Thomas Dietz, president and CEO of SKS Insurance and Risk Services, believes that expanding ownership is the first step in modernizing an agency.
Thomas Dietz, president and CEO of SKS Insurance and Risk Services, believes that expanding ownership is the first step in modernizing an agency.
Reinventing an agency is always a difficult task. This successful organizational change involves keeping what is already working and building on that base to create a "new," well-established agency that everyone still respects and trusts. And when you're 125 years old, that serves to add to the problem. But, as we've all learned in this ever-changing marketplace, the status quo no longer works.
Schiff-Kreidler-Shell Insurance and Risk Services (SKS) in Cincinnati, Ohio, traces its roots back to 1876 and should be happily plodding along, enjoying its mature status. But that's not the way agencies survive today. Instead, SKS has undergone a number of major changes so that it can provide a complete package of risk transfer solutions to its customers.
The first step was taken some 13 years ago when then President Robert Schiff divested ownership of the agency to its employees. Today, the agency has 20 employee owners, none of whom owns more than 15%. Tom Dietz is president and CEO of SKS, and Schiff is chairman. We talked with Dietz about the agency's success and its plans for the future.
SKS has 85 employees and an annual property/casualty premium of $51 million. The company brings in $30.5 million in premiums from life and benefits. Its goal for this year was to hit $10 million in revenue. (It should be noted that Ohio has a monopolistic workers compensation fund, so this has been accomplished without any compensation premium.) "Our annual revenue will exceed that amount," Dietz says. "We're looking to hit $15 million in five years." Eighty percent of the business comes from commercial accounts. In the last couple of years, Dietz notes, growth has come from the employee benefits side. "In 1997, we wrote about $14 million in premium. On the property/casualty side, we worked diligently to grow by 8% in 1998 and 1999."
Vice President Donald Riggin was brought on board to develop the alternative risk transfer (ART) department.
Planning for the future
The first step in "modernizing" the agency was the expansion of ownership. "Not only does this give employees a personal stake in the agency's success, but it also helps ensure that we will remain independent," Dietz explains. "Too often, agencies with only a few owners end up in a position where it is financially difficult to transfer ownership to the next generation." There also are times when the next generation may not be interested in assuming ownership. "We're looking at setting up a perpetuation plan that will build on this so that shares can be provided to the next generation. We're also working on a leadership succession plan to work in concert with the ownership perpetuation plan. In short, we want to set up a plan that will have this agency around for another 125 years," Dietz says.
The next step, Dietz says, was to determine where SKS was going and how it was going to get there. Last year, the agency codified a strategic plan developed in conjunction with a local consultant. Patti Holmes, president of Holmes Training and Development, is a specialist in strategic planning and leadership coaching. "The strategic planning process was something we'd never done before. It helped us to focus on our strengths and opportunities for growth. In many ways, we wound up writing down what we already were practicing. The core values by which we always lived--integrity, respect, professionalism, teamwork, enthusiasm and giving back to the community--remained a key part of the plan. But we also recognized that we needed to structure the agency around those values in a way that would make us more competitive in the current environment. We identified nine critical success factors to reach our vision. Teams have been established to identify activities and tasks to accomplish these goals. It isn't enough to be a top-notch agency. We had to make certain that our employees, customers and potential customers knew that as well. We are committed to demonstrating our core values, and we had to make certain that we were ready to provide a complete array of risk transfer products to our clients."
And that meant going beyond insurance for those clients who needed or wanted an alternative. "Because we have a large number of construction risks, we set up a separate surety department," says Dietz. "We also established a separate loss control department. Right now, we provide that service, but we're trying to determine how to convert that to fee-for-service in cases where utilization is high. We've also started an alternative risk transfer (ART) department and brought in Don Riggin, CPCU, ARM, to set up the department. Don had helped us with a large construction wrap-up program with one of our contractors, and we were impressed by his knowledge and sensitivity to client needs.
"The ART department really is an investment in the future," Dietz continues. "It's harder to sell than traditional insurance, especially in a soft market; but with the market changing, we're pretty sure this is an investment that will pay off. Don's already working with one of our large accounts on a captive."
SKS also is a member of Assurex International. Alvin Roehr, executive vice president, says, "That's been a real help to us in working with clients that have overseas operations. And we believe it will become even more important in the future. It puts us on an equal footing with the big guys when we deal with large, international clients."
Hiring a sales manager
Another important step in developing a consistent structure was hiring a sales manager, Dutch Egbers. "Sales management was my responsibility, along with a number of others," Dietz points out. "But we determined we needed someone to focus solely on coaching and encouraging our producers. It really was tough bringing in someone who was not expected to generate any revenue. That was a big step for us, but we needed someone who would help establish credible goals for our sales people and make certain they were on track. We're very strongly focused on writing business," Dietz adds. "We have a sales meeting every Tuesday. And with Dutch in place, we can have greater mentoring of our sales staff and more effective accountability."
Dietz continues: "Last year we had a lot of opportunities to write different programs, including a warranty program and a pollution program. The agency has a car dealer program that's been very successful. The sales manager position allows us to take advantage of these opportunities when they make sense for us. Dutch can sit back and look at a program and can organize us to take full advantage of it if it's one that fits."
The agency also kicked off a speaker series this past June. Each producer has the opportunity to invite two clients to the Metropolitan Club for breakfast and to hear a top-notch speaker. Topics include international insurance. Another will feature a motivational speaker who discusses leadership, and a third topic currently scheduled will focus on cyber-liability. "This is just another way to provide a value-added service to our clients," says Dietz.
Dietz concludes by pointing out that "we were a good agency to begin with, but we recognized that we needed to take it to the next level. We're the largest independently owned agency in the area, and we want to stay that way."
We're certain SKS will be around for the next 125 years. "With a commitment to our core values, a living, breathing and working strategic plan and greater involvement and decision-making from our employees, we are truly committed to building ownership," says Dietz. "This, in turn, will build loyalty and commitment from both our employees and our clients. The only way you can grow is if you change!"
With a rich tradition, Schiff-Kreidler-Shell continues to build on a strong track record and to change with the times to help its clients succeed in the 21st century and beyond. *