Answer the phone and have a good time

Rough Notes, Apr 2003 by Pillsbury, Dennis

MARKETING AGENCY OF THE MONTH

Revenues grow to $40 million in 15 years as casual atmosphere fuels entrepreneurship

When Mike Heffernan started Heffernan Insurance Brokers in Walnut Creek, California, in 1988, he had a dream of establishing a unique, sales-oriented organization where the wealth could be shared, the atmosphere could be casual and entrepreneurs could thrive. He purchased a small agency with about $900,000 in revenues as the starting point for his idea. Today, the Heffernan Group, which includes Heffernan Insurance Brokers, the retail agency; Presidio, an MGA; and Advanced Risk Technologies (ART), a TPA, has revenues in excess of

$40 million and employs 245 people in eight offices in California, Oregon and Florida. In addition to the headquarters in Walnut Creek, Heffernan has offices in Menlo Park, San Francisco, Sonoma, and Los Angeles, California; Portland, Oregon; and West Palm Beach, Florida. The group has three Regional Operating Centers (ROCs) in northern California, Oregon and Florida, with Los Angeles operating as a satellite office at this time. The agency currently boasts a revenue-per-- producer level (for producers who have over three years' experience with the firm) of $860,000, which is expected to be at $1 million by 2004.

After attending college as a history major with plans to become a teacher upon graduation, Mike found his career heading in a different direction. He had insurance experience from working at his father's brokerage in San Francisco. So instead of teaching, he entered the insurance business in 1982 with a multiline insurance company. He later joined his father's insurance brokerage. After that agency was sold to Arthur J. Gallagher (one of Gallagher's first acquisitions on the West Coast), Mike left to start his own firm and make some history of his own.

"The atmosphere in our offices is much different from what you find in a standard insurance company office," Mike notes. "There's a high energy level that stems from the fact that most of the people in our company enjoy their work. It's fun doing what we're doing. Our mission statement makes it clear: 'Answer the phone and have fun: That's our number one concern. When a customer calls, everyone at the agency knows they're expected to answer the phone and either provide the needed information immediately or let the client know when he or she will have an answer. And, if our people are having a good time, that spills over into the way clients are handled. Fun is contagious."

It's also more fun if you can be successful while having a good time. And the Heffernan Group provides the opportunities for all to succeed. "One of my primary goals is the `Shared Economy,"' Mike continues. "I want as many individuals as possible to have ownership in the company. It just takes commitment and dedication to the company and succeeding in your position to receive stock. We have more than 40 owners and they're spread out across all levels and disciplines within the company. We consider every job in the agency to be important, and people who are outstanding at their job can be rewarded with ownership."

In addition, everyone has an opportunity to move up or over-to achieve his or her individual goals. For example, "many of our producers have come from elsewhere within the company," Mike points out. "Our 2002 producer of the year started out as a receptionist in the Sonoma office. One of our other top producers was an account manager whom we identified as having sales potential."

He continues that one of the benefits of this approach is "we have producers who: understand the entire process involved in placing business and servicing accounts; understand how difficult the other jobs in the agency are; appreciate the effort everyone is putting forth; and understand just how difficult the market is. We also have started a trainee program where we bring in two people each year and put them on a two-year track to become a producer. We started that in 2002 and, so far, it's looking good, but well be analyzing the results. The objective is to keep new blood with new ideas coming into the firm.

"We have a very young organization-most of the management team are in their 30s. I'm the old guy at 43. We have buy-sell agreements for each of the owners and a perpetuation plan and are regularly bringing in new owners. In short, we're in position for the long haul. We plan on remaining independently owned and operated."

On-the-job training

A key aspect of the firm that contributes to its casual, team atmosphere is its home-grown Producer/Account Managers. Heffernan's Producer/Account Manager development program is a systematic learning program, allowing budding producers to learn the ins and outs of account servicing before advancing to the producer level. This provides future producers with an intimate understanding of the unique challenges of account management. The result is an experience designed to help them better understand the importance and functions of the various account servicing roles, while keeping big producer egos at bay.