Strategic Planning


The PROCESS of Strategic Planning may be as (or more) important than the Plan itself. Strategic Planning permits an organization to synergize the thoughts of its owners with those of the managers, producers and employees. As owners, we have significant ideas of how we’d like our agencies to operate and how we expect them to grow and prosper. However, ideas without plans are called dreams. And dreams rarely come true without significant efforts to make them happen. Planning permits us to solidify those dreams, reality test them with the very people upon whom we rely to make the dreams a reality.

Why is the process so important?

The process described below involves your key employees in the long term future of your agency. It moves the participants through a series of steps that permits them to understand your goals, internalize them and add and change them with creative ideas of their own. The process progresses from the ‘big picture’ through changes we have to make in our operations and methods to direct objectives necessary to make the dreams into reality. And the process goes beyond that point, too. When I was responsible for Strategic Planning in several insurance companies I found that the common weakness in their elaborate (and expensive) plans was that once the Plan was created, it was bound and shelved to be used as a measuring device only (and as a hammer to punish managers not achieving goals) . How often will managers get excited about planning if they see the Plan as a punitive device?

In order to make the planning process an integral part of an agency’s daily operation, we added Quarterly Action Planning to describe creative solutions to permit achievement of Objectives and Monthly Benchmarks to permit objective measurement of each objective on an individual and departmental basis. Even Objectives are too large to use to manage daily activities. Action Plans and Benchmarks translate the objective into a “how to” and “what to do” on a monthly and quarterly basis.

The most important part of the planning process is the learning and communications process, itself. If yours is a typical agency in the U.S. (large, medium or small), one of your greatest weaknesses is a lack of communications. No single individual is at fault. As busy as every agency is in these difficult times, lack of communications is a shared problem from the owners to the line employees in every department. Once in a while a “check-up from the neck up” is a wonderful idea. The Strategic Planning cycle is one such opportunity.

Discussing the last year’s results and how they were achieved will open some eyes (if we judiciously avoid finger pointing and blame). The issue is what was accomplished, what was missed and the ingredients that lead to the result achieved. Why those results were achieved and who deserved the credit or debit is a costly and injurious line of discussion. The analysis of current and past results is only valuable as the basis for what you would like to continue, change or implement in the future. The discussion creating the agency’s Vision and Mission creates and reinforces the agency’s base principles and philosophies. The strategies that are adopted to change the way the agency operates must be grounded in what has helped and what has hindered the agency’s efforts to grow to date. The objectives must be totally integrated in the agency’s mission and strategies. If not, the agency will find itself following a path that, even if successful in the short run, will not accomplish its long term goals.

The First Steps

By this time of the year, you should be into your strategic planning cycle. If not, there’s still time to trigger a plan that will be operational in 1997. We urge you to take specific steps toward the creation of this operating tool for a variety of reasons. First, you must understand that writing something down solidifies your thought process. Second, involving others in your Plan permits the synergy of shared thoughts. Yes, it IS your business. But your managers, producers and employees count on the future of your business to support them and their families – just as you do for yours. And your employees can add a dimension to your thought process. After all, you hired them and maintain them on staff because they each add some strength to your organization. Why not use those strengths (and more) to add to your Plan and implementation?

The third reason for following a set process is that of inclusion. When people are involved in a Plan and help create it, they understand both the reasons and the results expected. We have all been involved in forms of autocratic decision-making. The result of dictatorial planning is being told what to do without understanding why. Consider that while you may be the owner, your success depends on whether or not your employees carry out your Plan. Without following the process, many Plans simply languish from indifference and neglect by a staff who don’t understand why they are being asked to do something different. If you TELL the staff what must be done, be prepared to manage every step of the process yourself.

The steps of Strategic Planning are as follows:

1. Mission Statement & Vision Statement – The Vision is how you want to be viewed as an organization. The Mission is your business statement that defines the position you intend to occupy in five years. The Vision Statement is one that you would be able to send to prospects, clients and companies telling them who you are and what your company is about. The Mission Statement is an internal document that describes your business goals.

2. Strategies are built from the action items of the Vision and Mission and describe things that have to be done differently than in the past to assure attainment of the Mission and Vision.

3. Objectives are the lowest level of the strategy goals that need to be activated in the next year.

4. Action Plans define how to accomplish each objective, quarter by quarter. Believe it or not, this is the key to the entire Plan and its most difficult ingredient.

5. Benchmarks are monthly landmarks against which each objective is measured. If the benchmark is achieved, the Action Plan is working. If not, the Action Plan must be refined and fine-tuned.


Most businesses who have developed Strategic Plans have created either a Mission Statement or a Vision Statement. Few have done both. A Mission Statement defines the business goals for your organization in a stated period. A Vision Statement defines the organization’s principles and image expectations of itself in the same period. These two statements must be mutually dependent and should define the organization for customers, companies, and employees. An example of a Vision Statement is:

Providing a full range of insurance products with integrity, honesty and trust to all of our clients at a fair price with uncompromising attention to service is the driving principle of XYZ Agency. Our primary focus is to satisfy our clients’ insurance needs. Our expertise and high quality of service enables us to develop long term relationships with clients and maintain their loyalty. The employees of XYZ Agency are paramount to our success and our success, itself, is the measure of our adherence to our driving principle.

If the Mission Statement defines the business goals by which the agency measures its success, the Vision Statement becomes the organization’s constitution, defining how it expects to act and develop. This statement will fail your organization if it contains ‘PR’ words and hype that are not integrated into the way your agency operates every day. This is the company’s bible – reminding employees, owners, clients and suppliers of what it expects from itself in order to claim success. The business goals of the Mission Statement are not enough to make an organization successful.


By the year 2001, XYZ Agency, Inc. will be a $3.5 Million revenue insurance agency offering a full range of insurance and financial service products to each of its customers. By fully utilizing its automation capabilities and hiring and maintaining the most effective insurance professionals available, XYZ will achieve a productivity factor that will permit a 20% pre-tax profit to its owners. Innovative growth strategies and well-controlled loss ratios will cement strong partnership relationships ($3 Million minimum premium) between XYZ and its five leading carriers.

The Mission Statement defines the agency’s desired business goals for the next five years. The creation of the Mission, like the agency’s Vision before it, should be free-wheeling and open discussions between the owners and the key employees of the agency. The goal is to understand where the owners want to be and what the employees can visualize the agency achieving because, in truth, you can only achieve that which you can perceive. If the owners can’t decide the future among themselves, the Mission is guaranteed to be either a failure or an exercise in ego strength. If one owner is stronger than another, his (her) vision of the future will most likely occur. If you have only one owner, this process is simpler. If the owner’s vision is unrealistically high it will only be reached if the agency staff has the fortitude to make enough sweeping changes to alter the path of the organization. If the owner is too conservative (more often the case), the agency will be limited to the owner’s vision because he will not be willing or able to support changes that will move the agency further than he has been pre-disposed to accept.

Strategy Development

Strategies are developed for each action statement of the Vision and Mission Statement that requires changes in the way the agency does business to accomplish. The Vision and Mission Statements should be “blue sky”, free thinking processes to congeal the desires and expectations of the participants into cogent, written forms. There should be no validation or analysis permitted at these sessions. However, the action phrases of each of the written statements must subsequently be analyzed to determine if the agency’s present course is sufficient to reach that statement. For instance, the first action statement in the Vision Statement is, “Providing a full range of insurance products¼” If the agency is already involved in personal lines, commercial lines, life and health products and if no one can identify product lines that are yet untapped for the agency’s customer marketplace, then no strategy is needed to accomplish this part of the statement. However, it is proper to define each action statement, whether a strategy is needed for it or not. So we will have a definition page in our document that includes this action phrase with the definition, “XYZ Agency recognizes that the client marketplace that it serves requires personal lines, commercial lines, life, health and other financial based protection products to remain a full service insurance agency. It will strive to maintain competitive products in each line of business that reflects prevalent needs in its marketplace.”

Since the agency chose to identify itself with the words Integrity, Honesty and Trust, it must also define what those words mean to the agency. All definitions in the Strategy session should be created within the group atmosphere. Those that require the agency to perform differently than it has in the past require the creation of strategies, as well. The definition session is an excellent tool to identify areas that require strategies to accomplish the position of the Mission or Vision Statements.

Two examples of Strategies:

1. The Vision requires “¼high quality of service¼” If the agency recognizes that its service levels are not yet good enough to earn this statement, it must create a strategy like – XYZ will return all calls within four working hours of receipt and will complete 90% of transactions, error free, within three working days of the client’s request.

2. The Mission requires $3.5 Million of revenues to accomplish its five year goal. The appropriate strategy could be, “XYZ will accelerate its growth each year through the attainment of producers, acquisition of agencies, and the development of innovative marketing techniques to achieve growth levels of 7%, 10%, 12%, 15% and 18% in the next five years.”

The Strategy Session solidifies the action phrases of the Mission and Vision by first defining them and then identifying how the participants agree they could be achieved.

Reality Testing

We all recognize that at different times and under different circumstances we can either be overly conservative in our thought process or overly liberal. It’s easy to be a dreamer when things are going right and its easy to be a prophet of ‘doom and gloom’ when business is not going well. Beginning with the Strategy Session and continuing throughout the rest of the Planning Session, we must ask the group to reality test each Strategy, Objective, Action Plan and Benchmark with the question, “Is it realistic to expect this of our team?” While you must worry about the realities of today’s marketplace on the annual objectives and quarterly action plans, you are not under those constraints in the discussion of strategies that will be five years in their implementation. Your greatest concern should be whether the team is capable of achieving the result, not whether the marketplace will permit you to do so in the long run. When reality testing your next year’s Objectives and Action Plans, you must consider the insurance marketplace in which you reside. Growing in personal auto is ludicrous if no company in your area intends to write personal auto next year (unless you decide to enter the non-standard marketplace in order to provide a solution to your customers’ needs outside of the “norm” of the independent agency).

Long Range Goals and Next Year’s Annual Objectives

A set of long range goals should be attached to each Strategy that identify the success positions that you must accomplish in each of the next five years in order to reach the position of the Mission and Vision Statements on time. We normally start from the end point five years from now and work our way backwards. The reality testing process will determine if those goals are simply too aggressive to be accomplished by the current team. An action item in the Vision or Mission could have one or more Strategies and each Strategy could have one or more sets of long term goals. The lowest level of each Goal Set becomes an Objective for next year. Each Objective must be “owned” by an individual in the Planning Group. That individual may or may not be a participant in that Objective. However, the Objective Owner assumes the responsibility of tracking the results of that Objective through the year and reporting at the monthly management meetings. Usually, the Objective Owner is the department head or key operative in the implementation of an objective.

Please note that working backwards from the Vision and Mission to identify your objectives virtually stops you from creating objectives that are not connected with your Vision and Mission. If anyone tries to identify an objective that does not seem to connect to any Strategy, analyze whether we left out a key element in our Mission or Vision Statements, or if the Objective really has nothing to do with how we identify our success in the future. Don’t implement objectives that are not grounded in your organization’s Vision or Mission.

If one of our Strategies is to return all calls within four hours in order to achieve the high quality of service that we espouse in our Vision Statement, we may set long term goals that end in 2001 at that four hour return time, but start in 1997 with returning calls within one business day and decreasing that target by one hour in each of the next five years. Don’t worry about the “woulda, coulda, shoulda, oughta” concept. You know, that’s the one where the owner says in a frustrated way, “We oughta be doing that right now!” If you can’t return calls in three days now, don’t expect to change that working atmosphere by edict tomorrow. It won’t last. The Objective is just that — the short term goal that you would like to accomplish (at a minimum). The key to attainment (or over-attainment) of the objective is in the Action Plan, not in the Objective, itself. If the Action Plan permits the staff to return calls faster, they will not stop at one business day because that’s all that’s required. Everyone’s goal is to become what your Vision Statement espouses. Set your Objectives as a set of logical progressions from where you are now to where you would like to be in five years in realistic, objective, measurable and achievable segments.

Quarterly Action Plans

Let me state this once again. THE KEY TO THE SUCCESS OF THE ENTIRE STRATEGIC PLAN LIES IN THE SUCCESSFUL IDENTIFICATION AND IMPLEMENTATION OF YOUR QUARTERLY ACTION PLANS. Action Planning is also the hardest part of the planning process because it requires the most active thought. The dreams and wishes that are committed to paper in the Vision and Mission Statements involve understanding the expectations of all of the participants and the synergy of those ideas into WHAT CAN BE. The Strategies define WHAT NEED TO CHANGE. The long term goal setting define HOW MUCH NEEDS TO CHANGE EACH YEAR in order to get to the desired end point. The Annual Objectives are simply the lowest level of those long term goals. The Action Plans are different. They will stretch your imagination to determine exactly what must be done each quarter of next year in order to accomplish the annual objective. And that activity is not a numerical result desired (that’s left to the Benchmarks). The Action Plan is the creation of the activities that the department or individual must perform in each quarter in order to accomplish the Objective for the year. Most of the time this involves different actions than is customary and usual in the agency. The individual, team or planning group must help each Objective Owner identify a set of possible action plans that would accomplish his/her objective if performed properly. It is up to the Objective Owner to choose the Action Plans that will most likely accomplish the desired objective. Many Objectives will carry the same Action Plan for each of the four quarters of the year. However, truly creative Objectives will need different Action Plans each quarter in order to accomplish the needed goal. Also, some Objectives require progressive steps in their implementation (i.e. the Objective of moving to a new location). Each quarter demands different Action Plans for those Objectives.

Monthly Benchmarks

Monthly Benchmarks are the Objective Owner’s way of keeping score. Action Plans are triggered in order to achieve annual objectives. The Action Plans are defined activities. In order to determine whether those activities are working the Objective Owner must identify the objective, realistic, measurable points that should be attained in each month of the year. Numerical objectives easily lend themselves to Monthly Benchmarking. For instance, if new business is expected to flow evenly during the year, the logical benchmark for your new business objective is one-twelfth of the annual objective. However, many objectives are not numerical. The Objective Owner’s goal is to identify at what stage of success the objective will be in each month of the year if the Action Plans are working properly.


Most insurance agencies in the United States still don’t budget. This is a mistake. Like the Benchmarks of your Objectives, a budget tells you on a monthly basis whether or not you are achieving the revenue and expense projections that you expected and that will yield your required year-end results. The agents who simply keep track of cash to determine whether they are generating sufficient cash to pay the bills are using their agencies to simply make a living. Their own compensation is just one of the bills (and usually the one that suffers of the cash flow is insufficient). What a way to run a business!

Most of an agency’s expenses are relatively fixed. An analysis of prior trends in most expense lines will give you sufficient data to project monthly and annual expense budgets for those lines. The preliminary budget should be created by the Financial Manager (or the owner when he is the ‘Jack of All Trades’) ahead of the Strategic Planning Session projecting both revenues and expenses in accordance with the historical trends of the agency adjusted for known changes for next year.

During the Planning Session, the Financial Manager will hear Objectives develop that will change the budgeted revenue expectations. The Objective Owners will identify Action Plans that will develop additional expenses in order to accomplish the desired Objectives. Those, too, must change the budget. At the conclusion of the Planning process, the Financial Manager should have an annual budget identifying all revenue and expenses expected. The budget should be projected by month in order to report the results of the month and year-to-date against budget at the Monthly Management Meeting.

Monthly Management Meeting

The Plans of most companies fail because they are considered planning documents, not working guidelines for the year. The way to avoid that stigma in your organization is to use the Planning Document as your management tool during the year. As early as practicable in each month after January, you should have a Monthly Management Meeting including all of the people who have Objectives in the Plan. Each Objective Owner should report his/her Objective Benchmark and whether or not it was achieved. No rationale at all is necessary if the Benchmark is missed by 10% (in either direction). However, deviations outside of that 10% must be explained and, if necessary, the Objective Owner should ‘fine tune’ the Action Plan if it is not working well enough to accomplish the desired result. Caution – don’t fine tune an action plan if the problem was that the action plan was simply not implemented. If the Plan becomes the agency’s working document there should be no excuse for simply not doing it. One of the benefits of the Management Meeting is that it is self-policing. No one likes to state their failure to accomplish an Objective that they created and to which they committed as their part of the overall success of the organization. If this happens, please remember that the Management Meeting is not a forum to criticize. Adopt the principle of Public Acclaim and Private Criticism within your organization. Many a creative and comprehensive a Plan has gone down in flames because of public criticism and a punitive response by ownership to honesty by the Objective Owners.

The planning process can be creative and exciting for an agency’s owners and for its employees. It will be a morale booster if the employees see the owners and managers getting behind progressive activities to make the organization better. Most employees would like nothing better than to be proud of their company and their job. Much of the dissatisfaction in the workplace today results, not from a lack of hard work and commitment, but from a lack of understanding and communications between owners and employees. The Strategic Planning process that we have explained here can bring an agency together and can regain the enjoyment and excitement in an organization.

Please call us if you would like help organizing your Strategic Planning process. We have assisted agencies with as few as five employees and as many as 250 develop an on-going Strategic Planning cycle.