ACG - Agency Consulting Group


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

Total Quality Management - Part 08: Measuring Results, Progress . . . Everything

How do you suppose a college or professional baseball, basketball or football coach knows which play to use in the particular circumstances he faces? How do they know which player to insert against a specific opposing player? How do they know which plays work under specific conditions?

The answer is STATISTICS. Many of our readers remember when they personally knew the records, RBI's and batting averages of almost every big league player in baseball. This information came from the backs of baseball cards, from newspapers, from television and from radio commentators. But all of us who followed Mickey Mantle (or Babe Ruth) could tell you against whom they were most likely to get a hit. Those statistics were of interest to us because we were fans. They were VITAL to the players and coaches because it meant the difference between the most important statistic of all WINS VS. LOSSES.

For the players and managers, those statistics were not part of the game, they were a part of the business.

Now -- how well do we keep score? For ourselves as managers? For our "players" as participants in a business that must help them succeed and make a living?

As an owner, your "primary statistics" are measured in terms of retention (clients, policies, commission and premium), new business production, loss ratios and collection of premiums. Success in terms of these statistics will guarantee success in your business. Secondary (but still important) statistics include employee retention and customer satisfaction. However, even if you, personally, know all of the statistics that are important to you as an owner (and many, if not most, owners can not make that statement), you are decreasing the chances of your success if you do not also provide a full range of measurement tools and statistics to your employees as well.

First, every player (and certainly every owner) must know how the player can WIN, whether it be the sale, the retention of customers or any other measure of an individual's success in the business. The more the employee knows about the job and his/her level of success, the better the employee will be able to help in the success of the business. Knowledgeable employees are interested in the future of the business. Ignorant employees (whether from the owner's lack of information or the employees lack of interest in the information provided) will not provide answers to problems, they will just state the problems and assume others will solve them. Which type of employee would you rather have? If you would prefer the interested employee whose efforts are dedicated to satisfying the customer and increasing the value of the business (thereby providing them job security and financial success), you must treat them like that type of employee first. This treatment includes sharing all information that would help the employees determine a) how they can be successful, and b) how to measure their success in their jobs.

Don't measure the activities of the employee unless the outcome of that job is the activity itself. Measure the results instead. For instance, an input operator whose performance (and success) depends upon the speed and accuracy of input transactions should measure them to help determine the success of the job. However, a manager, whose "outcome" is the speed and accuracy of a transaction from it's initiation by the client to it's delivery back to the client should measure the total result, not a specific component.

We have already illustrated in previous articles that the success of insurance agencies is based on meeting and exceeding their customers' expectations. The money represented by retained and new commission dollars are only the measuring stick for the goal of meeting and exceeding customers' expectations. Every employee needs to know the measurements of "winning" in his/her job performance. And make those measurements in terms of satisfying or exceeding customers' needs and expectations. Of course, you insurance companies as well as your clients are considered your "customers". In this way, timely and completed information to a carrier is as important a measurement for an agency marketing department as competitive products and pricing to a client is to the production team.