Staffing, Competing

The other day I spoke with Bob an IIABNY member with a medium size agency. He and his management staff had just completed several days of planning for the upcoming year. He was really concerned because as a result of the planning he realized there were a number of areas that needed to be dealt with if his agency was going to run smoothly and grow in the future. Adding to his concern was the cost in man hours and money necessary to do all that was necessary. I asked him if he would share his results and what follows is an overview of many of his concerns. Bob and his management started discussing their concerns with staffing as all involved were of the opinion that was a critical area. Here are the issues they addressed. One of their key employees, the person responsible for negotiating pricing and coverage on their commercial business, was retiring in 4-6 months. That means someone would either have to be promoted to fill the role requiring some additional training or they would have to go outside the agency to find someone with the necessary experience. In either case there would be additional time and resources necessary to make this transition as smooth as possible. Their discussion also uncovered concerns they had because it would take time for the new person to develop relationships with all their carriers. The discussion then turned to finding a new employee either to fill the position that would be open or to replace the person being promoted to fill it. There was a lot of concern expressed regarding the process and their success as they had attempted to fill a position 18 months ago and they really had a hard time finding a qualified prospect. Even with the unemployment situation the agency staff didn’t feel finding someone qualified would be easy. They also discussed the additional workload that would transition to the rest of the staff during the process of finding and training a new person for the position.

After discussing their immediate staffing need they then started to discuss staffing in general. Everyone agreed that they had to do a better job helping existing employees to grow in their knowledge and capabilities in addition to making sure all the licensed staff met their CE requirements. Currently the office manager was responsible for handling this task. After discussion it was felt that various department heads should be responsible for their staff as they were better able to assess the training needs. It would also spread this important, but time consuming, responsibility out into a more manageable number The remainder of the discussion regarding staffing centered around the need to update the employee handbook and add agency policies. There was discussion about having a social media policy, EPLI training and coverage as well as cyber liability and the agency policies and procedures to protect important client financial information. I encouraged Bob to have some of his staff participate in the upcoming webinar on email encryption.

After their discussion about staffing Bob said the majority of the rest of the conversations revolved around marketing and sales including the agency’s 2012 marketing plan. The discussion was lengthy because everyone involved had issues and concerns that they felt needed to be addressed.

The discussion initially centered around big picture issues. The potential hardening of the commercial lines market, The need to engage CSRs and Account Reps directly in sales while getting the whole staff focused on marketing and sales. The increased competition in Personal Lines and the increasing trend of younger buyers to use the internet in exploring and purchasing insurance. That led to a conversation centered around social media and if the agency should get actively involved in social media and if so who would take on the responsibility of keeping it updated and relevant.

They were also concerned with some mergers and acquisitions that had occurred with several agencies in the area that were their competition. There were 2 agencies they regularly went up against that had now merged and the merger would now give them the ability to focus more resources and manpower in marketing and sales. Another issue was a competitor agency that had joined a cluster and picked up 2 markets that previously only they represented. These changes would definitely increase the competition they experienced on accounts.

Several of the agency’s commercial producers were fairly new. They were very aggressive in pursuing new business and getting the best premium quotes on new accounts. All the things necessary in a soft market. With the market hardening production would no longer be based on saving premium and aggressive actions by companies and their marketing underwriters. Production would be based on keeping an accounts premium from going up too much and convincing underwriters that they qualified for certain programs and pricing. Strong agency company relationships and a substantial working knowledge of coverage were necessary for success in a hard market. This would be a big change for the newer commercial producers and there was concern they might not be very successful until they learned how to work in a hard market.

The agency had been pretty lucky in the past in writing and retaining business but it was apparent as they worked on this year’s plan that they would need to do a lot more if they were going to be successful in 2012 and beyond.

Everyone agreed they needed a strong sales management effort including an automated sales center and significant sales training. The personal lines staff needed to get involved with internet marketing and sales as well as enhancing their ability to sell value over premium. The commercial lines producers needed to gain technical knowledge as well as the ability to ask the right questions and develop the necessary underwriting and coverage information.

The management team needed to commit to having regular sales meetings. During those meetings they would discuss the good and bad sales calls, where they were in relationship to their plan and additional training, including role playing, to improve their success. At the end of their planning the agency staff discussed a number of varied issues that were raised and made plans to discuss them in more detail later. They discussed subjects like pending healthcare changes and its effect on their agency’s employee benefits business. The Worker’s Compensation market and where it might go in 2012 and beyond. Increased competition for Worker’s Compensation caused by the State Fund as well as large payroll companies like Paychex and ADP. Technology needs and costs as the agency struggles to keep up with the market by using technology to more effectively run their agency. Increasing production demands of carriers and the agency’s ability to meet them. The need for an agency perpetuation plan and the effect it might have on the staff.

Bob and his agency are not real. Their issues and concerns however are real. Bob’s agency was a collage of different discussions I have had recently with various agency members. My purpose in writing about them is to discuss some of the issues facing independent agencies today.

Owning and successfully operating an independent agency in today’s world is not easy. It requires a serious commitment of time, energy and resources. It means finding and keeping a professional and experienced staff committed to the success of the agency. Our business is constantly changing and lately the speed at which it is changing is frightening. Clients and consumers are better informed and expect immediate attention and service. Those agencies who aren’t constantly working on improving the quality of the services they provide and keeping their clients and prospects protected and happy will find themselves slowly fading away or gobbled up by someone else.