Agency Management 202

AGENCY MANAGEMENT 202

by Carol Hammes

One of the most challenging tasks facing insurance agency owners and managers is to decide how and what to pay employees, producers, managers, and principals. Before you start giving raises and bonuses, make sure that you’re motivating and leading people in a positive manner. The best way to grow your agency is to grow your employees. Turnover is very expensive and definitely detrimental to client retention. To increase the loyalty of good employees you need to help guide them along their own professional paths. Make sure that you have position summaries and descriptions for each job. Include both the tasks and the skills the job requires, together with the necessary personal characteristics. If someone wants to advance in the agency they need to know what’s required for them to do so. Emphasize the identified items in the performance review process as part of developing a strategy for them to reach their goals. Map out what they need to do, such as taking classes or reading certain materials, to get where they want to go. Be supportive and help subsidize the cost if they earn a designation or pass a course. But make it clear that the ultimate responsibility rests with them to implement their own strategies to further their career.

It’s also wise for larger agencies to create internal internships and/or mentoring programs. Encourage managers or senior level employees to spend time with newer or junior personnel so that they’ll gain a better understanding of the overall agency operation, company relations, and their specific department. They also need to know how all the jobs connect which each other. It’s important for them to see what other job positions might be available, given certain skill and experience levels. This information will give them the input to help decide which positions they might eventually want to hold.

Retention of good employees is just as critical now in this changing job market as it was during better economic times and a soft commercial market. It could cost the agency more than $50,000 to find, test, replace, and train a new customer service representative. Turnover can also affect the morale of other employees, customer and producer relationships, and overall agency productivity. If they’re good team players and know their jobs you don’t want to lose them. Principals who infuse the agency with a sense of values and a strategic plan that employees can share are becoming the agencies where better people want to work and to stay. Sharing core values and a common sense of ethics and professionalism helps agency owners and managers develop the respect of the employees —which, in turn, makes them want to remain.

Treat your employees equitably and with dignity. Lack of politeness from the owners and especially the producers can create significant morale and turnover problems. Everybody in the agency needs to look at their fellow workers as people first and employees second. People in positions of authority need to recognize that they’re dealing with a whole person who has a lot of other interests. And, since most employees aren’t owners, they’re dealing with people whose personal lives are probably paramount. It isn’t good enough to communicate this recognition at a performance evaluation or once a month at a lunch. It must be done daily. Agency principals who persist in operating the way agencies did 20-30 years ago will be hurting themselves through high turnover rates and a local reputation for not offering a pleasant environment.

It’s also important to look for 'exit signs' well before an employee turns in their notice. There are many small things that can be done (many of them not compensation related) to defuse the issue and retain the employee. The warnings are often there, but agency principals/managers are too busy doing their own things to notice them. Early detection can make a significant difference. Pay attention. If it appears that a person is looking for another job or is surly and unhappy most of the time, take action. Subtle questions and approaching the employee with genuine concern to open a dialogue about what might be the problem is far better than confronting them with your knowledge about their activities, which might include more personal phone calls, closed doors, increased sick days, and so forth.

There are other signals that will tell you that an employee has already mentally checked out. Perhaps a previously vocal employee suddenly becomes passive at meetings and won’t express opinions. Or if a previously quiet employee starts to practice the approach of the 'squeaky wheel getting the grease' it might mean that they’re looking for a job and figure that they have nothing to lose by being more assertive. If an employee is suddenly giddy and happy all day they might have their next job lined up.

One of the worst things that we’ve seen agency owners and managers do is to micro-manage. After all, because you own the agency or have a high level position you obviously must know what’s best for the place — or perhaps not. Although you might be highly competent you can’t know everything about the insurance business or be totally cognizant of management techniques, particularly for employees who are your children or those who are even younger than your progeny. Realize this reality. Hell hath no fury like a micro-managed workforce. The compulsion to look over your employees’ shoulders will cost you a lot of money and heartache. You do not and cannot control everything that happens in the agency. Hire the right people and let them deal with the everyday issues within their job parameters.

If you feel that you’re too controlling, admit it and do something about the problem. Take an inventory of your work behavior. If people are afraid of your reaction, they’ll eventually sabotage you. Because they don’t want to deal with your constant criticism they’ll no longer be willing to take risks. Creativity then dries up. And when employees are frustrated with management they tend to take it out on customers. Given the need to be overly soothing while delivering 30% premium increases at renewal, you don’t need surly employees who could care less about the agency keeping the account.

What should you as an agency principal or manager do when you realize that you’re indeed a controlling micro-manager? Apologize to your employees and ask them to tell you when you’re stepping over bounds. Empathize with them and thank them for their support. If you don’t say 'thank you' every day, you aren’t praising them enough. Most importantly, give up on the concept of 'being right.' Nothing’s more of a turnoff than a boss who knows it all. Don’t say, 'I told you so' when mistakes occur. If you think that this type of negative feedback helps, think again. And if you routinely call the office while on vacation, recognize that employees think that you’re calling to check up on them and resentment will build.

In the long run, it all comes down to mutual respect. If you give employees the respect to make them feel like valued members of the team, in most cases they’ll respond in a positive fashion. If they don’t respond well, however, you need to take stronger action. During the past 25+ years in dealing with insurance agencies we’ve often seen an 'ostrich effect' when it comes to disciplining recalcitrant employees. Many agency owners tend to put off discipline, hoping that the problem will just resolve itself. But things almost always get worse unless you address the basic issues head-on. Good managers know they must act decisively to deal with these situations.

Traditionally slumping workers eventually ended up getting fired, after costing the agency a significant amount in lost productivity. Firing an employee is no longer a good answer to most personnel problems. Ridding yourself of an employee might seem like a good answer in the heat of the moment. But we don’t have a wealth of talent entering the industry these days. And a new person, however qualified, won’t know your accounts, your agency procedures, and possibly not even your agency management computer system. Knee-jerk reactions rarely work in dealing with management issues, particularly in today’s litigious environment. You have to figure out how to sit down with errant workers and get them on a more productive course that will help build the overall team effort the agency needs. It’s important to know that this process won’t be easy — but it’s a skill that smart managers must master. You cannot allow recalcitrant employees to pull down the agency because you simply have too much at stake for your other employees, your companies, your accounts, and the owners.

Practicing constructive discipline is critical. How do you determine what mistakes you might be making in the discipline process?

• Don’t get emotional. Most discipline is delivered in an emotional outburst when the owner or manager is angry. That almost never works. It’s demeaning to the employee and the positive message about the team effort that you want to deliver gets lost in the yelling. If the employee gets upset, give them a few minutes to vent and then go back to the issue of the poor performance (such as having ignored client requests for too long, not responding to the underwriter’s questions, being cavalier about suspensed items, etc.)

• Don’t delay discipline. Get calmed down so that you’ll be able to avoid an outburst and then let the employee know that there appears to be a problem that needs to be addressed. Ask for their input before making any accusatory remarks. Just state the facts as you’ve heard them and then ask for a response.

• Don’t use generalizations. Don’t tell the employee that they 'screwed up' without providing specific details. Vague feedback doesn’t help and will probably make matters worse as inappropriate communication harms the individual’s morale. This, in turn, can affect other employees.

• Don’t conduct the employee meeting on the fly. Although most agency owners have very busy schedules, it’s critical to let the employee know that they’re important enough to have a one-on-one meeting when an issue must be addressed. It’s worth the time and effort to shift an employee’s behavior to a much more positive and productive attitude.

• Don’t put the employee on overload. Very few people can handle being told that there are 10 things that need improvement immediately. Focus the discipline session to two or three areas in which the employee needs to improve. Limit the discussion to no more than one half-hour so you can stick to this rule. Long sessions can often result in bringing up a number of petty items that cloud the major issues.

• Don’t play favorites. Employees want and need to believe that disciplinary procedures are fair. Principals and managers must be consistent in treating all employees and producers. Employees need performance feedback because of what they did or didn’t do, not because of who they are. A morale problem can devastate productivity and the possible EEOC implications from real or perceived discrimination can literally take the agency down.

• Don’t act as if you’ve never made a mistake. Show some humility in the meeting and be human in your approach. Employees usually know of instances where you have messed something up, either in company or claims negotiations or perhaps in trying to sell a new account. Playing 'God' will often cost you the opportunity to convince the employee to take the situation seriously.

• Try to accentuate the positive aspects of the employee’s work. If you want them to stay you need to let them know gently what problems exist — but you should also let them know how much you appreciate the good things that they’ve done. View discipline not as a negative confrontation but a way to help employees grow. For example, if the situation involves the way an account was handled this might be a good opportunity to suggest additional education. Giving your employees thoughtful and substantial input can help them become a much more valuable asset to the agency and will also give them insight on improving their knowledge and professionalism. In many cases, people don’t change their behavior because they don’t know how to do it. Go into the discipline session with your own ideas for improvement, but make sure that you ask the employee for their suggestions and input. Particularly when dealing with an underachieving producer, it’s important for an agency principal who has been very successful in sales to offer concrete suggestions and a time commitment to help the producer figure out why the numbers aren’t what both of you expected. Beating them over the head with lackluster results won’t get you anywhere. Most of the time the person will be grateful and appreciate the fact that you put in the time to figure out a prescription for greater success in the service or production area. If they’re not appreciative, the employee clearly isn’t a good member of your team and you should take appropriate (and legal) actions to terminate the relationship.

• Spell out the consequences of not changing. One of the most important things that you need to do before the meeting is to understand the employee’s motivation. Remember that it might not be at all close to what motivates you. If you tell an employee or producer that they might lose out on a promotion or ownership opportunity when they couldn’t care less about those things you won’t get the results that you want. For a consequence to matter and actually make a difference, it must be important to that employee.

• Set a deadline for improvement. Once you’ve discussed the problem(s), helped come up with solutions, and told the employee the consequences of not improving, make sure that you give them a deadline for changing. Let the employee know that you’ll be having a meeting in a month or so and set the time and date immediately. That will make it clear that you’re serious. Without this follow up, the employee might write off your disciplinary meeting as just a passing pique or whim on your part. With a follow-up meeting scheduled, however, employees who want to stay with the agency and improve their performance will know that you’re insisting on a change for the better and that you care about them. This knowledge should help them resolve to make the changes in behavior that you’ve jointly outlined.

• Provide positive feedback. At the follow-up session, if the employee has made progress, make sure that they know that you’ve noticed it. Tell them that you’re aware of the effort that they’ve expended. Praise them and reinforce even an approximation of success. Shaping new behavior takes constant and significant attention from management.

These guidelines can give agency principals and managers a strong and solid approach to putting employees back on course. Will the results be what you want? Perhaps — or perhaps not. There’s no guarantee.

Much will depend on your execution and the employee’s mindset. If you have to terminate the employee, it’s probably as much of a management problem as a behavioral attitude with the employee. The inability to help an employee become a productive member of the agency generally comes down to a lack of good management skills. You and your managers have the ability to improve the skills and behavior of most employees.

You can learn to discipline employees more effectively and do so soon enough to deal with problems. Although most agency managers find it tough to be tough, with practice you can get better at it.

The payoff will be declining turnover, higher quality producers and service/support personnel — and a healthier bottom line.