For The Manager: A couple of fundamental challenges for agencies

All agencies face this problem to some extent. But the producer-development hurdle looms higher for smaller agencies-though it is probably more important for them-because they run leaner. They have less money and less time. They also have less experience developing producers, so their owners must adjust to sharing the spotlight, communicate more, and lead a concerted effort to see the producer succeed.

Strong leadership/management

Though all agencies face the challenge of developing strong leadership and management, this hurdle is higher for large agencies, simply because large agencies have more to manage. Most businesses face this challenge, but I believe this is a more difficult issue for independent insurance agencies. They are owned by salespeople, and salespeople generally exhibit two characteristics that do not mix well with management/leadership requirements: They avoid confrontation, and they like selling, not managing.

These two characteristics can play off each other to produce undesirable results for managers. For example, many issues that managers face involve some form of confrontation. At first managers may find it easier, though not necessarily better, to postpone dealing with these issues, to avoid a confrontation. Most owners prefer selling and know that selling is the lifeblood of agencies. So they rely on the need to sell to further postpone management responsibilities, such as resolving issues, setting goals and setting the tone of the agency. Repeatedly postponing action on a problem can result in a crisis. Like the old ad for a transmission service used to say, you can pay now or pay later-and paying later almost always means paying a higher price.

Leadership is the second post of this hurdle. Producers and staff generally look to the agency owner(s) to lead. The difference between the owner and employees is beneficial. The "worker bees" know how the agency "hive" runs, and they know it is not theirs to run.

But if the agency owner does not lead, who does? Agency owners are sometimes surprised by, or even unaware of, this expectation. Many owners are self-directed and do not need a leader. They often overlook the fact that not everyone is like them, nor should be like them. I often see agencies floating aimlessly, with disastrous results. Usually such an agency has poor morale, a lousy environment, high employee turnover, poor productivity and a poor financial situation. Agency owners with no desire to manage or lead have several options. The first is to commit to being a strong manager/leader. This means taking more responsibility for the agency's success or failure. This takes time, dedication and energy, but the results can be quite rewarding.

The second option is to turn management/leadership responsibilities over to someone else. This typically requires finding and hiring someone with the necessary characteristics and capabilities to be a strong leader and manager.

The third option is a combination of the first two. Many agency owners abhor the details and time required of a manager; if committed, however, they make excellent leaders. The key is thus for an agency owner to lead, and find someone else to manage. Leadership and management cannot be totally disentangled, but the two functions can be significantly separated.

In working with many rudderless agencies, I have found that if an agency owner can find a way to separate leadership and management, he or she can sometimes overcome the reluctance to lead. This is again a bigger issue for larger agencies; a greater number of people requires greater leadership, and righting a larger ship is much more difficult.

Agencies can learn to clear these hurdles, though not easily. The effort involves pain and cost, but ignoring these issues will inhibit your agency from reaching its true potential. Which result do you prefer?