Most agencies and brokerages include their employees in the preparation for Strategic Planning. In one way or another, every employee should be involved in planning for the next year and many are involved in Strategy Development, while fewer are responsible for the creation, validation and changes to the Company’s Mission and Vision – its long term outlook on the future.

While many agencies and brokerages who already do Strategic Planning conduct their sessions in the Fall and Winter, a growing number realize that any time of the year is appropriate for Strategic and Tactical Planning and these cutting edge companies have begun conducting Planning Sessions during their slowest times of the year to allow for enough time and concentration to properly conduct the planning cycle.

Every year Agency Consulting Group is asked to provide guidance regarding the preparations for the Plan. Our primary recommendation is that the most successful planning agencies and brokerages are those that delegate preparations to every level of employee with the owners and key managers acting as the clearing house and controller instead of acting as the principal data collector for the Plan. The more active the front line employees, supervisors and department heads, the more they will know about their own activities and about the units that respond to them and to whom they owe their continued success.

PLANNING IS A PROCESS NOT AN EVENT!! Treated as such. The reports that are created weekly and monthly will feed into the participants’ preparations as the “grist” for the planning “mill”. Little extraordinary effort needs be exerted if the projections for the subsequent year are built from the data collected daily and historically for each planning participant.

Remind your employees and managers who sit on the Planning Session that the meetings should be the FRUITION of their planning work, not the beginning of it, nor the time or place to percolate new or existing initiatives. The sixty days prior to the Planning Session are used to compile all the historical data needed to create logical Objectives for growth, retention, profitability and productivity that will advance the agency or brokerage. Every participant will be asked to present their year-end results at the session and will present the first cut Objectives – what they expect or desire to accomplish in the next year, Action Plans – how they will accomplish their Objectives – the tangible activities that, if implemented properly, will yield the objectives and Benchmarks – the monthly measurements that they will conduct to reflect their success in their Action Plans toward their Objectives. This means that during those sixty days, they should meet with their teams and any other people who would be instrumental in the growth and profitability of their departments or roles in the agency or brokerage.

Here are some guidelines for “homework assignments” that should be given to each participant a few months before the planning session is to be conducted.

Administrative Employees

Receptionist: Identify the number of calls made/received through the receptionist in the past 12 months compared to at least the prior 12 months – more if these records have been kept or can be driven by the telephone management system. Identify the number of customers visiting the reception desk over the past year versus prior years.

If you are just starting the planning process, use this as a prompt to drive weekly, monthly, YTD and Rolling 12 month reports about these and any other functions that reflect the productivity of the receptionist. After a year of generating these reports from your reporting system, you will have the track upon which to measure productivity, goals for the following years and staffing analysis to identify empirically (rather than through the pain of your growth) when additional employees are needed.

Accounting employees: Every agency in the U.S. and brokerage in Canada have accounting and financial functions that differ from each other. Whether you have receivables and payables segregated into different responsibilities or the same people handle both, the measures upon which to judge objectives for the next year is percent of receivables collected in each age group and quantity and efficient timing of payables. This means that historical data should be maintained to determine the baseline each year upon which the employees recommend their own objectives for the next year.

If you are in an Agency Consulting Group, Inc.’s Incentive Compensation Program, this and many other objectives, action plans and benchmarks are based on enhancing individual and department productivity each year to permit the employees and departments to be more efficient for both the Company and for them, since their compensation is controlled and measured by their productivity.

Customer Service:

Assistants – These employees are generally responsible for processing while the customer service representatives, Account Managers and Account Executives respond directly to an ever-growing customer base to properly service and retain the clients. Their annual objectives should be based on finding ways of handling more transactions, faster and with a high degree of efficiency without adding additional staff. Their measurements are # of renewals, # of endorsements, # of new business transactions, # of quotes and a total number of transactions done by the individual (if individually assigned specific responsibilities or customer groups). They should have access to these numbers on a weekly, monthly, YTD and Rolling 12 month basis. If they are working under an ICP (Incentive Compensation Program) these numbers will be their lifeblood because advancing productivity in these areas will allow them to realize wage increases. But even if not under an ICP, having this data available to the direct employees empowers them to take the assignment of finding ways of performing their functions better each year. They will provide ideas and/or coordinate with their managers to create new system, procedures and devices to better service and process customer requests as objectives for the next year.

Direct Service Staff – These positions are some of the most important roles in the agency or brokerage – the retention of customers. Although no one has total control over customer satisfaction and retention, the service representatives, like the producers and owners, must realize that lost customers affect the growth and profit of the agency or brokerage and, subsequently, their own compensation growth – whether or not they cause the client to stay or go. However, most customer representatives don’t realize that they, not the producer touch the clients most often and can form a primary relationship that will keep clients from shopping or leaving.

Every Service Representative should have access to the following information on an on-going basis: Customer Count, Written Premium Total, Commission Total, Policy Count, New Client Count, New Annualized Premium and Commission Count and New Business Policy Count. This basic information is available from most agency management systems or should be kept manually in order for the employee to know the status of his/her workload and success in the agency or brokerage. And, with one or more years of this data in hand, the employee is prepared to tell the manager of the department what they estimate for retention of business and growth capacity (how much more can they handle) at a desk.

If the agency or brokerage is in an ICP, this is, of course, the basis of raises. Regardless, it is the information needed to create objectives for a Representative which, combined, form the Objectives for the department.

Producers – Every producer should have a five year record or at least two years of annual or rolling 12 month: a) Gross Revenue, b) NB Revenue represented by the book of business for which they are responsible, c) Total Client and Policy Count, and d) NB Client and Policy Count. This information will yield average client and policy values, growth rates and retention rates (Retention = (Current Period Total – Period NB)/Prior Period Total) where the “period” is YTD, Annual or Rolling 12 month)).

Most agencies and brokerages have producer compensation strategies that compensate producers based on prior year gross commissions, New/Renewal Commissions or Base/Growth Commissions with many advancing to tiered compensation that pays a higher rate to larger volume producers because of the economies of scale related to larger books of business in every agency or brokerage. The planning cycle is the perfect time for a producer to project the next year’s compensation and derivatively, the expected retention and new business to be generated to achieve that compensation level. The combination of all producer’s objectives forms both the Sales Goal of the department/agency (brokerage) and the projected producer compensation expense for the Company’s budget.


Personal Lines – Many Personal Lines Managers are responsible for both NB and retention. Homework for them is to incorporate the retention of their service staff with the NB generation methods used to generate business through producers (dedicated producers or all producers) or through other marketing methods employed by the Company. The historical data over several years will show them what they have done considering the human and other resources that have been expended on behalf of personal lines. They must use this information to create a retention plan including action plans and benchmarks and a New Business plan for the next year. The creativity that managers must have comes from communication with their staffs it is not an individual task to identify opportunities for growth and retention and systems and procedures that can make the department run smoother. Any supporting staff, equipment and marketing efforts needed to achieve the objective should be fleshed out and the costs identified for budgeting purposes.

Communications with both the department employees and with management during the two months preparing for the planning cycle will cause much less stress with the Plan comes together.

Commercial Lines: The function of the Commercial Lines service department is NOT the processing of business – that is only one of the methods by which they achieve the REAL function, the retention of commercial lines customers with a degree of efficiency and effectiveness that permits the agency or brokerage to achieve an operating profit. This means that the department’s goals incorporate both retention of accounts and the processing of transactions. The homework for the commercial lines manager should track the historical performance of the department for these measures and to create projections for the next year that will dovetail with the sales department objectives to determine if the Company can service the projection of retained and growth accounts at acceptable levels in the next year. If this is the first year of planning, the manager should have the following statistics at hand for the Planning Session: three or more years of total customer counts, total policy counts, total transactions counts (automated transactions) and new customer counts and new policy counts. Applying the retention calculations, above, the manager can delineate the retention rates in customers and policies for the period tested in order to project the department’s next year retention based on the current year projected total customer and policy counts. Then, in tandem with the sales department projections of growth, the manager can estimate the transaction counts that will prevail in the next year to determine staffing load and needs. At this point the manager should evolve any ideas and potentials for enhancement of productivity in the department and the costs and returns of implementing those concepts.

Sales Management: The Sales Manager’s goal involves collecting or assisting each producer in the development of his/her expected sales goal for the next year based on that producer’s historical performance, compensation history and expectation (as it relates to the need for production and/or growth). Once the goals are established, the manager is prepared to evolve the costs of the growth, both in terms of compensation and other sales costs associated with that growth. The growth projections and the costs (compensation, marketing, programs, etc.) will be provided to the Financial Manager to substantiate the budget.

Financial Manager: The Financial Manager’s principal responsibility in the planning process is to drive the budget. The preparation for this exercise is the projection of 12 month historical projections for every line of revenue and expense. These projections may be driven based on historical trending of the specific line, by the addition of prior year revenues and expenses for the balance of the year for the respective lines or by educated estimates and consultation with other operating managers responsive to lines of revenue or expense. Once the historical projections (or rolling 12 month revenues and expenses) are determined, the Financial Manager is responsible for driving a 1st Cut Expense Budget for the next twelve months (or planning year) based on historical trends and known change factors.

During the Planning Meetings the Operating Departments will offer revenue retention and growth projections and expenses needed to support the operating departments for the next year. The inclusion of the operating revenues and expenses beyond the Financial Manager’s projections will form the 1st Cut Operating and overall budgets that will determine whether the Company’s resultant profit potential is sufficient to meet the needs of the Company.

If the budgets are accepted by the executives or the Board, the Plan is implemented as proposed. If the resultant profit is insufficient to meet the Company’s needs or ROI expectations, the managers will be asked to either revise revenue growth and identify other opportunities and expenses associated with stronger growth requirements – or – they will be required to identify cost reductions that will accomplish the Company’s profit goals for the next period.

Support Managers (HR, IT, etc.): Each support manager is expected to meet with the operating managers during the two months prior to the Planning Meetings to determine the needs of the Company for which that manager responds. The manager is to provide projections for project needs, personnel needs including their costs and timetables in support of the operating departments’ objectives. Those projections will be delivered at the Planning Session and will be incorporated in the Company’s budget process.

CEO: The Chief Executive Officer (often the Chairman) is responsible for the conduct of the Strategic and Tactical Planning Session and is operationally responsible for the annual implementation of the strategic portion of the plan (i.e. merger/acquisitions, carrier development, programs, geographic expansion, etc.). The CEO is the primary manager for the two months prior to the Strategic Plan Session to manage all of the Plan participants to accomplish their individual and department assignments. The CEO is functionally responsible for meeting with the appropriate key players to prompt ideas for the future of the Company and will chair the Mission Statement, Vision Statement and Strategy development and evolution at the Planning Session. As with all other sections of the Planning Session, all discussion and strategic meetings regarding the Company’s future course, it’s strategic growth initiatives and the strategic succession plan (a confidential document that identifies each year who is prepared or can be developed to assume each key role in the Company should something unforeseen occur to the incumbent).

COO: The Chief Operating Officer (often the President) is responsible for the implementation of the Tactical Plan. The COO is measured by and directly manages the achievement of every objective in the Company by aiding every manager to take down the roadblocks to their successful achievement of their department goals. The COO chairs the Tactical portion of the Planning Session including the evolution of the Company’s Objectives for the next year, the Action Plans that validate the reasonability of the objectives and the Benchmarks that will be used as the monthly measures of each Action Plan and Objective. The COO is responsible for the growth and retention of revenue for the Company.

CFO: The Chief Financial Officer is responsible for the creation of and management of the budget for the Company. Once the final iteration of the budget is completed (at the conclusion of the planning process) the CFO responds to the Quarterly Meetings to convert the budget into YTD and Annual Projections of revenues, expenses and profit. The CFO is responsible for controlling costs to budget unless projections warrant increased expensing without negatively affecting the Company’s profit goals.