 It is no secret - these are uncertain times. Life always has a specific level of uncertainty. We usually have a good feeling of the trends that seems to be occurring, but the duration and magnitude are the key variables. What we face now is a juxtaposing of the lack of clear trends in many areas that would impact the insurance industry for years to come. In one sense the weak economy and soft market should run through a normal cycle. However, the impact of what the federal government does or does not do could throw the market into new directions. We believe that it is best to be proactive rather than reactive. Being proactive when the trends are not clear can be very risky. It could even be down right disastrous. However, a business that is stagnant during these times will die when the winds of changes sweep in a new direction.
So, what are the five fundamentals that agencies need to practice and refine? LEADERSHIP Let's start with leadership. Now is the time for the owners and managers to be highly visible and clearly set the business direction. Owners and managers need to provide positive reinforcement to the staff and above all, communicate openly with employees about what is going on and how the company plans to deal with the issues. Open communication is the most important element for management, since all other aspects of managing people is a subset of open communication. Keep in mind open communication does not mean full disclosure. It does mean keeping your staff informed of vital information so they can perform with confidence. The vacuum of no communication will be filled with rumors and misunderstandings. The object of communications is to have a common understanding. If you want your employees to help you achieve the organization's goals in these uncertain times, they must know what those goals are and how they fit into the plan. Be truthful and empathetic. EMPLOYEE PERFORMANCE How well a firm is organized to coordinate efforts and effectively manage personnel affects its success. With a streamlined organizational structure in place, talents of the best individuals are utilized properly, service activities are delegated to the least costly, qualified employee and salespersons are supported with good technicians to free up their time to sell new prospects versus service existing customers. Review employee productivity. This means evaluate each employee's workload. Set performance standards. Most employees do not know what is expected of them. The number of accounts and commission volume that needs to be handled in order to be an average or perform well-run should be understood by each person and should also alert management to the need for additional staff or a need to "rightsize." Have the employees focus on results and critical performance activities - not individual tasks. Teamwork is important and should not just be a "buzz word." Hold the staff accountable for achieving expected results. Set short-term goals based on the overall business plan and make sure there are performance reviews. Employees should complete their own performance review and then management should just critique what the employee wrote.
STRATEGIC PLANING A business without a plan is like a ship without a rudder; it can only go where the prevailing winds are blowing. A business plan should be short and concise. This makes the creation and implementation of the plan more practical and palatable. Every year, the owners and key managers of the firm should go off-site for one to three days (depending on the size of the firm and the specific areas of concern) to develop the coming year's goals and the action steps to achieve those goals. An analysis of strengths and weaknesses of the agency should be completed by each individual prior to attending the planning meeting. The results should then be analyzed in the group session. Goals also need to be determined in the group meeting.
The steps required to accomplish the goals should be put in writing. Specific individuals need to be held responsible for the implementation steps and time required reaching each goal. At least quarterly, management should review the progress made on action steps to determine if headway is being made as expected, or if corrective action is required. FINANCIAL MANAGEMENT Sound financial practice needs to occur in lean times as well as good times. Most agencies today are experiencing dramatic revenue declines due to the market conditions. This mean that the firm must not be careless with its financial affairs. Some expenses are also increasing, so profits are dropping even more. There are certain financial management characteristics that all well-run firms exhibit. Financial management starts off with efficient analysis of revenues, expenses, assets and liabilities. Periodic review of financial statements should include a comparison to past performance, future budgets and industry standards. The well-run firm always displays good control over all expenses. Compensation expenses (which account for two-thirds of all expenses in the average firm) are thoroughly reviewed. Better firms run "meaner and leaner" and will have fewer employees but pay them each above-average salaries because they hire only the best. Capital expenditures should be made by investing in better people (both technical and salespersons), computers, office equipment and target marketing. This allows the owners to build future value rather than reaping short-term gains through bonuses or through taking out as much profit as possible, as many owners have in the past. Failure to reinvest in the firm will leave a hollow shell by rapidly decreasing the firm's value. This type of focus helps management choose the direction that will ultimately lead to more money for their retirement from either the sale of their stock internally, the merger with another firm and/or the eventual sale of the firm to a third-party buyer.
Continuous Improvement and Self-Evaluation Everyone in the organization must be dedicated to continuous improvement, personally and collectively. One technique to implement this principle involves an increased emphasis on training, "quality circles" (in which everyone involved discusses ways for improvement), research and communication (with clients - old and new, underwriters and company representatives).
Insurance agencies are notoriously lax in surveying clients and researching customers' needs and expectations. Collecting, analyzing and understanding the responses and sentiment of customers (remember the definition includes underwriters, etc) will put a business way ahead of the rest of the pack. Most businesses are too busy reacting to the market leaders to actually be a market leader.
Often, the difference between happy and unhappy people is that happy people mostly evaluate their own behavior and constantly attempt to improve what they do (self-motivated people). Unhappy people (read: unhappy employees), on the other hand, mostly evaluate the behavior of others and spend their time criticizing, complaining, and judging in an attempt to coerce them into "improving" what they do.
Concentrate on developing happy (self-motivated) employees. Management needs to spend time developing a process or system that an employee will enjoy following, not driving the employee to follow a process they don't like. SUMMARY "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness..." This famous Charles Dickens' quotation is especially true for the insurance industry today. Chaos should now be considered the norm. Focusing on the fundamentals of business management is a safe bet that sound judgements will be made in other business decisions. Keep in mind that with chaos comes new opportunities. | 
