Exploring management myths

Sitting at the head table in the hotel’s convention room, I felt a quick stab of uncertainty. I had agreed to be a guest speaker at this broker management seminar staged by our provincial brokers’ association. As my company’s senior marketing representative, it was part of my job to maintain strong links to brokers. However, the seminar organizers had asked me to give a company rep’s perspective on “The Greatest Myths of Broker Management”.

“Dave,” they had enthused, “you’ve been around for years. You work closely with a lot of us — the good, the bad, and the ugly. Here’s your chance to tell it like it is.” As I was introduced, I looked around the room and saw many familiar faces. However, it was to be a “free-for-all seminar” with questions allowed during my presentation. I cleared my throat, swallowed hard, and began. “Let me start by saying I really have no right to be here, telling you your business. I’ve never run an agency. Never been responsible for a payroll. But your president asked me to come. He said it would be interesting for you to get a view from the other side of the fence. So here goes with my ‘myth number one’ — my productivity’s as good as it can get.

“In its simplest terms, productivity is the art of getting more work, and more effective output, from the same number of people. That being the case, there are a few questions you should be asking yourself. For instance, have you fallen into the comfy rut of accepting the work output of the staff in your office? Have you ever suspected that some of your CSRs work harder than others? How long is it since you actually measured the output of individual CSRs? Do each of your CSRs use all the available automation to process work?”

“Hey, Dave!” It was Harry, one of my brokers who ran a sizeable suburban operation. “How am I gonna find all this out, unless I stand over them?” I smiled at him, “Harry, that’s the job either you or your office manager should be doing. And, you should have a weekly meeting with your office manager to discuss work processing and any problems that show up. You know, I’ve been in offices where staffers still hand-write information that comes in over the telephone, then transfer it later to the computer. That’s not only doubling the work, it’s doubling the chances of error.”

Harry sat down in his chair. I took a deep breath and plunged on. “When was the last time you discussed work loads openly in your office? That’s why I suggest that the number one myth is being convinced that your office is productivity proficient. If you’re not really sure of your answer to this, here are a few more questions to ask yourself. For instance, after having installed new systems or hardware, did you measure the time and money saved, or just ‘assume’ that good things were happening? When was the last time you measured your office against industry standards?”

From the corner of my eye I could see several brokers scribbling on their notepads — hopefully a good sign. “Now, for ‘myth number two’ — you can’t do much about payroll. Let’s face the fact — agency salaries, benefits and bonuses represent the biggest single outlay in your office, anywhere from 60% to 75%. It’s the 800-pound gorilla that never goes away. The ‘myth’ is that you can’t do anything about it. The reality is you can!” I looked up from my notes and saw that I had their attention. “You should be asking yourself some tough questions. One, am I overstaffed? Workloads tend to rise and fall, sometimes dramatically. If you add staff during work peaks and don’t trim back during flat periods, you can wind up with a bloated payroll. Two, do I really know what it costs to invoice and collect? From conversations I’ve had over the years, some of you feel that the short-term interest you earn rolling over agency-billed business is a moneymaker, whereas direct billing by the company earns you nothing. Problem is, this conveniently overlooks the staff costs of handling your own billing, plus the stationery and postage. Three, am I getting what I paid for? In other words, is your reward system right for you and your office? Giving automatic salary increases or bonuses is one approach.

“But,…” I was interrupted by the screech of a chair being pushed back, and I recognized the middle-aged broker who was on his feet. “Excuse me, I have a question,” he said brusquely, “I gave each of my CSRs a healthy bonus last year and all I got was bitching. Most of them seem to think they should’ve got more!”

I was ready for this question, but I tried to put my answer diplomatically. “I’m afraid you just brought up another myth of agency management,” I said, shaking my head, “that myth is ‘standard bonuses bring universal happiness’. Unfortunately, they don’t! Your best people resent the fact they got the same reward as your average or under-performers, and your under-performers realize they were right not to knock themselves out. A bonus should be a reward for superior effort.”

I paused for effect, “the third tough question on payroll is checking salary and wage levels against current market levels. Salary levels are usually influenced by several factors, namely agency income, productivity and inflation measurements. Even if you don’t do regular measuring, the market always does — so it pays to see how you stack up against industry averages.” I took a quick sip of water, ‘the next ‘myth of agency management’ — you can’t plan too far ahead these days. Every broker should have a strategic plan, and once everyone agrees with it, stick to it. It doesn’t have to be a 200-page document with flow-charts and colored graphs. It should be a straightforward description of objectives for the year. It should be clear and accountable, and set out simple steps for monitoring progress…” A voice range out, “how do you suggest we come up with good plan, Dave?” The question came from Joanne Newman, co-partner in a successful suburban brokerage.

Again, I had half-expected this question because it was one I had debated many times with my own group of brokers. “Joanne, the best answer I have is, do it together. In my experience, the best strategic plans are those that involve input from everyone in the office. As an owner, or a partner, you shouldn’t be trying to create the perfect ‘master plan’ in isolation. One practical approach is to set up a number of brain storming sessions with all your staff. Have a chairman, and an agenda. Keep it tight and businesslike. Get it all down on a chart. Try to get everyone participating.”

I glanced down at the lectern, flipping over my notes. “Here’s the next myth, ‘I’m automated, I did it years ago.’ You probably have one of the agency management software systems installed. But when was it installed? Software systems become out-dated faster and faster. Computer capacity is doubling every two years. Do you make it your business to evaluate software and hardware upgrades — like laptops — on a regular basis? Does everyone in your office operate at the same technological level? Do you have a staff program on technical training courses offered by vendors or companies? Does your office bring in new equipment on a trial basis to see if it meets your needs?” I glanced quickly at the wristwatch I had placed on the lectern beside my notes. I saw that my time was nearly up. “I’m almost out of time, so I’ll just quickly run through a few other myths of agency management as I see them. Myth number five, ‘the harder I work the more effective I’ll be’. Wrong, you have to work ‘smarter’, not harder.

“Myth number six, ‘change is gradual, what’s the rush?’ Fact is a lot of brokers and companies who once thought the same just aren’t around today. Myth number seven, ‘as the boss, I shouldn’t have to sweat the small stuff’. Not true, the trick is to know what to do about ‘the small stuff’, then delegate. A lot of small stuff sweated over now will make sure you don’t have to face some ugly big problems down the road. Myth number eight, ‘my service is fine, nobody’s complained to me’. I hate to tell you this, but as the owner, or partner, you’re probably sheltered from hearing wha t some of your customers really think of your service, or lack of it. Don’t fall into the trap of striving for efficiency and forgetting good old-fashioned service…”

“Hold on, Dave!” I looked up to see Stan, one of my own small-town brokers, on his feet. “You say direct billing is more efficient, but if I go that route, don’t I risk losing touch with my clients, and falling down on that ‘good old-fashioned service’ you’re talking about?” I shook my head slowly, “Stan, I can’t see how sending a bill is any great service. The way I see it, you have to separate premium collection from true broker service.” A quick thought popped into my head. “Tell me — when you take your car to the dealer for service, do you judge the dealer’s service on how VISA bills you? I don’t think so.”

Stan didn’t press his point, so I continued, “myth number nine is ‘no point in talking to my companies, they never listen anyway’. If you want change, speak up! Get on a company/broker advisory council. Gather support among your peers. You need companies, but they also need you and your business.” I gathered up my notes from the lectern and took a last deep breath, “and now for myth number ten, ‘being tough on collections isn’t popular’. The truth is, very few people stay successful by being a ‘soft touch’. Having a firm collection policy isn’t aggression, just common sense.” I was finished, and my old broker friend Bob Davies rose to his feet and thanked me on behalf of the group. Then, with a twinkle in his eye, he said, “oh, there’s one more myth you may not be aware of. It’s this: company-marketing reps who tell us our business cannot be grilled.”

With that, Bob quickly turned to the audience, asked for questions, and a forest of hands shot up at once. Bob grinned at me as the first questioner got to his feet. “See what I mean Dave?”