Don't get fat, dumb, and happy

Rough Notes, May 2003 by Sitkins, Roger

WINNING STRATEGIES

Is your agency positioned to stay successful when the market turns soft?

Last year should have been one of the best or absolutely the best year ever for your agency. If you are a producer, you should have had your greatest growth in gross commission income ever. Assuming these two are correct, I have a major concern. I am concerned that too many agency owners and producers will become-you've heard the expression-FDH: Fat, Dumb, and Happy. Fat because the hard market generated higher commissions. Dumb because you got a big raise and you thought you really had something to do with it. And you're Happy because you're making lots of money. Are you living in a false world of security? Will the market change? Absolutely! You had a great year-market conditions guaranteed it. You renewed most of your commercial accounts at 25% to 75% plus increases. Yes, you worked hard, but you got a huge raise! Your personal books have grown and your personal income has soared. Will the market stay hard this coming year? Probably Next year? Who knows?!

The real key I see is to understand that there will be a soft market sometime in the future. Let's look at this from the perspective of an agency owner and a producer. Take this test and see how prepared you are for the future.

If you could not answer "yes" to all of these, now is a good time to take stock in how you are preparing for the future. Be careful not to fall into the false world of security that a hard market brings. Take away the revenue from the top 5% of your accounts and eliminate your profit sharing/contingency income-now how are you doing? If your personal book of business has $500,000 of commission income and the market becomes soft, are you prepared for $400,000 of commission income, a huge loss? Have an AMP, Agency Master Plan-a three-year plan that anticipates a down turn. React proactively instead of waiting until conditions do change and having to react defensively.

Let's take a look at these strategies individually.

Agency Owners:

Are you investing in your future? Everyone is making more money: the producers, the agency and the principals. But as a firm, are you re-investing back into the agency with respect to people and planning? You've heard me say before that the best never graduate. There should be continuous training programs for all levels of the agency. That is how you stay on the leading edge of the business world. If you do not grow and cultivate your team's abilities, your agency will stagnate and become victim to competitors.

Are you actively recruiting for the next producer? It takes time and focus to identify and recruit prospects for new producers. There should be a continuous process to actively drive the recruiting and hiring process. Just as producers must fill their prospect pipelines, managers must fill their producer pipelines. Are you: creating a database of candidates; introducing yourself to them; marketing to them regularly so that when they are ready to make a move they have a relationship with you and you're their next logical choice? To accomplish this, your agency has to establish a recruiting culture. In today's world, everyone in your agency has to help identify your next great hire. It's no longer the responsibility of just the owners or agency leaders. Why not?

When was the last time a million dollar producer knocked on your door and asked for a job? Remember, your best prospects are happily employed somewhere else and don't know what a great opportunity they could have in your agency. Someone needs to tell them! The follow through is the toughest part, primarily because of the busy owner schedule. Make sure you have a right-hand person who is your implementer and helps you maintain focus and follow through. Immediately establish a continuous recruiting culture.

Are you investing in the best automation? While you have this influx of additional income, now is the time to invest in the latest and best in automation.

Automation may cost less in the future. However, isn't it better to invest now and gain the increased efficiencies? Becoming active in your users group and maintaining upgrades are crucial.

Are you recruiting for the next great internal staff member? Just like having your prospect pipeline full, you want to have a hiring prospect pipeline. Your other team members should want to tell their friends about working at your agency. Be a workplace that encourages fun and creativity. Have an ongoing recognition program for your internal team. One agency in Virginia has a special SWAT Team that focuses on agency issues. At one meeting they talked about not tolerating negativity. A team member, who had been

previously prompted, stood up and spewed negativity. The SWAT Team became a force and drew out water pistols showering the negative person. They had great fun doing this. All team members were given empty water pistols as a symbol of dampening negativity. Be a workplace that team members want to openly invite others to join. Be a place where there is a waiting list of team members wanting to join.