ACG - Agency Consulting Group

The PIPELINE

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

Carrier/Agency Relationship

During the last several years, agencies have trimmed staff as their revenues were tightened, first by the “forever” soft market, then by commission changes that put more pressure on revenues. The results have been increasing backlogs, especially in this newly hardened market that causes extra work on every renewal policy.

Why Not Just Live With Backlogs?

There are many agents who choose to worry about backlogs, but not attend to them until they become crises. These are the “firefighters” among us who are too busy to teach fire safety because they are constantly ‘fighting fires’. What they don’t realize is that taking care of the fire safety issues is what avoids many of the fires in the first place.

Similarly, agents have told me that they can’t afford the time to cure their backlog problems because their staffs are constantly putting out their own ‘fires’. Little do they know that their severe and on-going backlog issues are what is causing many of the crises that stops their workflows from being well-managed.

THE CATCH-22 (or Self-Fulfilling Prophecies)

You are constantly responding to crises or agency ‘fires’, so you cannot work on reducing backlog. The fact that you are in a serious backlog situation causes 2nd, 3rd and 4th requests from clients and carriers, adding to the very workload that stops you from working on backlogs. This, inevitably, results in even greater backlogs. And, if the backlog includes unanswered phone calls and messages, the problem multiplies. When callers sense that their calls may not be returned, they tend to call more frequently and faster than if they are confident that their calls and messages will be promptly returned.

The Solution - TRIAGE

Facing a growing number of backlog situations within agency clients, we thought it wise to remind all of our clients and readers of our

TRIAGE PROGRAM that can severely reduce or eliminate backlogs in the services departments.

The triage program was taken from Korean War and Vietnam era field hospital procedures that treated in-coming patients according to the severity of their wounds, letting relatively minor wounds wait while life threatening wounds were treated even though the minor wounds may have reached the hospital first.

Translating triage procedures to the business world requires both prioritization and management of backlogs and workloads.

Prioritizing Backlogs

Every item in a backlog can be prioritized as “A” Priority (must be done on a “soonest” basis – both urgent and important) “B” Priority (items needing attention ASAP – urgent or important), and “C” Priority (needs attention and processing, but not before “A” and “B” Priority items – neither urgent nor important).

Rule of Thumb: No more than 10% of work can be in the “A” Priority category. Why? Because, regardless of the urgency of the backlog, only a minority of the work can be important enough to be considered First Priority Work (‘A’ Priority). We encounter many agents who claim that ALL of their work is ‘A’ Priority. However, when we actually take the time to go through their work with them, they can identify that portion of their work that is both urgent AND important, the qualifier of “A” Priority work.

Prioritizing Workloads

Large incoming workloads are what causes backlog to grow and turn into crises. Some incoming items (like telephone calls resulting in work effort) must be handled as they are received. Other incoming work (i.e. mail) can be prioritized and completed in an order that avoids growing backlogs and crisis points in agency operations. The priorities for incoming work can be more specific than that for backlogs. For instance, many agencies define New Business (to be issued), Audits, Renewals under 30 days away, New Claims and urgent items (like ID cards to clients changing cars) as their typical “A” Priority workload. “B” priorities are money endorsements (additional or return premiums). All other transactions are “C” priorities. And, yes, ‘C’ priorities do get done, but not before ‘A’ and ‘B’. Of course, you can assign any classification of work that you want to ‘A’, ‘B’, or ‘C’, but remember the 10% rule (above).

Define What Constitutes a “Day’s Work”

Prioritizing Backlogs involve counting it. Prioritizing incoming work should also involve counting phone and mail incoming work every day. If you know how much backlog exists in your office (or in the department) at the end of each week and you know how much incoming work you receive each week, you can determine the average “day’s work” by desk, for a department or for an agency. Simply add the incoming work (phone, mail, fax, e-mail, walk-ins, etc) for the week that adds to the workload of the agency to the backlog total that you had at the end of last week. Subtract the total backlog at the end of the current week and the result is a weekly “production” total. Divide that total by 5 and you have an average daily production.

Triaging the Backlogs with the Workloads

Once both the backlogs and the workloads are prioritized, you are prepared to Triage and attack the backlog. The rules are:

1. Handle all of today’s work today – If an item came in today, whether from phone or mail, complete those transactions today. If your staff cannot accomplish the normal incoming work every day, you don’t have a backlog problem, you have a staffing problem (either not enough staff or staff who are not fast enough to accomplish a day’s work in a day). If you suffer an unusual influx of work in any single day, complete ALL ‘A’ and ‘B’ priority items before moving to Rule 2.

2. Attack the oldest ‘A’ priorities in backlog and work forward to the most current ‘A’ priority.

3. After all ‘A’ priority backlog is eliminated, work on oldest ‘B’ priority work completing all ‘B’ priority work before moving to ‘C’ priority backlog.

4. Manage the staff to complete at least one day’s worth of aged backlog every day. Use the average daily production divided into the total backlog (or just the number of ‘A’ priority or ‘B’ priority items) to determine the number of days of backlog that you have to attack.

5. By eliminating at least one day’s worth of total backlog (or at least ‘A’ and ‘B’ priority backlog) you can quickly determine how many days it will take to eliminate all of your backlog (or, at least, all of your critical backlog).

We have had some clients who attack their entire backlog in date order (processing first ‘A’, then ‘B’, then ‘C’ priority work of the oldest dates before moving to the next oldest date). We have others who concentrate on the aging of ‘A’ and ‘B’ backlog. Still others eliminate backlog beginning with all ‘A’s followed by all ‘B’s and all ‘C’s. Regardless of HOW you do it, constructing and managing a disciplined Backlog Reduction Program will save you time, money and clients in the long run.

During the last several years, agencies have trimmed staff as their revenues were tightened, first by the “forever” soft market, then by commission changes that put more pressure on revenues. The results have been increasing backlogs, especially in this newly hardened market that causes extra work on every renewal policy.

Why Not Just Live With Backlogs?

There are many agents who choose to worry about backlogs, but not attend to them until they become crises. These are the “firefighters” among us who are too busy to teach fire safety because they are constantly ‘fighting fires’. What they don’t realize is that taking care of the fire safety issues is what avoids many of the fires in the first place.

Similarly, agents have told me that they can’t afford the time to cure their backlog problems because their staffs are constantly putting out their own ‘fires’. Little do they know that their severe and on-going backlog issues are what is causing many of the crises that stops their workflows from being well-managed.

THE CATCH-22 (or Self-Fulfilling Prophecies)

You are constantly responding to crises or agency ‘fires’, so you cannot work on reducing backlog. The fact that you are in a serious backlog situation causes 2nd, 3rd and 4th requests from clients and carriers, adding to the very workload that stops you from working on backlogs. This, inevitably, results in even greater backlogs. And, if the backlog includes unanswered phone calls and messages, the problem multiplies. When callers sense that their calls may not be returned, they tend to call more frequently and faster than if they are confident that their calls and messages will be promptly returned.

The Solution - TRIAGE

Facing a growing number of backlog situations within agency clients, we thought it wise to remind all of our clients and readers of our

TRIAGE PROGRAM that can severely reduce or eliminate backlogs in the services departments.

The triage program was taken from Korean War and Vietnam era field hospital procedures that treated in-coming patients according to the severity of their wounds, letting relatively minor wounds wait while life threatening wounds were treated even though the minor wounds may have reached the hospital first.

Translating triage procedures to the business world requires both prioritization and management of backlogs and workloads.

Prioritizing Backlogs

Every item in a backlog can be prioritized as “A” Priority (must be done on a “soonest” basis – both urgent and important) “B” Priority (items needing attention ASAP – urgent or important), and “C” Priority (needs attention and processing, but not before “A” and “B” Priority items – neither urgent nor important).

Rule of Thumb: No more than 10% of work can be in the “A” Priority category. Why? Because, regardless of the urgency of the backlog, only a minority of the work can be important enough to be considered First Priority Work (‘A’ Priority). We encounter many agents who claim that ALL of their work is ‘A’ Priority. However, when we actually take the time to go through their work with them, they can identify that portion of their work that is both urgent AND important, the qualifier of “A” Priority work.

Prioritizing Workloads

Large incoming workloads are what causes backlog to grow and turn into crises. Some incoming items (like telephone calls resulting in work effort) must be handled as they are received. Other incoming work (i.e. mail) can be prioritized and completed in an order that avoids growing backlogs and crisis points in agency operations. The priorities for incoming work can be more specific than that for backlogs. For instance, many agencies define New Business (to be issued), Audits, Renewals under 30 days away, New Claims and urgent items (like ID cards to clients changing cars) as their typical “A” Priority workload. “B” priorities are money endorsements (additional or return premiums). All other transactions are “C” priorities. And, yes, ‘C’ priorities do get done, but not before ‘A’ and ‘B’. Of course, you can assign any classification of work that you want to ‘A’, ‘B’, or ‘C’, but remember the 10% rule (above).

Define What Constitutes a “Day’s Work”

Prioritizing Backlogs involve counting it. Prioritizing incoming work should also involve counting phone and mail incoming work every day. If you know how much backlog exists in your office (or in the department) at the end of each week and you know how much incoming work you receive each week, you can determine the average “day’s work” by desk, for a department or for an agency. Simply add the incoming work (phone, mail, fax, e-mail, walk-ins, etc) for the week that adds to the workload of the agency to the backlog total that you had at the end of last week. Subtract the total backlog at the end of the current week and the result is a weekly “production” total. Divide that total by 5 and you have an average daily production.

Triaging the Backlogs with the Workloads

Once both the backlogs and the workloads are prioritized, you are prepared to Triage and attack the backlog. The rules are:

1. Handle all of today’s work today – If an item came in today, whether from phone or mail, complete those transactions today. If your staff cannot accomplish the normal incoming work every day, you don’t have a backlog problem, you have a staffing problem (either not enough staff or staff who are not fast enough to accomplish a day’s work in a day). If you suffer an unusual influx of work in any single day, complete ALL ‘A’ and ‘B’ priority items before moving to Rule 2.

2. Attack the oldest ‘A’ priorities in backlog and work forward to the most current ‘A’ priority.

3. After all ‘A’ priority backlog is eliminated, work on oldest ‘B’ priority work completing all ‘B’ priority work before moving to ‘C’ priority backlog.

4. Manage the staff to complete at least one day’s worth of aged backlog every day. Use the average daily production divided into the total backlog (or just the number of ‘A’ priority or ‘B’ priority items) to determine the number of days of backlog that you have to attack.

5. By eliminating at least one day’s worth of total backlog (or at least ‘A’ and ‘B’ priority backlog) you can quickly determine how many days it will take to eliminate all of your backlog (or, at least, all of your critical backlog).

We have had some clients who attack their entire backlog in date order (processing first ‘A’, then ‘B’, then ‘C’ priority work of the oldest dates before moving to the next oldest date). We have others who concentrate on the aging of ‘A’ and ‘B’ backlog. Still others eliminate backlog beginning with all ‘A’s followed by all ‘B’s and all ‘C’s. Regardless of HOW you do it, constructing and managing a disciplined Backlog Reduction Program will save you time, money and clients in the long run.