Mad Hatters & Agency Owners

Obviously the title is a take-off from the classic Joe Cocker song/album, Mad Hatters & Englishmen, which is a take from Alice in Wonderland, which is a perspective on brains not working quite correctly.

What happens in an agency where an agency owner’s brain does not function appropriately? What is the definition of an owner’s brain not functioning correctly? I’m not qualified to provide a definition so I’ll provide examples.

An obvious and sad example is dementia. I’ve experienced owners with dementia many times and a winning solution just does not exist. All one can possibly do is minimize the damage to the agency but the agency will be damaged.

Another example is abusive behavior. The abusive behavior may be focused on employees, companies, or themselves. In these situations, if someone, somewhere cannot make the owner become self-aware of their behavior, there is not much anyone can do but leave the agency to work for a psychologically sound agency owner.

Another example is an owner with such a severe inferiority complex that from a layman’s perspective, they have a psychological disorder. In these situations, bad decision after bad decision follows bad decision. Quite often these situations are highly correlated to acquisitions, especially acquisitions where qualified third parties are not asked to complete the due diligence or valuation. This is because the idea of asking for assistance belies their inferiority complex, and they also believe every deal is a good deal because they can inherently identify every good acquisition. They believe due diligence is a waste of time and money.

Possibly the most common psychosis is that of a people pleaser. A more sophisticated psychological term likely exists but this is a true disorder for a person who has management and leadership responsibilities. A true leader, by definition, must be comfortable (not enjoy) disappointing, upsetting, and confronting people. Many agency owners cannot do this. The proof is in how the majority of producers do not follow procedures, nor do they even sell enough insurance to pay for themselves, and yet the owners will not take action.

Agency Ownership

Two ownership situations exist. The first is when the owner is the sole owner and the second is when partners are involved.

When the agency is only owned by one person and he/she is not psychologically normal, the situation can be dire because no counterbalance exists. There is no partner to address the situation. If the owner is extremely fortunate, their spouse will take action or they will employ a strong person not afraid to confront the situation even though their job is at stake. Few agency owners will be so lucky. For employees, producers, customers and carriers, these situations have little upside. Again, the best solution may be to just leave.

When agencies are owned by multiple people, assuming a somewhat even distribution of ownership, the partners have a fiduciary duty (at least I’m almost certain my attorney friends would say this so I’m relying on those opinions) to confront their unhealthy partner. As a shareholder, they have a fiduciary duty to act on the agency’s behalf. Unfortunately, most agency owners tend toward people pleasing so they put their own insecurities first or because they’re concerned about their paychecks, they put money first.

Mad hatters are mad, and patience and reasoning will rarely ever work without confronting the partner in a strong, constructive format. They have a disorder so talking to them rationally and expecting a rational conclusion is unrealistic.

Partner Issues

When partners are involved, another scenario exists and I see it all the time. The partner with issues, most commonly severe controlling personalities beyond any healthy/normal point, acts passively/aggressively so that no progress is ever made. They never make positive contributions to the discussion. Instead, whenever the partners agree to move the agency forward by creating accountability, efficiency, and a true sales culture they balk. The only exception is if everyone agrees that the partner can continue doing whatever they want. This is not really feasible, but some partners become so desperate, they agree anyway. Otherwise, the agency stagnates. I’ve seen agencies stagnate for years and even decades because of one partner. Stagnation biologically is decay from within. That is what stagnation is in an agency.

In these situations then, we really have two psychological issues. The first is the mad hatter. For some reason likely going back to childhood, they are obstructionists. They do not see themselves for whom they really are – not even close. They are so insecure they take every recommendation as a severe personal threat. They literally cannot even have a constructive discussion. They are so insecure and so by obstructing, they maintain control. Control is very important. Sometimes control is very important because they cannot really sell nor manage. Deep inside they know this and they are afraid of being discovered if the agency moves forward. It is the imposter syndrome, which is so real in so many agencies.

On the other hand, their partners are usually leaning too far toward being people pleasers. They may not be leaning so far as to be classified with a psychological disorder but they’re leaning far enough to avoid raising the mad hatter’s ire. So the mad hatter gets his or her way every time. The partners are at least, hopefully, mentally sound and just temporarily weak. If they don’t overcome their weakness, the solution almost 100 percent of the time is selling the agency.

Otherwise the solution is constructive conversation regardless of how painful and discomforting. Especially if a person has never done this previously, learn how to conduct these meetings or hire a third party like my partner Jay Brenneman to teach you. A science exists that you can learn to make these conversations much more successful. Even if you cannot get the other person to act normally or seek counseling, the way the best conversations are structured will leave you with no doubt the problem is the mad hatter’s.

Many agency owners I meet always have a doubt whether they’re the problem. Mad hatters are good at creating that doubt. Their ability to create doubt is likely inherent to their psychosis. With good structuring, you can lose this doubt and when you lose doubt, solutions become much more clear.

By no means do I mean to make light of anyone’s issues. Everyone has issues and through this article, I hope to bring to light that what some people take as a quirky or difficult personality is, in my experience, quite possibly a much more serious disorder. The cure is recognizing the situation for the true seriousness. The cure benefits everyone. Sometimes the cure gets ugly before light appears but if one just avoids ugly, there never will be any light.