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CONSISTENCY—THE HOLY GRAIL

CONSISTENCY—THE HOLY GRAIL

February 01
15:31 2022

CONSISTENCY—THE HOLY GRAIL

The relationship between consistency and efficiency

The most important safeguards of

consistency are the establishment of metrics

for performance and auditing for compliance.

Inside Matters

By Mary M. Belka, CPCU, ARM, ARe, RPLU, CIC, CPIW


While it is true that procedures are an important component … consistency starts at the top.

There is no shortage of operational challenges for most agencies. Many agency leaders reach out to consultants along the way, generally when they find themselves unable to operate efficiently. Most identify the need for “procedures” as primary; others cite turnover, technology, training and education, or some combination of components as their biggest barrier to success.

The symptom most often mentioned is that of inconsistency. Agency owners understand that it is not possible to be efficient without consistency; yet, they struggle to create and maintain an environment where consistency is the norm.

Most agencies want to start from the bottom up—with procedures—in order to create the elusive goal of agency-wide operational consistency. They mistakenly believe (and hope) that simply having procedures will magically create efficiency and consistency.

While it is true that procedures are an important component of consistent agency operations, the fact is, like almost everything, the genesis for consistency starts at the top. Procedures are actually one of the last steps in creating operational efficiency—there are critical building blocks that need to come first for procedures to make a difference.

Buying or creating procedures and hoping that will somehow lead to efficiency does not make it so. Rick Page restates the title of his sales book by saying, “Hope is not a strategy.” It applies equally to operations.

Over time, I’ve observed seven primary components that need to be in place to build a framework that can increase the probability for an agency to operate with maximum consistency. They are presented here in the particular order in which they should be addressed.

1. Strategic plan. I know I sound like a broken record—but planning matters. A clear plan provides a singular guide to all agency leaders and associates, outlining the who, what, when, where, why, and how of the agency’s operations. Specific goals—at a minimum, growth, retention, and profitability—should be included. Individual producer and account manager goals should follow, based on global agency goals.

Each individual should understand what his or her contribution needs to be for the agency to reach its stated objectives. This ensures that all are on the same page. The plan serves as the foundation for consistency to become a way of life for the agency. Agency owners’ commitment to the plan helps create a consistent model for associates.

2. Target client. This is a critical component of any strategic plan. It is not possible to be all things to all people—one of the roots of inconsistency. Specific characteristics of the focused, target client for each discipline (personal lines, commercial lines, benefits, etc.) provide a roadmap for producers to write those accounts the agency has identified as its focus. Alignment with carriers whose appetites match the agency target client increases the likelihood that consistency can become a reality.

The more detailed and specific the characteristics, the better. Producers and account managers alike can develop laser-focused expertise based on the specific needs of their target clients. Keeping exceptions to a minimum creates an environment where consistency can thrive.

Added benefits are increased efficiency and lower E&O (errors and omissions) exposure, as the need to access E&S (excess and surplus lines) markets is reduced when the agency aligns its focus with standard carrier appetites as much as possible.

While it is true that procedures

are an important component …

consistency starts at the top.

3. Business model. The lack of a clear business model is arguably the greatest barrier to consistency. A clear organizational structure, combined with specific position descriptions, defines who does what and outlines reporting relationships. Together, these underpin the procedures an agency ultimately wants to implement.

Properly written and applied, they create clarity and, perhaps most important, accountability, without which consistency remains a concept, rather than reality.

4. Operations management. This is a critical component of the business model. It’s just a fact—someone has to be responsible for creating and maintaining operational consistency.

Those agencies with competent, intentional operations management have the best opportunity to achieve an environment of consistency. The operations manager is responsible for recruiting, hiring, training, and education of staff; implementation of technology solutions; and creating procedures and performance metrics. Most important, operations managers audit for compliance, which validates what is working—and what may need improvement.

This is a differentiating factor that makes it possible for agencies to grow and prosper—because someone is charged with ensuring that everyone operates in an intentional, consistent way.

5. Technology. This category is broad in scope, and a major source of operational inconsistency. Agencies generally do not implement technology solutions in a consistent way. Training is often less than optimal, and use of automation from person to person is inconsistent. It is not unusual, even in a small agency, to have as many ways of doing the same job as there are staff members.

Determining the best way to implement new technology and integrating it with existing software, procedures, and devices, requires a global view. If employees are left to their own interpretation of how to use technology, consistency will suffer. The average account manager uses 14 to 20 different software tools on a daily basis, just to do the basic job. And they need to understand risk management and insurance concepts as well!

The agency must provide the training and operational oversight to make certain things are done in the same way, for the best result.

6. Procedures. These are a critical factor, yet they are second to last on the list by design. Procedures cannot create consistency on their own. It’s hard to build procedures without the foundation and focus that underpins them—the framework is mission critical.

Note: E&O carriers now invoke an “invariability” standard—not just one of consistency. The question has become, “Are your procedures invariable?” The answer can be yes only if they are codified, mandatory, and audited for compliance—which just doesn’t happen on its own. Agency owners must be committed to setting the example.

Rule number one: No one is exempt from procedures. Rule number two: Exceptions to procedures undermine consistency and must be kept to an absolute minimum.

7. Metrics and auditing. The most important safeguards of consistency are the establishment of metrics for performance and auditing for compliance. These are critical functions of operations management and should not be left strictly to “peer” audits, though these can be part of an effective training and development plan, handled correctly.

Regular, frequent review of reports, documentation, client files, procedures, and system use are invaluable to achieving high levels of overall efficiency. Some components are reviewed daily, weekly, or monthly; quarterly is simply not often enough to ensure the best result when it comes to procedures and technology used daily.

Final thoughts

Most agencies have a desire to operate effectively. Yet, not all are willing to make the commitment of time and resources to make it happen. Both the process and the result can be rewarding—and it can be done! There are advantages to be earned besides just consistency in applying the process. For instance:

Hybrid workplace flexibility. Attracting future employees will require a blended approach to working remotely and as teams. It will be more important than ever to operate consistently, in order to maintain high levels of efficiency and profitability, in this brave new world. Operations management and all aspects of procedures will be more important than ever before in maintaining profitability and serving clients in the best possible ways.

Reduced E&O exposure. Consistency isn’t just about efficiency; it is also a key component to avoiding E&O pitfalls. Again, invariability is now the procedures standard.

Performance-based compensation. Employing all of the steps outlined above also creates a natural path toward performance-based compensation for servicing staff; the same metrics apply. This can help in recruiting and retaining the best employees.

Increased growth, retention, and profitability. Aren’t we back at the beginning? Achieving your stated, established strategic goals is the primary reason to get thing operating consistently.

The author

Mary M. Belka is owner and CEO of Eisenhart Consulting Group, Inc., providing management and operations consulting to the insurance industry. She also is an endorsed agency E&O auditor for Swiss Re/Westport. A graduate of the University of Nebraska, Mary holds the CPCU, ARM, ARe, RPLU, CIC, and CPIW designations.

 

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