Once And Done

The keys to efficiency in agency operations.

The average productivity in insurance agencies has risen to more than $100,000 (measured in terms of revenue per employee). Yet we still encounter many agencies whose revenue per employee is between $50,000 and $80,000 and can’t seem to advance beyond those levels.

Why is productivity important? Most expenses in insurance agencies are relatively fixed. Compensation, the primary expense in all agencies responds to the market pressures in each geographic area. Few agencies can pay their employees $30,000 per year if all the agencies around them are paying $40,000. And if the agencies are still paying far below scale they probably retain less productive employees than are working for the competitors. Most other expenses are truly fixed unless they respond to owners’ needs and desires.

Since most agency expenses are predictable, the more productive we make our employees, the fewer employees we need to sponsor a growing number of clients and revenues and the more money becomes available to the agency each year for profits (in real dollars and as a percentage of revenue).

Systems support and procedures specialists talk about following procedures to add consistency and discipline to the service and administrative process in the agency. This is true. But why?

Consistent systems and procedures are in place to permit consistency among all staff to permit transactions to be done quickly. The quicker we can handle transactions (all transactions, not just those done in the computer) the more we can do in a day, week or month. Theoretically, the more transactions we can do, the more clients we can handle.

If a CSR handles 300 clients and system changes permit her to handle 400, she has increased her productivity by over 30%. Since we don’t have to add space, computers, or other fixed expenses, much of that increased revenue drops to the bottom line. Imagine an average revenue of only $750 per client. That would increase the revenue for that CSR from $225,000 to $300,000 with no further expense beyond acquisition costs.

But efficiency of procedures and systems (handling all transactions in a similar fashion) is insufficient to assure productivity gains unless all transactions are done efficiently – being handled only once.

Once and Done – describes the process of one person handling every transaction from inception to completion, preferably in one continuous process. For instance, if a CSR fields a call from a client asking for a quote on an additional property or vehicle, how is it handled in the agency? In many agencies, the CSR handwrites a note specifying the need, then transmits it to an assistant to generate the quote. The assistant gives the quote back to the CSR for customer contact. Usually, the CSR can’t reach the customer on the first try and either continues to attempt personal contact or writes (or e-mails) the response to the customer. Then, if the customer requests an endorsement of that vehicle or property to the policy, the CSR again writes the information and gives it to the assistant to generate the policy change (or policy change request).

In a Once and Done agency the CSR would have fielded the call, done the quote while the customer was on the phone and asked the customer if she would like the policy change done. If yes, the CSR would have completed the policy change on the spot – Once and Done. Yes, the initial transaction would have taken longer. But it wouldn’t have taken nearly as long (or as much time from at least two employees) than the inefficient multiple-touch process still prevalent in so many agencies across the country.

Once and Done both enhances efficiency of your employees, permitting them to handle more clients quicker but it also enhances their effectiveness by minimizing errors. When only one person handles a transaction – the person who knows the source of the transaction – there is much less chance of error in handling.

Errors causes multiple transactions and more complicated, time consuming transactions because it takes a lot of time to identify problems after they occur, backing down incorrect transactions and issuing corrected ones. It also usually involves multiple customer contact to assuage their concerns. Once and Done will minimize errors. But they won’t solve the problems caused by employees who are not sufficiently trained and make mistakes (many of them the same mistakes) frequently in their normal work effort.

We urge all managers to include an audit process in their management of employees. An audit can be as simple as reviewing a few transactions from each employee on a weekly basis to assure the manager that the coding and procedures are being followed. In larger agencies who are well aware of the importance of low error rates to overall productivity, the audit process is formalized to include an audit of each common transaction type from every worker on a regular basis. In smaller agencies, once the manager is convinced that the employee knows that transaction type well enough to adhere to a minimal error rate (we’ll never stop all human error), the audits of those types of transactions ceases and new transaction audits are done on other types of transactions.

Regardless of whether we audit specific transactions because we have indications that the employee is not yet proficient in their process, or we audit different transaction types for every employee as a part of error control, the audit function is one of the important roles of management that is not common in most small and medium-sized agencies. If we initiate specific or general audits, you can be assured that your error rates will diminish and the customers will be more satisfied because they will be getting their requests completed both faster and correctly the vast majority of the time.