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My Greatest Hits
Based on your response, these six issues topped the charts in the past six years.
Fast Focus
- Culture and talent management are major weaknesses and top concerns.
- Agencies need to rethink organization and compensation strategies.
- Yes, it’s possible to spare yourself death by meetings.
When you’re in the depths of a downturn, there’s a great urge to just look ahead and say, “When is this going to end?” That’s important because you need to plan your way out of it. But it’s also instructive, and maybe a bit easier on the nerves, to take a look back as a reminder of, in the words of The Boss, your “Glory Days.”
Well, Bruce Springsteen probably has a good broker advising him on his coverage needs, but hearing his classic song recently jolted me out of my funk about the 2009 business climate and away from looking toward 2010 as the savior.
It’s been a great six years of writing about innovative ideas, success stories and proven strategies, and now, like Springsteen or U2 or the Rolling Stones, I’d like to revisit six of those ideas in my own “greatest hits” column. In putting together a list of the ideas that most resonated with readers, I went back through my email to see which ones generated the most reader response. Here is my greatest hits playlist.
1. CULTURE
If there is only one article I could encourage everyone to re-read, it is the one about culture. Without a doubt, this hit home with many, and I think I understand why. First, it was written about RSI, the most amazing agency I have ever worked with. It’s an employee benefits brokerage in Mount Laurel, N.J., which has since been acquired by Arthur J. Gallagher. Considering why some companies are fundamentally much better than others, the article concluded that they “engrave” the culture into the very bedrock upon which the firm is built. Other companies treat value-setting and culture-creation as trendy exercises that end with the CEO espousing the mission, vision and values at the annual meeting.
When I cite culture as the differentiator between a good company and a great company, I am talking about the ability to convert a stated culture into specific actions that influence events in the company, the industry and the marketplace.
In RSI’s case, the company’s culture is an intentionally designed, aligned, high-performance organizational model for success. At RSI, culture includes the shared beliefs, attitudes and values of its people. It is based on the relentless pursuit of excellence in everything done by the agency. RSI recruits carefully for this culture and then teaches and coaches with a passion.
The “intentionality” of a company’s culture begins with the clear communication of behavioral expectations. It is further supported by a rigorous hiring process that selects only certain types of people. The culture is then taught through an extensive integration program for new hires. Finally, the culture is reinforced through the daily teaching and coaching of leadership.
The clearest embodiment of this culture is found in what RSI calls its “Fundamentals.” The Fundamentals are a series of 30 values and behaviors taught to all employees. The company is so committed to these values that it surveys all customers annually to check on the degree of consistency between the stated values and the customer’s observed behavior.
http://halesgroup.com/articles/PA_cultured_pearl.html
2. SHOW ME THE TALENT
As an industry, we always talk about our most important asset being our people and the importance of recruiting, training and retaining talent. However, most firms have never really embraced the concept of talent management as a strategy. Many owners and CEOs view recruiting and hiring as short-term functions. Talent management is all about the strategy behind your employee program: recruitment, development, promotion and retention. It is a well-thought-out element of your strategic plan and is tied to both short- and long-term goals. True talent management focuses on developing leadership depth for both current needs and future challenges.
The consulting firm DDI believes that successful talent management is much broader than succession planning. It encompasses a range of activities that support a firm’s competitive advantage, including:
- Connecting corporate strategy with the quality and quantity of leadership required to execute;
- Driving leadership accountability for the cultural strategies that support business goals (essentially covering the firm’s fundamentals);
- Identifying employees with the highest leadership potential early in their careers;
- Assessing high performers through the lens of current and future leadership needs and skills;
- Accelerating the development of high performers; and
- Improving the quality of leadership.
I worried that some might view the topic of talent management as MBA BS, so I have been thrilled to hear from so many of you who were inspired by the article to embrace the concept, get it into your strategic plans, and see how talent management really can become a competitive advantage.
http://halesgroup.com/articles/LE_Make_Yours_A_Talent_Agency.html
3. ORGANIZATIONAL AND COMPENSATION STRATEGIES
My ideas about organization and compensation have hit a nerve with almost everyone. As I see it, much of the industry is flawed in terms of organizational and compensation strategies. It is the result of holding onto legacy concepts.
If I had just one message to impart to the industry, it would be this: Agencies need to seriously rethink their organizational and compensation strategies. Get away from fundamentally broken norms and beliefs.
How should the industry evolve? You need to believe we are in a sales-driven industry, not a service industry. Herein lies the fallacy behind the organizational approach of many agencies. They build their infrastructure around service, not sales. The end result is that producers stop selling, agencies stop growing, and firms believe service is a competitive differentiator. Service is not a competitive differentiator, except for the very few firms that have taken service to a whole new level.
If I had a mission statement for servicing and selling it would be:
“Create an organizational structure that supports the delivery of exceptional quality service that results in superior retention rates while providing your producers time to sell.”
Agencies that have done this realize service is the foundation of any firm, as cement footings are the foundation of a house. You have to have it, and it needs to be strong, if not exceptional. However, a sales-driven agency has created its organizational structure around sales.
Firms that have mastered the service model have in essence “institutionalized” the sales and service aspect. What do I mean? Basically, they have created a culture in which the producers do not think they “own” their book of business. This eliminates the single biggest risk to an agency, which is that a producer may leave. When you organize your agency to institutionalize the customer relationship, the client views the service team, not the producer, as the focus of the relationship. This concept, which should be simple to comprehend, is just foreign to so many in the industry. It must change in the future.
So what’s wrong with the compensation plans at most agencies? By far the biggest issue is that producers are not effectively motivated to sell. The commission is high for both new and renewal. (Paying 40% commission for new and renewal business is so old school.)
There is no process of setting goals for generating new business and no “punishment” for not getting it. In essence, the legacy plan allows the producers to earn a “comfortable” income even when their books of business stop growing. For support staff, there is no “skin in the game,” which means their compensation is not aligned with the agency goals and objectives (if they exist). Win or lose, the support staff still receives the same compensation.
Contrast this with the most effective compensation plans in today’s market. A savvy agency will continue to provide producers a good commission on first-year business (with incentives for exceeding goals), but it will be more focused on new sales than customer maintenance. Renewal commission percentage is significantly less in year two and beyond. As a matter of fact, in year two and beyond, the customer is owned by account service teams, not producers. This makes some sense because service is the key to retention.
For your compensation plan to be truly effective, your account executive, account manager and customer service representative also must be won over. Understand that they are primarily driven by base salary but motivated by incentives. Tie their pay to the book of business they service, overall company goals, team goals and individual goals.
The issues surrounding organizational structure and compensation strategies are the most pressing issues for many agency leaders. I have heard this from you over and over, and if I could leave one legacy, it would be to have the industry rethink these strategies. This industry is littered with flawed logic.
http://halesgroup.com/articles/PA_hunters_or_farmers.html
4. STRATEGIC NEGOTIATING
I touched on one of my favorite topics—strategic negotiating—in October 2008. Many of you have struggled with mergers, acquisitions, deals that fell apart, or ones that should have never happened.
The concept was a simple but effective strategy called “Wish-Want-Walk.” Sounding almost too simple, but in reality being very hard to execute, the basics behind this strategy are:
- Wish. Set a goal for the negotiation. Make it your dream, your best-case scenario.
- Want. Lay out a realistic assessment of where you think the negotiations will end up, based on market forces.
- Walk. Draw a line across which you will not step. Know what the numbers or terms are that will cause you to simply walk away because the deal will not be worthwhile.
A problem with the way most people approach negotiations is that they don’t start the planning process early enough. Many will say, “Let’s see what the other side has to say,” before sitting down and beginning to map out a strategy. Candidly, I have never heard of a more ridiculous approach. It amounts to no strategy at all.
As someone who is involved in negotiations almost every day, I cannot fully express my frustration of working with clients who will not commit to or stay committed to the wish-want-walk strategy. Readers expressed similar feelings with comments such as, “I wished I had walked away from the deal much earlier,” “I never should have let emotions get involved in the transaction,” and finally, “I felt like I was never in control of the negotiations from the start.”
It became very clear to me that, while many agency leaders are great sales people, being great at sales does not make a person a great negotiator.
http://halesgroup.com/articles/LE_Dealers_Choice.html
5. THE PRIVATE EQUITY GROUP MODEL
During my 25-plus years in consulting, I have been continually amazed at how often agencies’ great plans get lost in the details and execution and never become successful. When I wrote about the private equity group (PEG) model, I discussed how PEGs achieve their overarching goal by limiting their action initiatives to no more than three to five that are critical for success and how they challenge the business-as-usual philosophy with three core components:
- Incremental changes or execution that will make the firm’s current activities more profitable;
- Out-of-the-box thinking that will require changes to some or all of current operations and processes that will affect future success; and
- A commitment to shift resources away from activities that do not represent the future of the company.
The concept of limiting your strategies to just a few and changing longstanding business practices is clearly an eye-opener to many.
http://halesgroup.com/articles/LE_LookingPEGSinTheMirror.html
6. DEATH BY MEETINGS
This article called “Death by Meetings” was an afterthought, but I touched a nerve. The response was unbelievable. I had spent many years using a tool called the “Growing Pains Questionnaire” that included a simple question for my client firm: “Do most people find meetings a waste of time?”
As I accumulated survey results over the years, I realized just how inefficient and unproductive many meetings were. This led me to the book Death by Meetings by Patrick Lencioni. The framework to turn your meetings into a positive experience for the participants and actually bring results to an organization are outlined in his four meeting types:
- Check-in. Daily meetings of no more than five to 15 minutes to ensure everyone is on the same page and collaboration is taking place where appropriate.
- Tactical. A weekly one- to two-hour meeting to discuss immediate tactical needs that move your strategic plan forward. This is essentially a follow-up meeting to see that assignments are being carried out and projects are on track.
- Strategic. Monthly meetings of two to four hours focusing on the critical strategic issues that will affect your business now and in the future. Strategic meetings include both internal and external issues. The key to a successful strategic meeting is not putting everything on the agenda. Each month, tackle two or three crucial items, come prepared with up-to-date information about each, then dig into ways to increase performance.
- Off-site review. Quarterly meetings of one to three days to get away from the daily tasks of running a business and to take a more objective view of what you are doing. Your strategy is put under the microscope, but you also review industry trends, external forces influencing your success, any people issues you might have, and all other major factors that affect your ability to achieve your goals and objectives.
http://halesgroup.com/articles/PA_deathbymeeting.html
I am not foolish enough to think the future will replicate the past. Change is inevitable (and good). It will separate winners from losers. But whatever new twists the future holds, you can still apply tried-and-true methods to tackle new challenges.
Consider some of these ideas in light of your own success. Realize that you can—and will—go back to your glory days if you are willing to try new ideas and even those from the recent past that have worked for others.
Robert Lieblein is a contributing writer and managing partner of Hales & Co. |
