"We're convinced that community involvement and doing well in business are intertwined."--Steve Brown

MARKETING AGENCY OF THE MONTH

DOING THE RIGHT THING
EVERY DAY

Philosophy leads to success for this
Sherman Oaks, California, agency

By Dennis H. Pillsbury

In 1961, Bernard (Bud) Brown entered into business with a family friend, George Hoffman, a well-respected, honorable man who did a little bit of everything, including real estate, life insurance, property/casualty insurance and various other services needed by the community. Bud focused on insurance and Hoffman Brown Company, Sherman Oaks, California, was born. George, who was in his mid-60s, retired a few years later, leaving Bud as the sole owner of the business.

Bud decided on a bold experiment that was grounded in his philosophy to "do the right thing every day and success will follow." With that basic tenet as his starting point, Bud--and later his son, Steve--built an agency that removed as many of the obstacles to achieving that goal as possible.

The result was a very different model than exists at many agencies. Everyone was salaried. Steve, who is the current president, explains: "My father and I both felt that our mission as an agency was to protect the financial well-being of the client. To accomplish this goal, we needed to provide the client with only the coverage he or she required. Salaried people sell only what is needed. There is no incentive to do otherwise. Of course, a vibrant business has to have sales, but our dream was to give such fine service that our clients would want to help us by providing referrals. And it's worked. Our only marketing strategy is to do the right thing every day."

The Hoffman Brown philosophy clearly attracts a special type of person who not only embraces these philosophies but also carries them forward. One who values a noncompetitive environment, almost a safe haven from the outside world. A place where turnover is low, excess profits are shared and social values are encouraged.

Today, Hoffman Brown has revenues of $7 million--60% commercial, 30% personal, and 10% benefits.

Learning from his dad

Steve originally decided not to go into the insurance business. "I had such a good relationship with my father, I didn't want to mess it up," he remembers. Instead, Steve entered the real estate business and did very well. He worked out of the insurance agency office. "It was a perfect arrangement. Dad and I were doing different kinds of work together."

"I quickly found out that insurance was perfect for me," Steve says. "It's a very social business where you're involved with clients all the time. You don't do many deals in the real estate business. Insurance just was better for me."

From the start, Bud hammered home the essentials for success. "I remember one of my first calls with my dad," Steve says. "We made a $200 sale. My dad pointed out that we'd just made $4,000, and I gave him a quizzical look. He told me we would be keeping that client for 20 years because of our service. Retention is the name of the game, and my dad understood that very well."

The HBC Feeds IV Committee worked with numerous companies, including Neutrogena, AIG, Celestial Seasonings, and a local forklift operator.

What was true then is true today. And it's true for the people in the agency as well as for clients. "We understand that our first responsi-bility is to provide everyone at the agency with an opportunity to be a business and personal success," Steve points out. "As far as I'm concerned, I'm at the bottom of the heap. I work for them; they don't work for me."

Treating people right

The agency has a staff of 40 people. "That means there are 40 families depending on this agency to do well. That's part of what drives me," Steve continues. "And these 40 people are responsible for taking care of our clients. If they're happy with their jobs, then their treatment of our clients will be better. It's as simple as that. So, we pay all our people well so that salary is never a concern." And it hasn't been.

"We stick with our people," Steve continues. "Everyone focuses on the client. Our whole philosophy is to be in touch, to talk to the people who buy our product. We don't go home with a single phone call unreturned. We all pitch in when one of our people is in need, because each person knows that we'll back him or her if there's an emergency or an illness."

In addition to providing good salaries, Hoffman Brown also rewards its people for their contributions to its success. "Five or six years ago, we reached a new level of financial success," Steve remembers. "We were doing phenomenally well. This was not because of one person. Everyone added value. We always gave a gift and a nice holiday party, but we wanted to do something special to show our people how much we appreciated their efforts. We had a Hawaiian theme for that year's holiday party. So, I went out and bought 40 coconuts, opened them up and put $1,500 in each one and then closed them back up. Bud and I handed them out at the end of the party and told each person this was their holiday gift. They knew they always got something nice and we knew they wouldn't just throw them away. In fact, there were stories how some people stopped their cars on the way home and cracked open their coconuts on the curb. Last year, each employee received in excess of $3,500."

HBC Feeds is truly a family event. HBC's Sandy Kreuzberger and nephew Nicholas Palumbo move boxes at the big event.

Steve continues: "Everybody told me that giving cash gifts was a bad idea, because people start to expect and rely on them as bonuses. But we collectively earned this money and it's only right that it be shared. Besides, all our employees know where we are financially throughout the year. They know if we're doing well, because we tell them. And they'll know if things aren't going quite so well. So there won't be any surprises."

As Steve mentioned earlier, he sees this as 40 families that are supporting the agency. And one year, he wanted to thank the family members for their support by giving something to the entire family. It was in the middle of the year and suddenly a truckload of boxes was delivered to the agency. Steve wasn't in (on purpose), so no one could ask what was going on. These boxes, containing all of the components for top-of-the-line desktop computers, sat in the middle of the office all day. Needless to say, employees were curious. Then Steve came in and shared the news that there was one for each employee to take home, for them and their family to enjoy. "I told them it was our way of thanking their families for their support,"

Hoffman Brown also pays for classes in "any activity that supports left brain or creative activity," Steve says. "My own passion is ceramics and pottery. That helps me every day. I want our people to be creative in the problem solving process and thought this was the best way to support them. Of course, we also pay for any type of business education."

Giving back

Another aspect of "doing the right thing" is giving back to the community. Hoffman Brown contributes significantly to charities in the community. Each year, the employees are involved in deciding what charities will be embraced. A number of years ago several members of the Hoffman Brown family faced the realities of breast cancer. Thankfully, the treatments were successful primarily due to early detection. "That year our philanthropic efforts went in the direction of cancer research. And it wasn't just in the form of contributions to the charity. At that time we encouraged our employees to get regular medical and cancer screening examinations." Steve adds: "We're convinced that community involvement and doing well in business are intertwined, especially in a service business like ours. We've always done a lot.

Hoffman Brown Company employees and family members were joined by employees and volunteers of Los Angeles Family Housing at this year's feeding program.

"Five years ago, at a holiday party, we discussed doing something to provide food for the needy at a time of the year when they are forgotten. The needy always get food at Thanksgiving or Christmas," he points out, "but they are left to fend for themselves during the rest of the year. That year, we bought enough food to package 500 boxes (around 5,000 pounds of food). One Saturday, all of our employees and their families joined together to pack the boxes. They also decided which charities would receive the food. Last year, a lot of the food went to families of soldiers who were fighting in Iraq, many of which were struggling to make ends meet."

This year, Hoffman Brown's feeding program provided more than 70,000 pounds of food. Their employees and family members were joined by the residents of Los Angeles Family Housing in packing the 2,200 boxes of food. Many others also contributed their time or provided items for distribution. Numerous companies, including Neutrogena, AIG and Celestial Seasonings contributed food, boxes, transportation and supplies with Hoffman Brown purchasing the balance. The forklift operator also donated his time.

Steve adds: "Our people unanimously voted to do this again. Working side by side with the people at L.A. Family Housing also added to the experience. Many participants working there are graduates of the Los Angeles Family Housing program, transitioning them from homelessness to active members of our society. Although they don't have much, they still want to help those who are less well off.

"Most people want to give," Steve maintains, "but they don't know how. If you give them an avenue to help, they will. That's why the Rough Notes Community Service Award is so important. (Hoffman Brown was a runner-up this year.) This program shows others how to get involved. There are many successful agencies that have a wonderful culture of giving, and they should be mentors to others."

Doing right by the companies

The final and equally important constituent in the success of Hoffman Brown is its insurance company partners. "Our carrier relationships have been excellent because the carriers know we don't put bad business on their books," Steve says. "There is no item that we have to write. Our decisions are based on what is right for the carrier and the client."

Steve continues: "That is why the independent agency system makes so much sense. It protects both the carriers and the clients. I've been extraordinarily lucky to wind up in this business and work alongside my father. It's been perfect for me and great for our firm. I'm proud to be part of the HBC Team."

Hoffman Brown's focus on "doing the right thing" has resulted in a successful agency which exemplifies the best of the independent agency system. We are pleased to honor them as our Marketing Agency of the Month. *

More than 70,000 pounds of food were packaged in 2,200 boxes for distribution to local charities.