PUBLISHED ARTICLES

New Year's Revolution: The party's over. It's time to resolve to revolutionize your firm with a new strategic plan, renewed sales culture and new investments in staff.

Leader's Edge, December 2007

Fast Focus

• Reward your firm with a solid road map and by taking steps to become a better CEO.
• Establish a culture that breeds success, and then share the wealth.

In the spirit of giving, don't wait until January to make resolutions for the new year. Do it in December, and think of it as providing valuable holiday gifts to your agency, your staff and yourself. Fruit baskets and theater tickets are great (to cover your bases, don't skip them), but the best holiday gift you could give is a solid plan to make next year more successful.

My first resolution was to propose this approach after a whirlwind year in which I've traveled to more than 30 states and consulted with 50-plus agencies. The experience left me with a long list of agency traits, both naughty and nice, that deliver everything from shiny wrapped gifts under the tree to lumps of coal in the stocking. Why not end the year by reviewing what you can do to make the next year better for you, your shareholders and your staff? Come January, you'll be ready to make it happen, ensuring that next year's holiday season will be even more merry.

Here are my shopping suggestions of resolution gifts for everyone on your list.

For All the Stakeholders

The perfect gift for the agency that has it all is a strategic plan-or the update to an existing plan that's been languishing in the dusty corners of the office. This is definitely not a one-size-fits-all present, and it constantly amazes me how many firms don't already have one. Without a plan, your agency has no road map to the future. Instead, it's more likely that you're heading for a dead end, or a narrow path with no side roads, that leads to the agency being put up for sale at a less-than-desirable price.

Rather than considering that Grinch-like scenario, give yourself the gift of the future, and enact a vibrant plan. If you want to put a package under the tree that will get you started, try the writings of C. Davis Fogg, my favorite author on strategic planning. Here, from Team-Based Strategic Planning (Amacom, 1994), is what he has to say about the value of a plan:

The strategic plan is the road map for continuous change in your organization and ensuring your future. It guides your change effort and your business. It also is the wedge that you drive between believers in change and the infidels in your organization who oppose it. The plan is not a one-shot effort to change direction and get you going but is an entire system that is geared toward continuously changing based on internal and external factors that guide you to produce your desired results.

Such a description should resonate with anyone who's an owner or a C-level agency executive responsible for growth and profitability. Keep in mind that your plan must address these key questions:

• Where are we now?
• What do we want to be?
• How will we get there?
• Who must do what?
• What are the financial implications?
• How are we doing?

For Producers

It's always a challenge to find a great gift for a salesperson. New ties are so passé (besides only working for the male staffers), pen-and-pencil sets are so '80s, and everybody has a BlackBerry by now, don't they? What to do? How about making their work lives better by creating a true "sales culture" in your organization.

In my consulting work, it's another regular source of amazement for me to find so many agencies that think they have a sales culture when, in fact, they have created a team of farmers, not hunters.

Cultivating the fields you've already plowed is simply not a way to create a dynamic, sales-driven organization. Hunting for new business, and creating a support system that tends to the existing field of customers, is the sales culture that will truly pay dividends for all stakeholders-you, the firm's shareholders and the salespeople themselves.

As part of your resolution, put these elements into the plan as gifts for the sales force:

• Organizational structure. Create an organization that is built around great service teams. This will allow your producers the time to make sales. I call this the "no excuse structure" for producers.
• Goals and objectives. Do you work with your sales force to set new business development goals each year? Do you monitor and observe milestones?
• Management. Support your producers by actively managing the sales process. This can be done by you or delegated, but it is essential. Components include monitoring, coaching, training and providing the tools that allow producers to succeed.
• Compensation. Here's the truly sweet bauble that makes the holiday season shine. Are you taking full advantage of financial incentives? Structure it so that new and renewal commission percentages are at levels that motivate producers to sell.

For Other Employees

Non-producer staff members also need much attention to get truly stellar performance. We all know that lack of new talent and advancing age of existing staff are twin issues that loom over the industry and make it even more vital to keep valuable employees happy and productive. Invest in them!

What does a resolution to invest in employees mean? Consider these steps:

• First, develop a formal training program. You need them to know that you take their development seriously, which means a financial investment and hands-on awareness of what they're doing and how they are progressing.
• Next, monitor and evaluate your employees year-round, not just through a year-end performance review.
• Finally, reward people with incentive compensation. This should not be solely for producers. Your employees are the ones that ultimately make your agency successful, so you must share in success by providing incentive compensation that is tied to company, team and individual goals and objectives.

For Your Accountants

It would be an oversight to forget the bean counters, for they are the ones who provide the insight into your success. So you must create metrics and measure performance by the numbers. Key metrics that any agency needs to have regularly under the microscope include:

• Operating profit margins
• Revenue, compensation and spread per employee
• Revenue and profitability by line of business
• Revenue and profitability by carrier
• Compensation, selling and operating costs as a percentage of revenue.

For Yourself

Last but certainly not least, give yourself a gift this season. Take steps to become a better CEO. An upcoming article will go into more detail on this topic, but here are just a couple of thoughts: yes, your people are important because a ship can't operate without sailors, but even with the best crew, it won't go forward successfully on its mission unless an effective captain is at the helm.

Resolve to improve your own skills by enacting these simple commitments:

• Surround yourself with the best people. Make it your goal to have nothing but top-tier managers, producers and line staff. Continually evaluate whether each position is staffed by a person who supports your efforts and who, in turn, has your full support.
• Turn employee training into a strategic initiative. Well-trained staffers with the latest information will be a competitive advantage when making new sales and servicing existing customers.
• Listen more than you talk. Two ears, one mouth. Use them wisely.
• Put the right people on the job. Play matchmaker between job duties and each person's strongest skills. Work to understand your staffers' traits with aptitude and personality tests, as well as your own intuition, supervisor reports and customer feedback.
• Keep communication flowing. You can never communicate enough, telling employees what's needed for company success and why.
• Let people do their jobs. If you have the right people and they're well-trained, it's then your duty to get out of the way.
• Reward employees for success. Compensation is the number one reward, and how you structure that is certainly vital. But other rewards, perks and benefits can supplement the package and keep morale high.
• Lead by example. How you do your job and present yourself will be the standard to which good staffers will aspire. Your attitude will be contagious, so make certain you make a good role model.

Be Like Santa

We all know that Santa Claus doesn't just swoop out of the sky and drop random toys on the world's children. All year he's busy making and checking lists, and his elves are constantly skittering around his workshop. Only through sustained effort can he deliver joy to the world all in one night. Whether you condone such mythical activities, there is something to be learned from the model: Work your plan. So here are some further details on elements of this strategy that will make the resolutions come true.

Establish a culture that breeds success. Success is not luck, it is a proactive stance that builds a culture. It involves designing the future you want and making it happen. But success is not easy; if it were, more agencies would be role models. Follow these basic rules:

• Create accountability for your employees. From job descriptions to goals to metrics, there are ways to ensure that everyone knows what is expected of them. It's your job to keep monitoring their progress.
• Make changes to fix problems. Create a leadership style that embraces change and encourages everyone to make the tough decisions. It starts with you but must trickle down to your managers and beyond.
• Enable and align the agency's work. Everyone needs to understand goals, objectives and rewards.
• Provide an environment where all employees can thrive. It's supportive, educational and challenging.

Share the wealth. It has been proven that equity participation improves agency value. Whether you develop employee equity, real equity or quasi-equity, your goal is to build both intangible and tangible value. When people realize their fortunes are tied to the success of the entire enterprise, you can truly create a team-based environment. Remember the maritime metaphor used by John F. Kennedy: "A rising tide lifts all boats."

Sharing agency wealth must include the following elements:

• Equity ownership must be significant enough to have an impact on the employee's financial future.
• Ownership must be spread to many staff levels.
• You must establish a culture where employees feel like owners.
• There must be a shared understanding of agency goals and objectives along with a common commitment by all.

Many equity plans exist, and there is no correct or incorrect model; neither is there just one way to implement the plan. Commonly used equity participation plans include:

• Stock options
• Restricted stock options
• Stock appreciation rights
• Performance-based shares
• Phantom stock
• Deferred compensation
• Employee stock ownership plans.

Keep communicating. It is vital to keep information and discussion flowing between everyone, all the time. It is also not easy, but don't let that stop you. People crave knowledge and, as the CEO, you need to emulate Ronald Reagan and be the Great Communicator. Leadership is defined in a number of ways, but no one would deny that Reagan's greatest trait as president was not that he made the right decisions every time, but rather he shared his vision. At a minimum, communicate the following:

• Vision and mission
• Revenue goals
• New business development goals
• Key strategic and tactical objectives
• Company values and beliefs
• Key financial metrics
• Honest and candid assessments of company and individual performance
• Incentives and rewards for achieving goals.

A great agency's rise begins with the vision and commitment of its leaders and, even during the holiday season, that must continue to be "job one" for you. Certainly this time of year is when we celebrate our success and toast to the camaraderie that we feel when working together. But you can make the occasion even more joyous and meaningful if you get a jump on the new year by resolving to aim for greater success in the year to come. Make a list of steps needed for that goal to come true in the next year, check it twice as you're enacting the plan, and anticipate the warm feelings you'll have when ringing in 2009.