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Total Quality Management – Part 06: Setting Boundaries

Quality management initiatives promote a package of rock-solid, customer oriented management philosophies that free the employees to serve the customers in a way that will assure their satisfaction and loyalty to the agency. A Commitment to Service, developing a Recovery Strategy for the inevitable mistakes that are made, a policy of Continuous Improvement, Listening to your Customers (instead of deciding yourself what the customers should want and need) and Changing the Role of Management are the first five principals that define a quality initiative. Frankly, these principals are much more difficult to practice than to learn because they are not the way we, the agency owners and managers, learned management on our way up the experience ladder.

However, the smart agency owners recognize that the business of operating an insurance agency in the future will be radically different than it has been in the past — even in the recent past. That’s not either good or bad — it’s just fact!! The businesses who succeed in this transition will be economically successful through the next generation of owners and managers and will pay retiring owners handsomely. Those agents who rely on 1950’s methods of operation and management will find themselves “merging” in order to maintain some asset value for their eventual retirement.

This Quality Management series is meant to pique the interest of the agents who intend to remain active, aggressive and vibrant businesses through at least one more generation. Most of these agents are interested in both building the value of their businesses and guaranteeing their perpetuation.

The changes suggested to date are the articulation and codification of those philosophies that we already claim to believe. After all, who in the service industry does not believe that they are committed to service and that they don’t try to continuously improve themselves? However, if we really look at our business conduct, we will find that we don’t “walk it like we talk it”. The actual conduct of the insurance agency business has been much more clerical and mundane, geared toward completion of endless paperwork and correcting our own and our companies’ mistakes with customers “interrupting” our days with repetitive requests. A disciplined, quality initiative is meant to concentrate both management and employees to the important part of what agency’s do — Customer Service.

“Setting Boundaries” is the delineation of the framework and core values of the agency. Are your employees clear about what’s expected of them? Do they know where the “boundaries” are and how far they can go in their new “empowered” functions? A business without boundaries is much like a football field without sidelines and end zone markers. You may point the players in generally the right direction, but how do they know where and how far they can go?

One of the first things you can do for your employees (it will help crystalize your values for yourself as well) is to write a Statement of Philosophy. A sample Statement of Philosophy written by a successful and growing agency is displayed in this issue. The statement should communicate the importance of service to your organization, define your service goals from the customer’s perspective, clarify why service is important to you and how you intend to measure your success. The Statement of Philosophy sets a criteria for your employees decision-making process.

The next step is to clearly define the “End Zone” for your organization. Tell your employees how to know when they score a touchdown. Your end zone could be as simple as “when the sale is made” and “when the customer is retained”. Each of these statements requires the combined effort of your entire team to achieve — just like a football game plan.

Staying with the football example, a game plan is of little value unless each player knows his assignment. Job Descriptions should contain, both in general and specific terms, how you expect the employee to contribute to the overall effort.

Procedures should not be restrictions on employees efforts. Rather, they should be guidelines that permit efficient operations by the creation of “normal” daily actions. Deviation from guidelines should be expected and accepted — as long as the deviations don’t exceed the boundaries that you have set. Just as in football, the employees are encouraged to do anything necessary to score (i.e. sell and/or retain) short of going out of bounds. The boundaries that you set should be explained in terms of protecting the customer, the carrier or the agency. The employee should not be permitted to assume financial or insurance exposure that could harm customer, carrier or agency (without your participation).

Setting boundaries clarifies what can and can not be done by your employees. Writing it down crystallizes your philosophies for yourself and your staff. Those boundaries limit their ability to react to the customers, but you should make those boundaries as wide as possible (while still protecting yourself) and give your employees the freedom to customize their actions within the boundaries to satisfy the customers.