Don’t Cheap Out on the Training

Use your agency management system to the max. Measure your productivity. Communicate consistently and effectively with your staff, customers and carriers. And above all, don’t cheap out on the training.

Do those tactics sound familiar? Hopefully they do, as they are aimed at improving an organization’s bottom line and should be included in any high-performing agency’s management “Bible,” according to a duo of consultants who work with agencies to improve operational processes and profitability.

There’s a lot of redundancy out there, said Texas-based Pat Alexander, an independent consultant who works with agencies on defining and managing their agency management systems. “I have to tell you any time I go through an agency, no matter at what level it is performing, I can find how that agency is not using its system to its maximum capabilities,” Alexander said. “Maximum operational performance leads to the improved bottom-line.”

How does an agency achieve operational efficiency?

“One of the first things you have to do is define the roles in an agency,” Alexander said. “The four basic roles are production, service, processing and financial. Some agencies also have a marketing department; some agencies have other specialty departments based on their niches. But these are the four basic roles.” Missed deadlines, finger-pointing and lackadaisical attitudes can all be avoided by clearly defining roles, making sure people know who is responsible for what and setting accountability, she said.

It’s a big job to assess and refine an agency’s processes, Alexander said. The best way to achieve success, then, is by doing one thing at a time. “Figure out what that one thing is, get it. Then take the next thing, get it,” she advised.

“Enter data once and use it as many times as possible,” Alexander said, acknowledging that achieving that goal with some agency management systems can be tricky. However, systems are improving, she said, and agencies need to assess how they can put those improvements to the best use.

“Unless you use your systems to their fullest, you have no way of measuring productivity with your staff,” Alexander said. Because an agency can only manage what it measures, management must determine how it will measure the productivity of its agency and be “ever vigilant in assessing needs, usage and performance.”

An agency can’t successfully monitor its performance unless its staff and work processes are defined, and employees are trained. While staff may have been trained at one time on the management and operating systems, “if you define something new, they have to have new training, [and a] new understanding of your expectations,” Alexander said. “You have to implement it. You have to be very firm and say, ‘from this day forward, we are going to do this new process.’ Until [employees] hear that and they see that in writing, they’re in denial. Then you have to monitor. I’ve seen agencies go from total chaos to very well-run organizations with these processes.”

In a time when resources are low, Alexander said many agencies are reluctant to devote the time and effort to define and streamline operational procedures. However, while it’s important to sell, “you can’t support sales unless you have the back office to do that. … I find that my most successful clients take that step when they can least afford to,” she said.

The Trinity

Eric Moberg, an agency errors and omissions risk management consultant based in North Carolina, agreed that agency efficiency is extremely important at this time. Bolstering sales is one way to work out of the soft market, he said, “but if you don’t lean your back office, you don’t lean your process and you don’t measure it very carefully, your sales results are a not necessarily going to achieve [the] bottom-line that you’re looking for.”

Moberg explained that his approach to E&O risk management uses what he calls a “trinity” of communication, documentation and consistency. “This trinity can be applied to most everything you do in your business and in every relationship that you have,” he said.

Within each part of that trinity, Moberg suggested agency owners and managers ask themselves some basic questions:

• Communication. How do you communicate with your staff? How do you communicate with your brokers? How do you communicate with your carriers? Are you satisfied with the communication that you have? Are you using the best technology for that communication? If you are using imaging? Are you using it the best way it can be used? Are you storing data multiple times?
• Documentation. How do you document files? How do you document communications? Can you project yourself out three years down the road, and if you had to defend yourself in court on a case, would the documentation be adequate to do that? Does your staff understand this?
• Consistency. Does everybody do it the same way all the time? Are they prepared to be trained and take the time to make sure that they understand this?

This concept “of what you do day in and day out with your staff becomes extremely important,” Moberg said. The key to success in implementing consistent communication and documentation is training. “Training is like breathing, it’s something you never want to stop doing. … You have to put the investment in to train your staff on how to do this. … Training becomes a critical aspect of everything that you do in the agency,” he said.

Like Alexander, Moberg recommended agencies take time to review their workflow. “Put teams together to look at your existing work flow. How are you doing it today? Is it the best way? Look at your procedures. Are they well-documented? Are they accurate? Or is that procedures manual you spent oodles of time working on four years ago sitting on a shelf somewhere that no one looks at? Is it relevant to what you’re doing today?”

One test of an agency’s level of communication, documentation and consistency, he said, is to determine what extent someone who sits at an agency principal’s desk or staff member’s desk is able to look at what’s there, take over and go forward with the work.

E&O Essentials

While consistency and efficient use of data management systems can be used to enhance the company’s profitability, they are essential when it comes to errors and omissions claims. Courts, Moberg said, are holding admissibility of evidence in the courtroom to the highest level of technology. Therefore, it is imperative that the agency analyze its processes and how it interacts with the organization.

Finally, Moberg said, it really is about the bottom-line. The work done to streamline an agency’s processes and procedures will enhance its ability to market and sell products. “Agencies and brokers exist to distribute the product for the carriers. That’s the simplest way to [put it],” he said. “Are you doing everything to optimize that with workflow?”

Editor’s Note: This article was based on a presentation at the Target Markets Program Administrators Association Eighth Annual Summit in Tempe, Ariz., in October 2008.