Generally, management responsibilities evolve as the business grows. The time requirement for management grows in proportion to the revenue of the firm and the number of employees. Before your create or modify a management structure, it's advisable to perform a thorough review of your agency resources, as well as management requirements. Smaller agencies can do quite well with the owner spending just a few hours a week on managing. Large and regional brokers will have a staff of people dedicated to management.
You need to determine the best use of their time. Most owners prefer, and might be better at, sales rather than management. Owners who want to concentrate on sales should consider delegating some or all administrative duties to someone else.
Most agencies don't need a full-time office manager. The individual might also handle other responsibilities such as the computer, service, or accounting. Determine the need for an office manager by performing a cost-benefit analysis. This equation should include an estimate of lost sales from the time spent on administration.
When you've grown to the point of having middle managers, “let go” of the authority once each individual manager has proven capable of managing their department. Their ability to get good results will depend on the amount of information and authority you give them. Delegation of authority is extremely hard for most agency owners. But having good managers with the authority to carry out their responsibilities will save you a lot of time. Limit their managerial time to strategic management, rather than day-to-day managerial activities, whenever possible.
3. HIGH EMPLOYEE MORALE
For most agencies, having a work-friendly environment usually isn't difficult. But when it becomes a problem, it can wreak havoc throughout the firm. Because perception becomes reality, you and your managers need to be aware of how employees perceive their workplace.
Some of the more common employee issues include: Too little employee recognition, uneven workloads, lack of incentives, poor communication, chauvinism, nepotism or other favoritism, lack of advancement, and responsibility without authority. Learn to distinguish between employees with legitimate complaint and chronic complainers.
Annual employee reviews and regular staff meetings are a good way to find out about employee issues. Once a problem arises, address and correct it immediately . A festering problem becomes a ticking time bomb. Don't be reluctant to use outside expert advice; the short-term cost will often be much lower than the long-term loss.
It's important to know why people leave the firm. Turnover is very expensive. Conduct exit interviews to help management understand why employees leave and ways to improve morale. Exiting employees tend to be more open in discussing problems.
4. A FIRM FOUNDATION
A business without a plan is like a ship without a rudder; it can only go where the prevailing winds are blowing. It's essential to have a concise, practical, and palatable business plan.
Every year, the owners and key managers should go off site for one to three days (depending on the size of your agency and specific areas of concern) to develop goals for the coming year and action steps to achieve those goals.
Before the meeting, have each participant complete an analysis of the agency's strengths and weaknesses to be discussed in the group session as the basis for setting goals. Write down the steps needed to accomplish these goals. Make specific individuals responsible for the implementation steps and time required to reach each goal. Your managers should review the progress on these steps at least quarterly to determine if you're on schedule or if corrective action is needed.
A FINAL THOUGHT
Make your business a personal statement of your philosophy, vision, and talent. Strive to create an agency that treats employees and clients with respect and still generates a fair profit for the owners.
To create a successful working environment (and agency), recognize that the managerial function requires dedicated commitment to ongoing improvement. Make management a continuous process — not a onetime project!
Bill Schoeffler, CIC, and Catherine Oak, CIC, AAI, are partners in the international consulting firm, Oak & Associates, based in Northern California. The firm specializes in financial and management consulting for independent insurance agencies, including valuations, mergers acquisitions, clusters, sales and marketing planning, as well as perpetuation planning. For more information, call (707) 935-6565, e-mail [email protected], or visit: http://www.oakandassociates.com. This article is reproduced, with permission, from Insurance Journal.