ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

Art of Management

Most insurance agencies in the United States are still family owned and operated small and medium sized businesses with less that 25 employees. The owner is normally the general manager and when an agency is large enough for additional management layers, there's normally no more than one manager between the owner and the employees themselves.

Our generation of owners and managers came into their positions in generally one out of three ways. Many agency owners/managers started their own business. They produced insurance in sufficient quantities that they needed assistance to manage the administrative and clerical efforts. Up to a point, the more assistance they got, the more freedom they had to sell more insurance. Eventually their staff grew to sufficient size that management and administrative efforts were required of the owner/manager and his time devoted to sales diminished.

The second way that we see agency owners/managers develop is through intergenerational transfers of insurance agency ownership. While an employee/manager's children who enter the same agency do not automatically become agency managers themselves, owner/manager's children who enter the agency business tend to become subsequent owner's of the business. If their parents are smart, ownership is not automatic and the children must work their way through all agency positions in order to learn the business. Many originating owners, however, do not have this type of influence and control over their children. The children start out in junior roles simply because of age and inexperience. However, without the benefit of the skills and personalities that made their parents successful, these children become agency owners due to family lineage.

The third type of owners and managers that we encounter in the insurance agency business are individuals who succeed into management and ownership from positions as employees in either agencies or companies. They must generally work harder and be more successful than children gaining ownership positions, but they often lack the entrepreneurial spirit of the originating owners.

A common characteristic shared by all three types of owners and managers in insurance agencies is that their formal training is in insurance product knowledge. Their on- the-job training evolves around insurance production and/or systems and procedures of insurance agencies. Very little effort is expended in the area of management training.

Insurance agencies are microcosms of all American businesses. Everything that gets done in an insurance agency is accomplished through the efforts of others. Relationships are managed with customers, with carriers, and with employees. All agents know that they must treat their customers well in order to retain them. Is the customer always right? No! Of course not. However, you treat the customer as you would like to be treated as a customer in order to maintain their continued presence in your agency. Some agents have learned that the companies must also be treated like customers. Those who try to berate, belittle or bully company underwriters and marketers find their relationships deteriorating and those companies harder to do business with.

The greatest problem for most agency managers lies in the area of management of employees and employee relationships. Even the most enlightened agency managers tend to take their employees for granted and do not give them the credit for what they know nor empower them to do their job without significant management intervention and approval. The worst of the agncy owners and managers treat their employees in an almost robotic fashion. Adults with years of experience who manage their own investment portfolios, buy their own homes, raise families and educate themselves are asked to "check their brains at the door at nine o'clock". After all, they won't needing them until five o'clock in the afternoon. At least that's the way their bosses treat them.

The insurance departments of the various states have done a great disservice to the insurance agency industry by requiring continuing education credits without the enhancement of management skills as a necessity of the insurance agency business. Professional insurance designations and continuing education in insurance subjects are excellent tools to maintain an agents competence. However if a manager of an agency would like to grow his management skills in pace with the growth of his agency, he should consider taking basic and advanced management courses in local community colleges and universities toward the achievement of an MBA. The job description of every agency manager should include the requirement to take no fewer than three management training seminars (at least one of which is in personnel management subjects) each year. Managers should also subscribe to agency management publications (like the Pipeline) and audio tape series in order to keep their skills honed.

As we all find out sooner or later, management is hard work. It's also very different from simply being an insurance expert. However, without developing the skills required to coach, counsel, motivate and manage your employees, owners and managers will frustrate themselves later in their careers when they can't seem to get anything done through their employees. Most complain to us that their employees are stupid and unmotivated. However, we found that the actions of the owners and managers have "dumbed down" their employees and demotivated them. We know this because the same employees do better under different management and under different circumstances. One of the greatest roadblocks to making the current generation of managers more effective is their own history. Managers who were raised in a dictatorial or autocratic management style feel most comfortable as dictators themselves. Even cooperation and empowerment become tools for the manager to get his own way. If the employees fail to respond to the manager's expectations, he simply reverts to an autocratic or dictatorial style. After all, "he's the boss". Unfortunately, bosses don't make the work flow, employees do. These managers have not yet learned that employees have good ideas too. So the cycle continues. The children and subsequent managers that they raise in this atmosphere feel most comfortable treating their employees the same way they were treated in the past.

We urge you to break this chain. Management is an art. It can be learned but can only be performed well when practiced. And some people do not have a flair for it. Just as painters' children do not necessarily become great artists, agents' children and managers' children may not be qualified managers themselves. Your comfort level with your employees will tell you whether you have the knack for management. However, without the training for how to build relationships and deal with people, the talent alone is insufficient to assure success. Read books. Take courses. Listen to tapes. And all above all else, practice what you read and what you preach. If you can become strong managers you will sustain and build upon your success as insurance agents.