061 – Five Indicators of an Insurance Agency’s Well-Being

FIVE INDICATORS OF AN INSURANCE AGENCY’S WELL-BEING – EPISODE 61

In this episode of The Digital Broker, Ryan Deeds and Eric Wistrand list the five questions you should ask to assess the state of an agency’s operations. By listening to this episode, you will learn:

  • How seemingly small details like compensation structures reveal a lot about an agency’s attitude toward standardization
  • How your workflow shapes the role definition of your employees
  • What a change management strategy ought to look like, and why your agency needs one
  • How you can streamline communication by choosing the right platforms
  • How the human resources department can prepare employees to make fewer mistakes and become better managers

Sherlock Holmes was famously capable of telling a great deal about a person’s well-being by a single detail of that person’s appearance. Holmes, of course, is fictional, and so is his outsized intuition. But what if you could tell a lot about an insurance agency’s well-being by looking at a few particulars alone? What would those particulars be?

That’s the topic of this week’s conversation. It began when Ryan Deeds, a data sleuth in his own way, kept running into a pattern: agencies that have uneven compensation structures tend to be more operationally dysfunctional than agencies whose compensation structures are more standardized.

As with Holmes, the reason is obvious after explanation: nonstandardized compensation structures are harder to calculate and pay out correctly, complicating operations of the accounting department. Also, nonstandardized compensation structures make producers nervous about whether they’re receiving their fair share. This results in stress, anxiety, and resentment, devastating everybody’s workflow. That’s the thing about operational excellence: it requires a lot of parts to work together in harmony, but a single piece of friction can halt the whole thing, exploding into various problems across the agency.

There is an upside. If we can trace so many problems to a root cause, we can identify the causes that are responsible for most problems. From there, we could develop a list of questions to help agencies get a quick idea of where they’re at operationally. Ryan brought the challenge over to his brilliant friend Eric Wistrand, another IT supernerd and a longtime friend of the Digital Broker. Together, they got the questions down to five.

The first question would be the one about compensation structures—are they standardized or uneven? This might seem like too specific a question, but that’s the point: looking at specific things forces you to consider the greater causes behind them. Asking about compensation structures will give you a general idea of the agency’s attitude toward standardization.

It is also wise to adopt a producer’s point of view for the next question: if you were a producer, would you want to work here? Never mind what you think they’d pay you, or how promising the niches look. Does it look like you would get on well with the account managers? Do they know what they’re supposed to do, what you need them to do, and what they need you to do in return, to deliver outstanding customer experiences as a team?

Those questions will bring out answers about the agency’s role definition, an absolutely critical component of operational maturity. Too many agencies suffer from a bad delineation of duties. This is driven by the best intentions sometimes—everybody wants to help out, so responsibilities overlap. The problem is that this model doesn’t scale and is inefficient. At best, you’re taking people away from work they’re supposed to be doing. At worst, you’re causing outright dysfunction. Employees forget what their responsibilities are, or they misunderstand, or they’re unhappy about them—at any rate, things don’t get done.

As with standardization, you can get a rough idea of an agency’s commitment to role definition by asking about something specific—in this case, see if the agent you’re talking to can name a process or a checklist tool that the agency uses in day-to-day operations. Since roles are defined by responsibilities, and responsibilities are defined by workflow procedures, an agency that’s serious about role definition will have tried to optimize employee workflow by baking some process, checklist, or product into it.

Even the best workflows, however, expire. Every agency can look forward to having to deal with change at some point, so there needs to be a question about it: does the agency have a change management strategy in place? Agencies that don’t are at risk. It is not enough to merely decide on a change; you have to see it through, and many agencies fail to do so. Driven by rush, excitement, or anxiety, they don’t give change nearly the amount of time and attention it deserves. Take it from a couple of IT veterans like Eric and Ryan: this happens with tech all the time. An executive will impose a new tool on the agency after hearing everyone else rave about it. Eight months later, nobody is using it. Must be the tool’s fault.

Not so fast. First of all, it doesn’t sound as if the executive took anybody else’s perspective into account when deciding to implement the tool. Worse, was there any plan to measure the implementation? All change requires some kind of metrics and a timeline for adoption. These are the things you think about when you design your change management strategy. Does the agency have one? Can it point to any ongoing or previous changes that were governed by it? Who decides on changes? All affected parties, or just a few people?

Make sure you put the answer in the context of the agency’s size. A smaller agency can perhaps afford to endow broad executive authority to a single person. A larger agency can’t because any change is likely to affect more people. The same is true of a communication strategy. It is not a top priority at a single-office agency whose 20 or so employees get to see each other every day, but it becomes a bigger deal at a larger agency that employs over a hundred people across several offices.

Internal communication is a huge part of operations and therefore open to streamlining. The thing about internal communication is that much of it is important and yet mundane—people merely need to see something and weigh in on whether it can go forward. That’s not the sort of thing you would expect to require countless, interminable email threads—and yet they keep happening, bogging down operations.

There are ways to streamline that sort of communication. Consider how Facebook does it. Suppose you post something, and when you check back in, you see you’ve gotten 33 Likes. That’s a pretty quick and straightforward way to know that those 33 people have looked at your post and approved of it in some way. They did not have to email you. They did not have to text or message you, or each other. Everybody can just tell.

Certain platforms, e.g., Slack, work much the same way and are designed specifically for office communication and productivity. The result is that employees spend less time on mundane communication and are free to have more thoughtful, meaningful, and creative conversations. Agencies that are serious about this will have thought about which communication platforms employees should use. Ask about them.

Much of what we’re talking about depends on the right training and onboarding processes. Employees have to be taught what to do before they can do it. Insufficient training and poor onboarding are some of the most common causes of operational friction because they lead to avoidable mistakes that create more work for everyone. Comprehensive training is superbly important—and by comprehensive, we mean beyond insurance-specific.

Everything we’ve talked about—standardization, role definition, change management, and communication—requires a combination of soft skills and managerial skills. Unfortunately, many agencies don’t take the trouble to impart these. Subject matter experts who stand out are typically put in charge of their peers, but then continue working exactly as before. This is unsustainable. An account manager who is put in charge of ten other account managers has to stop managing accounts and start managing people. Agencies that are serious about growing understand this, which is why, in conjunction with insurance-specific training, they offer courses on soft skills and managerial skills, or they will direct employees to outside resources that do, or they will chart some kind of managerial culture within the agency and stick to it.

Much of this is down to human resources. It’s their job to recruit eligible candidates and deliver resources for growth and development. So ask about it. Is the human resources department being empowered to do all those things? How does the agency recruit, what does the onboarding process look like, and what kind of resources are provided to employees?

In summary, here are the five questions:

  • Are your compensation structures standardized or uneven?
  • Are the roles among your staff clearly defined? Can you name a checklist or procedure in support of this?
  • Do you have a change management strategy in place, and can you describe it or point to any ongoing changes that are governed by it?
  • Which tools do employees use to streamline communication?
  • How does the human resources department recruit and develop employees? Does it offer courses on soft skills and managerial skills that go beyond insurance-specific skills?

You can put this questionnaire to yourself or to others. If you think you’re coming up short in any area, it doesn’t mean your agency is destined to fail, but it might mean you should look at what is going on and whether something is keeping your agency from operational excellence.

Keep in mind that you have resources to help you figure it out. This podcast is a great start. We’ve done multiple episodes on every part of the questionnaire. Want to rethink your compensation structures? We did an episode on those alone. Need a little help holding employees accountable to their roles? Consider checklists—we get you started on those here. Does the term “managerial culture” frighten you? Let’s demystify it—see our episodes about incentives and performance reviews. You can browse through all our episodes here. You are sure to find something that will help your agency.

Think we’re missing something? Have an idea for another episode, or more questions about something we did or didn’t talk about? Avail yourself of your other resource—the Digital Broker LinkedIn group, which we’ve created specifically to help insurance professionals connect and learn from each other.

Eric and Ryan are in the group, and all they did throughout this episode was ask you questions—come turn the tables on them.


Indio Technologies

Indio simplifies the insurance application process for brokers and their clients. We make it fast, easy, and E&O free, saving your agency time and money. The white-labeled platform comes pre-loaded with a library of 5,000+ digitally enhanced "smart" insurance forms and applications, a full e-signature solution, and secures document sharing. To date, thousands of brokers, big and small, use Indio to service more than 300,000 business clients. In total, Indio has raised over $30M in funding from Menlo Ventures, 8VC, NFP Ventures, 500 Startups, Merus Capital, and Compound.

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