Marketing Agency of the Month

Shared vision = Shared success

Employee ownership fuels growth as everyone participates

By Dennis H. Pillsbury

You don't have to speak with Rusty Reid for very long before you discover what has made Higginbotham & Associates, Fort Worth, Texas, such a success. There are two components that pepper most of his sentences—one is the word "we," and the phrase "clients wanted help with…" is the other.

That is the type of thinking that has transformed the one-man agency founded by Paul Higginbotham in 1948 to one of the largest independent agencies in the country.

Rusty came into the agency in 1986 from American General when he was recruited by Bill Stroud. Bill had purchased the agency in the 1960s from his aunt, who inherited it after her husband, Paul, passed away. Rusty was the agency's 12th employee.

Today, Rusty serves as president and CEO of an agency that employs 460 people.

Everyone's an owner 

Three years later in 1989, Rusty faced an interesting situation. Bill was ready to sell.

"I had been at places where the superstars left when new ownership came in and we wanted to avoid that type of situation," Rusty remembers. "We wanted to establish a place where everyone was part of the team and benefited from the success of the agency. The question was how.

"The more we learned about an ESOP, the more convinced we were that it was the way to go. The greatest attraction was employee ownership. What better way to come up with a shared vision than to have an arrangement where that meant shared success? And that's the route we took. It's definitely been one of the most important pillars underpinning our growth."

Rusty continues by pointing to another key part of the agency strategy: listening to clients. "The year 1989 turned out to be a very busy one," he notes. "We were setting up the ESOP and we also found out from many of our clients that they needed help with employee benefits, so we started searching for someone with the expertise to help us establish an employee benefits department. We found and hired Jim Hubbard from New York Life followed by Michael Parks, who had been at C.M. Alliance in life and health sales. Michael is a managing director and also serves as chief operating officer for employee benefits."

Michael says: "We immediately set out establishing ourselves as experts in employee benefits by slowly adding people who could provide help to clients that wanted to establish wellness programs or Section 125 plans. Our goal was to have a back-up team for our producers that could provide assistance with any employee benefits problem or concern. Basically, it was one person out front, with a whole army behind. This team approach helped to separate us from the pack by letting us provide ongoing service to our clients. It's not what happens at renewal time that determines who wins; it's all the things you do throughout the year. This is especially important today when we face more competitors on the benefits side than on the property/casualty side.

"And we haven't stopped adding expertise as the needs arise," Michael continues. "This year, we hired a lawyer to help us communicate externally and internally about the changes in health care. The situation is chaotic, but where there is chaos, there is opportunity."

Rusty picks up by noting how "interesting this business is. By placing our client's needs first, we have grown in directions we never would have anticipated when we started on this adventure. Employee benefits was added to help our property/casualty clients, but today is one of the largest contributors to our revenue stream." (At the end of 2009, Higginbotham & Associates was ranked as the 41st largest broker in the country by Business Insurance with total revenue of nearly $55 million—with 58% of that coming from employee benefits. The agency enjoyed 13.7% growth that year, which boosted its position from 52nd in 2008.)

A retention investment

Rusty continues: "This business is not a sprint, it's a marathon. We have to keep putting in the miles, helping our clients wherever they need help and trying to stay ahead of the competition so we're in contention when we approach the finish line. To us, that means that we have to be the single source solution for our clients. We want them to turn to us whenever they have a risk management concern in the broadest context of that phrase.

"We want to surround clients with the expertise to help them control the cost of risk."

Managing Director Chris Rooker, CIC, chief operating officer-commercial insurance, says, "We view risk management services as a value-added to our clients that is an investment in retention. We truly believe that our producers have a better chance of success when this is our basic philosophy. That doesn't mean that everybody gets everything. We have a needs-based service model that allocates resources according to the client's risk management needs, as well as taking into account the size and scale of the client.

"Over the years," Chris continues, "our producers have developed areas of expertise based on their own interests and successes. It's only natural that this occurs as the producer matures and begins to grow through referral business. Referrals start coming in from a particular type of business and, before you know it, you've found your niche.

"We have developed an expertise in a number of niches, including financial institutions, construction, health care, energy and life sciences. As these niches grow," Chris notes, "we develop support people for that segment, as well as creating an 'A' team of carriers that have shown an interest and expertise in the niche area."

Rusty adds, "We encourage our producers to build centers of influence in the community. It's a great thing for us in developing potential new clients and also provides us with a way to give back to the community. We're now in most of the larger metropolitan areas in Texas and have developed important community relationships in each of those cities.

"While this approach provides us with a mechanism to develop new clients, we also understand that our current clients often represent our best opportunity for growth. We are very committed to cross-selling and this has been an area where the ESOP really has paid off. Everyone recognizes that when we increase the business from a current account, everyone wins. Our property/casualty producers will bring along a benefits person if there is an opportunity and vice versa.

"We also understand that the more pieces of business we have with a client, the greater is the chance that we will never lose that client. Our goal is to always have a retention rate in the high 90s and we've achieved that every year. To show that we truly view retention as important, we pay the same for renewal and new business."

Rusty continues by noting, "We as a franchise are committed to investing in bringing new blood into the firm. We see that not just as a tool for perpetuation but also as a way to ensure that we are continually bringing new 'new' business into the agency as they establish new centers of influence in their own areas of interest.

"Naturally, we test and interview very carefully to see that the new hires have the talents and abilities they will need to succeed. Perhaps the most important test, however, is what we call the Thanksgiving dinner test where we get together with the applicant and determine whether we would want to spend Thanksgiving dinner with him or her. If the answer is 'yes,' then there's a good chance that person will fit into our culture and will enjoy a career that benefits all parties.

"The final ingredient is our corporate development team," Rusty says. "They're the people who make sure that the outside world knows Higginbotham as a place with which they would like to do business. They promote what we do as a firm through newsletters and symposia that are offered to clients and potential clients. They will set up appointments for producers.

"They also keep in touch with clients to find out if they are experiencing any 'pain' so we can immediately send out the best team to help them deal with the area identified. We have built up a very large database that allows us to identify solutions when clients experience 'pain' similar to that experienced by other clients. These days, one of the significant areas of 'pain' has been health care, which is why we added the attorney and are working daily to help people through the changes that are occurring."

Rusty concludes: "Our original goal was to become the largest broker in our market and we've succeeded. But large does not mean best. We've amended our goal. We want to be viewed as the best, not the largest. We want to be the best employer, the best advocate for our clients, the best partner for our carriers, and the best citizen in the communities we serve.

"How do we accomplish that?

"By exceeding expectations every day.

"In 2010, we established the Higginbotham Community Fund to make certain that, in addition to all the community work done by our employees, we as an organization would always contribute to our communities."

"Our most important asset goes down the elevator every day. Thanks to our employee ownership, that asset is recognized every day. We also operate on a basis of full disclosure and transparency so that every employee knows where we stand. When it all comes down to it, success is simple: If you take care of your employees, you will have a great business."

Rough Notes is pleased to recognize Higginbotham & Associates as one of the best by naming them our Marketing Agency of the Month.