Silo Busters
Here are four steps to breaking down silos piece
by piece while building a great team.
Fast Focus
- Silos, where employees do what’s best for themselves instead of the team, can kill a company.
- By creating situations that pit producers against each other, management encourages a silo mentality.
- Thematic goals can help break down silos and get everyone contributing to the team.
Here’s an easy question: Whenever has it been more important for your staff to work as a team? Obviously, the answer is “never.” If your staff does not pull together now in an environment that is sinking even well run businesses, what chance does your firm have?
The hard reality of today’s business climate is seen everywhere from the headlines to the bread lines. A smart businessperson doesn’t want to be in either. And for people managing their businesses for increased growth and profitability, even the most seasoned insurance professionals will find this the most challenging time in their careers.
Let’s keep this quiz simple: How do you leverage the excellence of your team in such an environment? Surprise—that’s not so easy after all. If I were teaching for CE credits, I’d take your answers in the form of a 2,000-word essay. Instead, let me tackle the question myself. Feel free to grade this column and send me your notations.
RECOGNIZING THE SILO
Let’s start with Team Building 101. A team is the sum of its parts, all working together. It sounds easy, but, of course, it is difficult to execute effectively and consistently across the organization. Further complicating that challenge is a situation I have observed many times—the existence of silos. Probably a familiar term to most of you, my definition is this: A silo exists when people who are supposed to work as a team create conflicts between themselves, their departments or their offices. Some describe this as office politics or turf wars, but it is nothing more than creating silos, whereby workers do what is best for themselves versus what is best for the team or the firm.
My experience—and I’m sure it is similar for a lot of readers—is that this type of siloing can be one of the most frustrating experiences in any organization. Silos can singlehandedly ruin morale, cause stress, create unnecessary turnover and erect barriers that make it impossible for people to achieve their objectives. In short, silos can destroy a company.
Most executives in my acquaintance who have struggled with this issue have a response along the lines of, “Why can’t people just get along?” They want to couch this as an interpersonal relationship situation. It is much more. The problem is what management is not doing, and that is creating an environment where the only measure of success can be achieved through cohesive teamwork.
The prospect of creating silos is much more likely in a service business like insurance than it would be in, say, a manufacturing firm. In our business there are individual employees (i.e., producers) who greatly affect firm success and are typically operating with an “eat what you kill” attitude. If this situation is endorsed and supported by management, team problems will be inevitable.
I’ve seen this in many types of service businesses, and I have owned a number of them. In service organizations, such as law, consulting and accounting firms, individual efforts generate revenue, and compensation is greatly tied to the success of the individual. In the agency model, the producer is often put at odds with other producers or with other members of the production team.
One of my favorite authors, Patrick Lencioni, is great at identifying and providing solutions to some of the most common business issues that inhibit companies from reaching their full potential. In his book The Five Dysfunctions of a Team (Jossey-Bass, 2002), he addresses the interpersonal and behavioral issues that prevent people from working together and forming a successful team. As we all know, in the insurance industry, where we have no “tangible” assets, a business cannot succeed without a cohesive leadership team.
Studying silos, I was once again drawn to Lencioni’s writing and his 2006 book, Silos, Politics and Turf Wars—a Leadership Fable (also published by Jossey-Bass). He talks about destroying the barriers that turn colleagues into competitors and identifies the causes and practical solutions.
HOW TO COMBAT SILOS
Lencioni identifies four components to combating silos: a thematic goal; a set of defining objectives; a set of ongoing standard operating objectives; and metrics. Let’s take a look at how each can support building an effective team rather than constructing silos.
Thematic goal. This is a single, qualitative focus that is shared by the entire leadership team and, ultimately, by the entire company. This type of goal applies only for a specified time period. It is not a long-term vision, nor is a tactical or measurable objective. The definition includes these key concepts:
- Single—it is the top priority and the most important theme.
- Qualitative—it is not a number, and it is not even specifically measurable. It is a desired accomplishment. Key words to use: improve, increase, grow, accelerate.
- Time-bound—the time frame to accomplish the top priority is limited. Typically, it is not more than a 12-month period.
- Shared—it is a goal that all members of an organization, whether sales, service or finance, must understand and buy into.
An example of a thematic goal for an insurance brokerage could be “increase organic growth.” This seems simple, but that is the point: The thematic goal should be so straightforward that all employees understand and can see how they can affect it. Many people confuse defining objectives with a thematic goal.
Defining objectives. Objectives defined in this process are nothing more than an “actionable context” from the leadership team so staff will understand what must be done to accomplish goals. These are the building blocks that serve to clarify exactly what is meant by the thematic goal. Defining objectives are qualitative and shared by the entire company. Again, these work best when they are fairly general. At this stage, assigning numbers and dates to defining objectives only limits employees who cannot understand how they can affect a specific number. Typically, leadership would name four to six defining objectives.
Examples of defining objectives that relate to the thematic goal of increasing organic growth could include:
- Hire additional producers.
- Establish a new sales training process.
- Improve sales productivity.
- Increase the cross-selling percentage.
Standard operating objectives. While pursuing the defining objectives, there will be other key objectives that management must focus on and monitor. Standard operating objectives often include such elements as revenue and expenses, client satisfaction, market share and productivity. The key to successfully defining standard operating objectives is to not focus too much on the numbers. If you dwell on items such as revenue growth or expense reduction, employees may lose focus on the thematic goal.
You also don’t want the thematic goal and defining objectives to appear to be just another “boy who cried wolf” situation because that could cause employees to think, “Here we go again. It is all about increasing revenue.”
You must find the balance, where employees know that increasing revenue is important in achieving the thematic goal but that increasing revenue alone is just one of the defining objectives and by itself cannot achieve the thematic goal.
Examples of standard operating objectives include:
- New business development goals
- Retention rates
- Hit and close ratios
- Referrals per week
- Increase in overall revenue.
Metrics. Once the thematic goal, defining objectives, and standard operating objectives have been established, the leadership team can begin to talk about measurement. How can you get employees to understand how their efforts affect the metrics? This is often the most challenging step. It is especially hard to do if employees do not understand how they fit into the bigger picture. In addition, metrics are not always quantifiable numbers; often they are dates by which a given activity will be completed.
Examples of metrics include:
- $200,000 of new business development per producer
- 97% retention ratio
- Three new production hires
- 80% close ratio
- $250,000 revenue per employee
- 20% increase in revenue for the year
- Loss ratios less than 40%.
MONITORING THE THEMATIC GOAL
Once this program is underway, you’re going to be asking yourself how to monitor its progress. You want to track actual achievements toward the thematic goal but also make sure that all employees remain engaged in the process and have truly bought into the goal. Strategic, effective meetings will help.
In another of Lencioni’s books, Death by Meeting, he outlines strategies for effective meetings that should be put into place here. Schedule weekly tactical meetings to gauge the progress and buy-in questions, but those meetings must be structured as action-based, quick hits. There should be a real-time agenda, where key staffers each give one-minute reports on their top priorities, which is followed by an assessment of progress made toward those priorities. You could use a simple numbering system, such as one equals significant progress, two equals some progress and three equals no progress or problems. This quick exercise should allow employees to quickly identify where their time should be spent. After the reports, the rest of the meeting should be limited to those items marked two or three depending upon the time allocated and number of issues to resolve.
ADD STRATEGY, VISION
When I work with clients to set up thematic goals, I’m often asked if this isn’t just another way to flesh out the company’s long-term strategy or agency vision. Lencioni discusses this, and I agree with his assessment that thematic goals are part of the strategy and vision but with some caveats. Consider the fact that many agencies have no long-term plans and are very reactive to short-term needs. Other agencies have long-range plans that can stretch out to five years in the future. Neither approach is perfect. Having no long-range planning is dangerous, but projecting out five years is unrealistic.
This is where the thematic goals can bridge a gap. Setting some thematic goals in the time horizon of three months to a year will provide some basic strategic planning for those agencies that have nothing. They should be clear and short-term enough to allow any leadership team to manage and predict. For the agency with lofty long-term visions, it will bring management back to earth and into a reality they can affect.
In essence, a well-planned thematic goal ultimately becomes a tactical objective that can tie all employees of an agency together versus just providing the marching orders for a team or a division or allowing each employee to operate solely on their own personal goals. Which brings us back to a silo. In essence, thematic goals can break down those personal or divisional silos.
A silo is a great tool for a farmer who needs a place to store grain, but it has no place in the offices of an agency. Unless, of course, you want your employees to be smothered by a mountain of hard, red, spring wheat. By avoiding the silo, you free your employees from being pinned in that mountain. They can see the goal on the horizon, they can get behind some defined objectives that are specific enough but not constricting, and they can be led to understand how their actions are affecting the operating objectives and company metrics.
When a thematic goal is clearly established and communicated, employees should be able to understand how their roles within the organization are contributing to the success of an outcome that is not necessarily around the corner but clearly within their view. In the end, they should be able to see how the agency’s long-term vision connects to its shorter-term objectives outlined in the thematic goal.
Robert Lieblein is a contributing writer and managing partner of Hales & Co. |
