The Power of Passionate Leadership

Following the blueprint to install Manage processes. Lead People. in your agency

By Tom Baker

“Manage processes – Lead people” is not an idea I picked up at the airport bookshop on the way to an agency. I have passionately embraced it for the better of 45 years. While new fads came and went, driven by leaders wanting to find the next big thing, Manage Processes. Lead people. continues to rely on a relational approach to business. Rather than trying to “manage” the actions of people you have no control over, this approach relies on engaging a bus full of motivated people with a well-planned map of how your agency does business. Another way to describe motivated people is “Job Owners” instead of “Job Renters.”

The blueprint for passionate leadership begins with the emotional commitment of management and staff to create a culture that is not a goal to live up to but a vision to be lived into. It is a long-term way of life worthy of my passion and yours.

The most effective tool for implementing Manage processes. Lead people. is a talent management system. While talent management systems are not standard in the insurance industry, it is a $7B industry expected to grow to $18B in the next ten years. Working with Symphony, the only talent management system for the insurance industry, I’ve learned several important lessons:

• The wrong compensation plan can do more harm than good.
• The average compensation plan encourages average behavior because it creates individual kingdoms of self-interest rather than a team culture of cooperation and growth.
• Trying to get staff buy-in to management’s ideas does not work as effectively as learning what is important to staff, then aligning change so the customer (your team) believes change is their idea.
• People don’t resist change. They resist being changed. (Peter Senge)
• You can’t inspire a hungry person. Physiological and safety needs such as having a secure job, emotionally safe workplace and consistent standards for how you do business must be met before inspiration and engagement can begin.

With the foundation laid, let’s explore how to use a blueprint to create a conduit to implement, “Manage Processes. Lead people.” with a talent management system like Symphony. The global Talent Management Software market is valued at $7B and is estimated to grow to $13.5B by 2028.

STEP 1: Vision Management

The first step to understanding your Vision is understanding the definition of “Vision,” “Mission,” and “Goal.” A great example is Gene Roddenberry’s Stark Trek.

• The VISION for the show is a world where poverty, war, and disease are eliminated. Audiences want to be a part of this grand Vision, even though society will never become that world. Who wouldn’t want to be part of that Vision? Star Fleet is in the process of “becoming” this Vision.
• The MISSION is “These are the voyages of the Starship Enterprise; its five-year mission to explore strange new worlds, to seek out new life and new civilization, to boldly go where no one has gone before.” This is what the USS Enterprise “does” as part of Star Fleet.
• GOALS are measurable milestones such as the number of planets visited in a year or new civilizations to discover.

In your agency, VISION describes “destinations,” identifying who you want to become in five areas:

1. Community Value
   If your agency went out of business, you would be missed because of the specific contributions you make to your neighbors and businesses.
2. Culture
   How do you want your staff to describe what it is like working with your agency? An employee with Zappos is quoted as saying, “I am a better person for having worked at Zappos.”
3. Customer Service
   Customer service is the “anti” to remaining in the game, but it is not enough to achieve your Vision. Seth Godin believes, “The purpose of customer service is to change how the customer feels.” What are specific strategies for establishing a customer service experience aligned with your Vision?
4. Agency Growth
   Growth is more than the sum of the numbers in weekly deposits. Sustainable growth and development follow the axiom, “Anything alive grows.” The question is not so much, “How do I grow” as it is, “How do I make sure our culture is alive?” Destination ideas for Agency Growth can include growth by acquisition, writing package accounts, and a genuine belief in value over price.
5. Staff Development
   What strategies can you implement in which staff feels and believes they are valued?

These destinations become the reason for all KPIs [Key Performance Indicators] and change. You are not fixing problems but pursuing an ideal you will never achieve.

STEP 2: Compensation Management

The next step in our blueprint is building a compensation plan that brings you closer to your Vision.

A well-rounded compensation plan is not a two-dimensional fixture defined simply as hourly/salary or commission. A compensation plan is not the way to get bad people to do the right things. A compensation plan does not rely on salary/hourly + bonus. A compensation plan establishes what staff is committed to delivering, then establishes the positive and negative consequences of doing their job. Jim Collins states, “The purpose of a compensation plan is not getting the wrong people doing the right things, but helping you to get the right people on the bus and keeping them there.“

An effective results-based compensation should apply to everyone in the agency, including all support staff and customer-facing positions. No one is left out. The three components of an effective results-based compensation plan are:

1. Hourly/Salary Income
   A good guideline is for Hourly/Salary Income to be around 90 percent of a team member’s total compensation plan.
2. Performance Income
   Performance Income is based on the percentage of KPI goals each team member achieves. A good guideline is for Performance Income to be around four percent of a team member’s total compensation package.

Each KPI is assigned a Goal and a Max Score. The total Max Score is 100.

Each team member’s performance score is calculated by determining the percentage of the goal achieved during a reporting period. For example, let’s say the goal for Asking for Google Reviews is 50, and the Max Score is 10. If the team member achieves 40 out of 50, that is 80% of the goal, so they receive 80% of the Max Score, which is 8.

Performance Income $1,000 can be based on a scale such as:

Score Range	Percentage of Performance Income	Performance Income Received
80 to 86	25%	$250
87 to 91	50%	$500
91 to 94	75%	$750
95 to 100	25%	$1,000

It’s important to emphasize to your staff that this is not a bonus plan. The staff’s job is to earn their Performance Income by achieving assigned KPI goals.

3. Revenue Sharing Income.
NOTE: Revenue Sharing does not apply to team members whose primary income is received from commission, such as Producers.

Unlike Profit Sharing, Revenue Sharing offers your team a portion of top-line agency income, including new business, renewals, fees, and any other income stream. A good guideline is for Revenue to be around four percent of a team member’s total compensation package.

The power of Revenue Sharing is its ability to bridge gaps between departments such that all team members must work together for everyone to receive their maximum compensation. The talent management system should provide a staff dashboard for easy access to personal performance and reporting on their compensation.

Revenue Sharing is earned when the agency achieves its revenue goal. Team members are assigned a Prime Commission Rate based on the amount of their Revenue Sharing Income. For example, if the agency goal is $1,209,990 and the team member’s revenue sharing income is $3,300, the Prime Commission Rate is $3,300/$1,209,990 = .273%.

Revenue sharing is paid when monthly revenue goals are achieved. In the example with Symphony, calculations are made automatically, including keeping up with past performance.

A results-based compensation plan is created and presented as a total package. When team members catch the Vision for everything in the whole package (Hourly/Salary, Performance, Revenue Sharing), they tend to do whatever is necessary not to lose what is theirs.

STEP 3: KPI Management

KPIs are the foundation of an effective results-based compensation plan. However, KPIs are not simply goals; they are habits that change people, not behavior. Correctly applied, KPIs can be used to lead staff from “Asking for Referrals” to “Getting Referrals” and finally, “Premium from Referrals.”

KPIs can also support culture and personal growth, including exercising twenty minutes a day three times a week on a treadmill in the agency, personal development such as learning a new skill, sending peer “thinking of you” cards to co-workers, and submitting ideas for the agency’s growth.

KPIs must apply to everyone in the agency, regardless of their position. A fantastic benefit of KPIs is the shot of dopamine each time we experience an achievement. Amazingly, all we must do for more of this powerful, natural pleasure drug is think about repeating past successes. This is why providing staff with a way to personally track their success in real-time is so important. Waiting for a year, quarter, or even a week to celebrate success strips KPIs of their power.

STEP 4: Performance Management

The most effective blueprint for growth establishes a relationship between management and staff based on careful “observation,” not “gotcha” watching.

Each of us wants the feeling of safety and security knowing the people entrusted with our care understands our world and care enough to get involved by observing our behavior. Studies as far back as the 1092s (The Hawthorne Effect) reveal that individual behaviors change when people know they are being observed. It is important to note that “observed” does not mean “watched.” Your team needs, deserves and desires to feel you understand their world and are in touch with the stresses and demands of their day. The result? Job owners. If staff feels they are being watched for the ammunition you might use against them, you produce Job Renters.

Owners face the modern challenge of having so much technology available they don’t have time to interpret data and understand staff’s needs and challenges. The most effective way to maximize observation is meeting weekly with each team member not to discuss what they did right or wrong, but to explore ways to improve their personal and professional growth. According to a Gallup poll, “employees whose managers hold regular meetings with them are almost three times as likely to be engaged as employees whose managers do not hold regular meetings with them.”

With a talent management system, observation takes place in two ways:

1. Admin Dashboard

The admin dashboard should provide easy access for management to invest about fifteen minutes each morning to understand team members’ achievements, failings, and challenges. Observing is to have the knowledge and understanding needed to coach, encourage, and mentor each team member.

A talent management system empowers owners and managers to invest fifteen minutes daily to view performance metrics, then communicate with each employee individually or corporately for recognition and accountability.

Staff Dashboard

Manage processes. Lead people. relies on team members who want to do their job. These individuals require real-time data and feedback to take charge of their lives and professional growth.

A Staff Dashboard is essential for staff to self-monitor their progress and be able to respond to agency management’s coaching. The Staff Dashboard should provide daily updates so they can understand their performance without running reports. The staff dashboard should also keep Performance and Revenue Sharing income readably available for staff to know what they need to do so they don’t lose money that is theirs.

It’s essential to use the agency’s agency management system to enter data in the talent management system to reduce duplicating efforts.

STEP 5: Compliance Management

Compliance Management is often challenging because team members say they don’t have time to change. They are just too busy. This is where you go back to Vision. It is not that they are doing things the “wrong way.” It is simply that your new way of business is best able to lead towards pursuing their Vision and Mission.

Compliance Reviews are recommended for aligning compensation with how the agency does business. A review is a form anyone in the agency who understands your processes and agency management system can complete. The Compliance Review is a pass/fail audit. For example, if an audit item is to have no misspelled words in any written communication with a customer, the auditor would locate an activity with an attachment and then proof the attachment. If there are 1,000 words in the email and one word is misspelled, it fails.

The KPI for Compliance Review might have a Max Score of 10. If ten items are audited, and nine passes with one fail, that is a score of 90.

The most effective blueprints are simple and passion-driven. Success can be challenging but should never be complicated.

My wife and I recently returned from Peru, where I had a remarkable experience. At the end of a lovely dinner, we added a tip for our server’s exceptional service. One problem. He would not accept it. He said, “There is no need. I’m just doing the job I love.” We encountered this passion everywhere we went. Not only did we receive fantastic customer experiences, but we also met people with no expectation of reward other than the satisfaction of doing their job. 

The most amazing experience was on the Hiram Bingham train. We had no warning, no expectation for what was to come at the end of our evening. As we departed the train, the entire staff was lined up on both sides of the exit, clapping and cheering for us, their customers. That feeling is hard to describe and impossible to forget. That’s a culture I want for my business, whatever it might be.

I recounted the story with a friend. He had an interesting comment. “But that’s their culture. That would not work in the United States.” My friend is right; it was their culture. He was wrong that it could not happen in our country. It could happen if – we are willing to shift our focus on why and how we do business.

Culture drives change and changes everything. Lasting change does not rely on doing things perfectly but passionately. Create the culture. Hire people who want your culture. Passionately make culture the highest priority every day for your agency. Passionately follow the blueprint, and you will always have a living, growing agency.

Tom is the LEADER of Comp21 and the developer of SYMPHONY, software that manages compensation in accordance with results desired.

Tom’s specialty is strategically identifying strengths and weaknesses in staffing, agency culture, compensation, and workflow to create simple, practical plans for personal and professional growth. During his 20 years as a marriage and family counselor and leadership coach, he discovered getting people to do the “right ” thing is neither productive nor practical. Tom brought his counseling model, “Manage processes. Lead people.” to the insurance industry in 2003. Since then, Tom has worked with both independent and captive agencies. He was the Senior Editor of The View, a monthly newsletter with a total readership of over 8,000 insurance professionals, and a monthly contributor for Agent and Broker magazine from 2006 to 2008. Tom is also the founder of Comp21, introducing the first talent management system for the insurance industry.