Rotting in The Status Quo

Change management is no longer an option.

If you are reading this and believe that you can manage your agency to growth and or continued profit by following the same course that you or your predecessors did in the past, you are heading for disaster. Many agencies are feeling the pinch of the soft market, competitive pressures and commission reductions (or is it the crush?). Those who have not yet felt a severe negative impact as a result of these economic conditions have been insulated by special circumstances.

Many of the agencies with whom we have been in contact over the past several years have addressed their problems by down sizing. “If we lose sufficient income we must, unfortunately, reduce our work force.” This is what we have heard from more than a few agents. The pressure of the workload, however, does not reduce and the effects are employee burnout and deteriorating service and administrative levels. The next line of defense for many agents is to acquire, merge or be acquired in order to enjoy the economies of scale of size. Without changing their way of doing business, however, this simply allays the problem for a few more years. And now the agency owner must live with a partner, a boss or a loss of control of the business that he worked so hard to own.

Finally, we see agents simply giving up, selling their business and retiring early. When we assist them in finding the most appropriate buyer, the agents confide in us that they decided to get out while there was still value in their agency. They presume that there is no way to turn the tide, regain their growth attitude and make the agency a profitable business venture.

Change is unfamiliar. While employees may suspect changes and resist them, the greatest fear of change in the operation of an insurance agency stems from the fear of the owners themselves. These owners learned how to sell and service insurance from their predecessors (whether family or not). The methods of operation that we have learned over many years were comfortable to them. Once the owners have reached a position of ownership and authority their security and success is defined by most in terms of financial success combined with the feeling that the business is operating successfully under their leadership. They refuse to (or can not ) understand that the decline of the success of the insurance agency has little to do with their or the agency’s competence, drive, and efforts. The business world and the insurance world has changed around the insurance agency network. The agents who survive will understand that their agencies must change accordingly.

The change is hard and expensive both in terms of dollars and personal stress. And some change is faddish and promoted by outside sources to benefit others, not the agencies themselves.

Unplanned change leads to chaos. How many businesses have the experience of owners attending seminars and returning to the agency to immediately (and chaotically) implement changes. Without forethought, inclusion of staff and education and planning, change for the sake of change is destructive.

Change management requires a plan. The theory of continuous improvement has worked successfully at progressive organizations for generations. These organizations experienced “celebrated discontent”. This means that no matter how good they feel about themselves, changing to make it better is always an agenda item on their strategic and tactical plans. Their theory is “if it ain’t broke, break it!” These change managers understand that the insurance agency of the 21st Century will resemble the agency of the 20th Century in the same way that a 20th Century agent resembles a 19th Century agent. Their change is not sudden nor dramatic. Their changes are continuous and include all employees. The inclusion of the employees and the continuous change mechanism infuses the continuous change syndrome into the culture of the agency.

Under these circumstances their is no longer a question about the potential resistance to change by employees. In a continuous improvement agency, employees understand when they are hired that the agency is not stagnant. They will either not be employed or not stay long if they can not participate in the change mechanism.

The key to making an agency a continuous improvement organization are the owners. We strongly recommend that the owners attend workshops, read books or participate in consultations that explain the mechanisms of change management and the ramifications of operating a continuous improvement organization prior to their efforts to convert their own businesses. You can not “try” a continuous improvement model anymore than you could take a tentative, short step of faith. Becoming a changed manager is a true leap of faith and requires a full commitment. Only a fool would make that commitment without the proper education in order to determine whether that conversion is appropriate for the individual.

The choices are rather slim. Remain embroiled in the insurance business without changing while the world around you, changes itself, is like falling in a pit of quicksand. Stay still and you’ll sink slowly. Try harder and, inevitably, you’ll sink faster. The only solutions are to bail, out or to learn new and creative ways of crossing that quicksand. If your life depended on getting across the quicksand, you would not take someone’s word for it that a magic formula (telemarketing, agency automation, niche marketing, service teams, etc…) is the single appropriate method for solving the quicksand dilemma. You would certainly not jump into the quicksand with a new computer or a new marketing program without having properly studied it and planned for its use. However many agencies do exactly that and find that their $100,000 automation investment simply acts as an anchor to pull them down faster.

Many of the change mechanisms that will work for insurance agents in the next generation are already in use or in development in the agency system. However no single solution or combination of solutions is right for every agent. We strongly urge you to commit to the concept of change management and continuous improvement and begin that process through education and the creation of a strategic and tactical plan. Planning is not an end to itself, it is the beginning of a process that invokes and provokes creative thought and a lifetime of change and analysis. As consultants we are often asked to assist agents with specific agendas to change the direction of their agencies. We have refused many of these assignments because we felt that the agent did not yet know or understand his own goals and the reasons for requiring change. Unless we could convince the owners of the business of the need to analyze the reasons for the desired changes, we knew that even if we implemented the changes, they would be short lived and result in another grand experiment gone wrong. Too many agency owners are waking up and becoming professional change managers for us to spend our time or agency funds to implement programs that have low chances of success. We seek and will continue to work with those agents who desire to become change mangers to assist them through their education and implementation process. The younger agency owners who follow this process will evolve 21st Century Agencies that provide them a strong earning space and high value business. The more experienced agents will become change managers of continuous improvement organizations and will maximize the value of their business prior to their retirement.