The Peripatetic Rep: Four disciplines, one vision

As we completed our tour of the brokerage’s renovated offices, Saul led me into a small boardroom on the second floor. Three men sitting around the table rose to their feet. “Dave,” he said with a smile, “meet my three partners: Ted who handles our personal lines business, Ian who looks after the life side of things, and Rob who is our financial products specialist.”

I shook hands with the three and accepted the offer of a cup of coffee. As my insurance company’s senior marketing representative, my responsibility today was to arrange the premium targets for this new brokerage which had been created when the four individual brokers decided to merge into a single entity which they had appropriately named New Compass Insurance.

When he had operated his own business, Saul had given my company a decent chunk of commercial business and now, after a year of operation as a partnership of four, it was time to set up some higher premium targets for all the lines their highly successful enterprise was writing.

I took a sip of my coffee. “Well, you four must be pretty pleased with your progress as one big office. No regrets?” Rob, the youngest of the four at 37, was the first to answer. “None from me,” he said emphatically. “I was always more interested in non-insurance products. When I was selling them I was always running into the insurance needs my clients had. Now all that business stays in-house through my partners here.”

“Best move I ever made.” It was the cheerful and outgoing Ted speaking. Now in his early forties, Ted had started his career on the company side, first as a personal lines underwriter, later as an assistant manager before getting his broker license and opening up his own office. “I like personal lines. My agency was over seventy percent personal lines. I was never as comfy writing commercial but I sweated hard to build it up because you know how companies keep raising the bar on your commercial lines premium targets.” He was grinning at me over his coffee cup.

We laughed together then Ian, the oldest and quietest member of the four, spoke up. “Over the years I built up a healthy life business. With all the referrals I now get from Saul, Rob and Ted, I’m doing much better, so we all come out ahead.”

I addressed my next question to Saul, the managing partner among the four. “What was the motivation for you four to get together?” Saul leaned forward in his chair. “Dave, we really had no other choice. Oh, I suppose each of us could have struggled on individually for a few more years, maybe even up to retirement. But the insurance business has changed. As we all know, it’s now one big financial services’ market and it’s pretty tough to cover all the bases and to try to be an expert in them all.” Saul’s partners nodded in agreement. He continued, “I think each of us looked at joining a cluster, but there’s one big drawback in the cluster concept. It’s too easy to pick up your marbles and go home.”

Ted added, “that’s my main objection to clusters. In my view they’re too freewheeling. Not enough discipline. Bad for stability and continuity.” Rob cut in, “and you know what? I prefer the discipline that a formal partnership imposes. We all have to play by a fixed set of rules. We can’t indulge ourselves by answering only to ourselves. I think that fact has made the four of us all work harder and be more conscientious.”

“Sounds like you four are all pretty compatible,” I suggested.

“You know, Dave, that’s a very astute observation,” Saul said evenly. “In fact, we have all known each other for a lot of years. I think we not only like each other, we also respect our individual abilities and personalities.” He turned to his companions around the small boardroom table. “Am I right?”

“You are.” It was Rob who picked up the dialogue. “I think we all knew inwardly, before we even got down to working out our partnership, that the chemistry between the four of us was good. When you work closely with other people, you quickly discover that everyone has their own way of saying things, and doing things. If their personalities clash with yours, then forget partnership. Partners have to work in a positive environment where one supports the other, or others, and vice versa.”

I took another mouthful of my coffee before I put my next question to the four partners. “Tell me, how did you set up your partnership agreement?”

Saul tipped his chair back and smiled. “It evolved pretty easily through a lawyer we all knew, a specialist in partnerships. At the very beginning, when we’d decided to join forces, we had the lawyer draw up a simple letter of understanding between the four of us. That kept things simple for the first year, and it allowed us the flexibility of amending and adjusting the formal legal agreement that came along later…”

At that moment a secretary entered the boardroom with a pink telephone message slip in her hand and handed it to Saul. He glanced at it, excused himself, and Ian continued the story.

“We opted for a shareholder agreement. Each partner owns shares based on the book of business he brought in to the partnership.” I nodded, and he continued. “Nothing unusual about our agreement. It simply specifies the goal of our business and the length of the agreement. It sets down the financial numbers of what each of us threw into the pot to start things off, plus what each of us is entitled to draw out in salaries and other benefits. It covers the other essential details, like what each partner’s agreed responsibilities are, under what conditions any one of us can opt out and leave the partnership, and what dollar valuation is put on the partnership if one of us were to leave. Of course, it also touches on what provisions are set in motion if one or us were to become disabled, or die…the usual cheerful stuff!”

As he finished speaking, Saul re-entered the room. When he had settled back in his chair I asked another of the questions that I was curious about. “Did you set yourselves a time-frame to integrate your four operations?”

Saul shook his head. “No. When we first got together to discuss the possibility of a partnership, we all felt that the right thing to do was to agree on a total and complete merger from day one. Sure, it meant some long evenings, and some long hours on weekends getting the kinks out, but in the long run it was short and relatively pain-free. Better than a long and drawn-out headache for months.”

“How do you resolve problems and differences of opinion? You’re four different personalities who used to operate independently. There must be times when you don’t all agree, surely?”

The four partners of New Compass Insurance grinned at each other, and it was Saul who replied. “Oh, sure,” he said with a chuckle. “But we have a regular meeting every week. There are always fixed agenda items to be discussed: market changes and moves, administration hang-ups, the odd internal staff problem. As managing partner, I try to get these resolved first. Then the second half of our meeting generally takes the form of open bull session. It’s a chance to air out anything that’s bothering you. It’s amazing how quickly we can work things out when we really have to.”

“I think we all know,” Ian said in his calm and precise voice, “that if our partnership is to work effectively, we have no choice but to talk to each other often and in plain language.”

“Even if one of us might be a little ticked off by something,” Ted added, “we all know that the next meeting is only a week away. So you don’t really have time to work up a big head of steam over something that’s bugging you.”

There was a second’s silence in the room then Rob cleared his throat. “Let’s face it: there are times when each of us gets a little territorial but over time, you realize that you’re only twenty-five percent of any decision and with four reasonably bright people at work here, we’re pretty good at finding a good compromise solution.”

At this point I threw in another sensitive question. “You must have had to rationalize your overall staff numbers when you got together?”

Saul nodded. “Yes. For instan ce, all four of us had a bookkeeper. We only needed two. And a few junior staff didn’t come along. But all our licensed personnel from each office did. From an administrative point of view, we’ve centralized all our back-office functions. So far as marketing is concerned, the four of us are now free to concentrate on sales and service in our specialty. We don’t have to worry as much about the accounting and banking side of the business. We didn’t have this luxury before when we were on our own: you had to have a finger in just about every phase of the operation.”

“Speaking of rationalization,” Rob said, “we’ve now got access to a broader range of company markets than we did as individual offices. Our combined volume gives us some added clout with our companies.”

“Didn’t you have to shed some insurers?” I asked. “Oh, yes, we did,” Rob replied. It’s never easy, especially when you have represented a company for a lot of years. But then,” and here he reached over and gave me a playful poke in the ribs, “most companies don’t worry too much about trimming down their broker numbers when it suits them. Right?”

I raised my eyebrows in an innocent smile. “Whatever do you mean?” I queried, and the five of us enjoyed another laugh together. “By the way, I guess none of your individual offices was large enough for the combined operation?”

“Correct,” Saul answered. “That’s why we had to find a new location for ourselves. But the good news is we’ve actually saved money in space rental. We also saved some money in advertising and promotional costs. I was a terrible softie when it came to stuff like that. These guys are much harder-headed.”

“Well, we expanded our business hours to suit our customers.” Again, it was the slow and precise voice of Ian, who drew a circle in the air as he spoke. “We rotate the extra hours among the four of us, so it’s easy to handle but a major convenience for people who can only see us after normal hours.”

“Any other advantages you’ve discovered?”

“I can give you one big one!” It was the youngest partner Ted, and he scratched his chin thoughtfully as he spoke. “This move has given me a positive charge. I feel re-energized about the business. It almost feels like a new job. The responsibility of producing good and profitable business for the partnership has brought more discipline to my working life. I’m working harder than I did before, but I’m also enjoying it more. I like the daily interplay we have with each other. I think it keeps me sharper, more focused.”

As he finished speaking, another small silence fell around the table. I pushed away my coffee mug and opened up the briefcase I had brought into the boardroom. “Well, now that we’ve raised the topic of staying focused can we look at the new commercial lines’ premium target we’d like to see you hit this year?”