What do your agent clientssay are their biggest challenges?

Demmie Hicks: The biggest challenges agenciesface are keeping their people engaged, motivated and aligned,maintaining meaningful organic growth and having a clear path todevelop future leaders. By taking the time to collaborate,create and articulate a clear and innovative vision and involveeveryone in its execution, our clients are able to overcome thesechallenges.

Phil Trem: The easy answer is organicgrowth. Agencies point to the prolonged soft market as asignificant obstacle to growing their business. However, whenyou drill down further, the majority of agencies will tell you thatthey do not have enough quality producers who drive new business ona consistent basis——regardless of the rate environment.

Laura Nettles: The biggest challengefor agencies today is operational efficiency. Commissions areshrinking, but the amount of work required to service thoseaccounts is the same. The staff is overworked and managementneeds for the staff to do more, not less.

What are your top three tips for agency success in toughtimes?

Hicks: 1. Keep moving forward and celebrate allyour agencies successes.
2. Collaborate and create a compelling vision/plan that enhancesevery area of your company and engage your people in theimplementation and accountability of the plan.
3. Create ways to stay consistently engaged with your people.

Trem: 1. Create a business plan and have thefortitude to stick to it.
2. Continue to look for your next generation. If you areproactively recruiting on a consistent basis, you may find the bestemployees during tough times.
3. Focus on organizational culture and differentiation. Thetwo should correlate and help your producers drive newbusiness.

Nettles: 1.Implement role-basedprocessing, clearly defining the sales, service and process roleswith each department. The sales role is responsible for newbusiness production and current client relationships. Theservice role is responsible for direct client services, problemresolution and marketing. The process role keeps thetransactions flowing and accurately documented in the managementsystem.
2. Implement workflows and procedures that integrate currenttechnology with practical insurance processes. Most agencies haveunder-implemented technology. Management system features likesubmission tracking, workload management and activity tracking arenot integrated in workflows making the staff more efficient. Instead, the focus is on recording, not efficiency. Carrierreal-time features providing instant access to claims and billinginformation are not implemented, requiring the staff to duplicatethese transactions in the management system. Back-end scanning,while initially useful, is not out-dated. Front-end scanningimproves efficiency by eliminating the paper from theprocess.
3. Monitor service staff workload. Just because staff members saythey are too busy does not always mean they are. Management systemsprovide data useful to management in accurately determining howbusy staff is at any given time. Use data to determine staffworkload instead of staff complaints.

How can agencies best hold down expenses while stillproviding quality service?

Hicks: Our clients have engaged in the processof reviewing all workflows/procedures and technology integrationfor maximum efficiency. Many have invested in outside consultantswho are experts at identifying/removing inefficiencies and trainingeveryone about the new processes.

We also believe that it is important for agencies to explorequality service and what it means to create a unique clientexperience. Determine what quality means to your customers and ifyou do not know, use customer surveys and quality circles to learnfrom your clients so you can identify ways your agency/people candifferentiate themselves when encountering a client or newopportunity.

Trem: Expense management is often an overlookedpractice within organizations. Evaluating where money is beingspent and determining if there is a return is important. One easyarea to begin with is in advertising. Take a look at where youare spending on your advertising and determine if you have beenable to drive new business from that given effort. Determineif you are getting a return on your investment. If the answeris no, cut or redeploy that funding.

Nettles: Increase capacity with existing staff;grow revenue without hiring service staff. This can easily beachieved by shifting work (not accounts) from your experiencedservice staff to the process staff. This creates capacitywith your most experienced staff.

Where should agencies invest and should you plan forperpetuation? Find out on the next page.

With limited capital, in what areasshould agencies most heavily invest?

Hicks: Agencies need to invest in training anddevelopment for their people, including communications skills likethe art of active listening and engaging dialogue. Advancedcommunication skills for producers are so often overlooked and webelieve it is at the heart of why most non-validated producers arenot validated or stuck producers are stuck.

Another area of development that is too often put aside isleadership development for your future leaders. Get themengaged now in developing the characteristics and skills that areand will be required to take the agency to the next level. Beaware that those characteristics and skills will likely bedifferent from those that have worked for you as an agencyleader.

Trem: Either individuals (new producer hires)or tools to help drive new business. I would focus on making sureyou put your producers in the best position possible to besuccessful. New business/organic growth cures (and masks)most problems.

Nettles: Invest in technology to help manageworkflow and workload such as Vertafore WorkSmartproduct. It’s difficult for the staff to give upwork. There are systems available that provide a “dashboard”of work in the office or work just completed. The best systemsprovide staff workload in real-time based on actual work—if oneperson is overloaded, technology can be used to shift work toanother person not as busy.

Are most agencies prepared forperpetuation?

Hicks: Most agencies we work with or know havean exit strategy in mind that may involve internal perpetuation, amerger or acquisition. We find they generally have a financiallystrong model and confidence that they can get their value out ofthe company, thus a strong focus is on the financialtransaction.

The financials are important; however, we focus on thedevelopment of an organization’s current and future leaders. Leadership development continues to be about on-the-job training,with an emphasis on producers who develop and maintain a large bookof business, but development needs to go to another level. Intoday’s marketplace, a leader must understand much more than thetechnical aspects of insurance and how to solve a client’sneeds. In addition to industry knowledge and financialacumen, leaders need to embrace a level of emotional intelligencethat allows them to understand how to motivate, inspire and empowertheir people to high levels of performance. All too often, peopleare left with the improper resources to excel and are then viewedas mediocre. Today’s leader understands that influence,engagement and collaboration are the characteristics that currentand future generations want to follow and which will contribute toachieving exceptional results.

Trem: Most agencies have the capabilities toperpetuate. However, it is not an easy process and it must besomething agency ownership wants to achieve. In many cases,it requires better expense management, investment and disciplinethat ownership is used to or potentially willing to do.

How does the M&A landscape look to you?

Hicks: Consolidation will continue and you cancount on it. What we look at during M&A activity is the culturecompetency of the acquiring organization. How do they integrate orchange the culture in a way that considers the thoughts andfeelings of the people in the organization being acquired? Doesyour culture help your growth or hinder your growth? Weencourage all organizations that are engaged in the process ofmergers/acquisitions to “test” your culture competency and know howit supports the people.

Trem: M&A activity has picked updrastically in 2011 and as a result, pricing also hasincreased. Through Nov. 1, 2011, 193 deals were reported,compared with 166 over the same time frame in 2010. Thisincrease has been driven by the public/national brokers who areacquiring to help supplement poor organic growth. Thismomentum will continue into 2012 but as the market begins to turn,buyers will likely become more selective. We anticipate moresellers to enter the market with the potential change in capitalgains rate beginning in 2013. It is important to remember thatthere will always be a market for a good agency.

Read the panel's advice on social media andrecruitment.

What should agencies be doing with theweb and social media?

Hicks: Agencies should stay aware of the weband social media landscape and know what their market place usesand expects to get information.

Trem: Awareness is an important factor. We are beginning to see a rising trend of agencies and producersusing the internet and social media to both advertise their firmsand connect with prospects. Firms are using LinkedIn,Facebook, Twitter, blogs and their own web pages to connect withtheir customer base. Understanding the environment andactively using it are two very different things. Agenciesneed to ensure they are committed to a social media strategy priorto implementing. It can be time consuming and detrimental ifnot done properly.

Nettles: Web capability is must for anyagency. Insurance clients want to be able to view insuranceinformation online, request documentation like certificates andcommunicate with agents via the web. I like the CSR24product. Currently, email is taking over and isextremely inefficient. Setting up a web portal willfacilitate and streamline documenting routine insurancetransactions.

What’s your advice on recruitment andretention?

Hicks: Have a strategy and stick with it.Recruiting is the first step and often the process stopsthere.Engage your new recruits in the process of learning andintegrating into your culture and be open to what’s important tothem because they are the future.

Trem: Recruiting good employees is like tryingto obtain new business. You need to consistently have a solidpipeline of candidates and utilize your current staff’spersonal and professional networks to find and attract newhires. This is beneficial for many reasons. Theemployee understands your culture and will likely recommend someonewho will fit in well, assisting with retention. The employeewill most likely not recommend someone who would not be a fitbecause they risk their own reputation if the new hire is notsuccessful.

It also is important to keep up to speed with statisticsreleased relating to wage increases across all workforces. Your employees are reading and hearing about this data. You need tobe prepared to respond if your increases trend below average orpromote if you are above average when it comes to percentageincreases of wages.

Nettles: Recruit the best people and then trainthem in insurance.