In response to my post on this subject, several have asked for my
experience. I have been encouraged by several members of this list and I
thank you. You may feel free to use this experience as public domain
material.
My firm is a commercial insurance brokerage. The industry is nothing
short of bizarre in how it is structured. The systems are built around
deep seated distrust. From Michael Porter's model of an industry, the
vendors are the insurance companies, the retailer is the broker, and the
insured is the client. By law in most states, the broker is an agent of
the company. To sell, the broker must represent to the client that the
broker will serve the client (which just isn't so). The sales force is
nearly 100% male. The service force is nearly 100% female. Over half of
the broker revenues flow to the sales force. The revenue of the sales
force will be 4 times that of the service force. The national average of
both is 50 years old. This is an industry which has few young people
moving into it. It had an abundance of cash for years. Any dummy could
make large amounts of money without applying any principle of good
workmanship.
About five years ago the nature of the industry began to change. Natural
catastrophes began occurring yearly. Cash began drying up, brokerages and
companies began looking for business like principles to help them.
Universally, they wanted to apply sound business practices for their
firms, they just didn't want that to interfere with the ways they
personally operated (they being the principals).
The pressure was on and both companies and brokers began leaving the
industry. In the last three years the industry has lost 30% of the
brokers. The number of jobs is shrinking. Companies are paying to the
brokers less and less commission. There is a dramatic rise in the number
of law suits filed by companies against brokers and the verdicts are
equally dramatic. The cash available to pay the principles, the sales
force, and the service force is under severe pressure. The part of the
system with the least countervailing power is the service force. These
people are usually high school graduates who came into the industry for a
second income while their husbands got their own careers established. The
service folks began to make more money than they ever thought possible
without a college education. Now they are making an income which can not
be replaced should they need to leave their current job. They have come
now to need that income. There is a shrinking job market in the industry
and the skills are non transferable to any other industry. There has been
a big push in the industry to automate the processes and an equally big
push resisting that change. Automation will eliminate 30 to 50% of the
broker servicing and support jobs if successful.
The foregoing was provided to help understand that there is significant
fear in the minds of all the players, fear having to do with the personal
loss of income. That fear is not misplaced. It is real and it is present
every day in everything we do. There is a shrinking revenue stream and
people who have been used to abundance are fighting over the scarcity
which is today's reality. No one wants to give up what they have, or
reduce what they have for the general good.
Now for our firm. We have been a model of the foregoing. Our firm is one
of the oldest independent brokerages in our region. We have maintained a
stable competitive position for over 20 years. The firm began seeing the
pressure about five years ago and began addressing that pressure three
years ago. They went the classic route, trying to get out of the crisis
applying the same principles they had used for years. It didn't work.
The staff has been in nothing short of disarray for the last two. People
couldn't very well leave, so they jockied for position, hurting lots of
their fellow workers as they did so.
In April of this year, the principles asked me to take charge of the firm.
I have been a bean counter all my life, teaching at various colleges and
working in several other firms. My department had run smoothly, and has
often been the only source of sanity. The advantage I had was that which
most hate, Generally Accepted Accounting Principles. I approached these
as rules of the road which helped all businesses run along the same road.
These principles were not made by me but were ones to which I could
subscribe. When asked to take over a brokerage firm I decided I needed to
apply the same kind of concepts. Where were the principles that worked in
structuring a businesses? I had been reading this list for months. I had
been introduced to Deming, Covey, Greenleaf, Senge, Porter, et.al. While
most of those espousing the principles talked good stuff, few had any
practical experience. Deming was one of those exceptions. He had applied
the stuff as an administrator, had implemented his principles twice, in
two different cultures. Both had been phenomenally successful.
The biggest challenges were two: driving out fear and getting the staff to
look past their wages. Wages were consuming the conversations. It is
true that wages were a subset of fear but I took them as a separate issue
with a symbiotic relationship to fear. To remove the fear, we first
committed that no one would lose their employment if they helped. Anyone
who didn't help would need to find other employment. I established one
self-directed work group which was made up of the youngest (it just
happened that way) and those who had been receiving the brunt of the harsh
treatment from the jockeying. They were ready for relief. I asked them
to make some commitments and explained the difference between commitments
and involvement. Weekly, I have been meeting with them and reviewing
their commitments. I have kept my commitments to them. Mine was that my
position relative to them would not be BOSS. I was there to help them get
their job done and would provide them whatever they needed to make that
happen. I committed to helping them find the best ways to do their job
and that I would keep them from the politics that had hurt them. I showed
them all the data, including the wages made by the benchmarks in our
industry. We focused on high performance benchmarks and established the
wage of high performers in our industry. I have no idea if that benchmark
is fair. It is, however, objective. I have taken everyone up to that
mark. I have also agree to establish a percentage of the bottom line
which they all will share equally. I need to have that figure for them by
the end of the year. Thus, everyone in the workgroup is being paid by an
objective standard. Those performing at benchmark levels of high
performance are being paid high performance wages. Five out of seven are
at that level and all of them can be, whenever they reach that level. No
one has to wait until review time. I have also committed to times of
"celebration" wherein we enjoy the milestone accomplishments. I have
tried to get them away from thinking about money so we celebrate in other
ways. I asked them for a list of things they would like. They began
brainstorming, made a long list, and then came up with five things they
would like to use as celebration times. All of them have to do with things
their families can enjoy with them; three months of housecleaning and a
full house carpet cleaning, a family trip to Disneyland, a day off with a
special dinner for the family.
One of the things this group asked for was a means for them to use our
network from home. I supplied an inbound line, made the necessary changes
so they could log in from home, for one who couldn't afford to buy a home
computer, we fixed one up for her had gave it to her. Then the line was
tied up so much they asked for another line. I actually had to tell them
to stop working so hard, they needed to take care of their family life
too. They had gotten so excited about what they were doing they were
giving too much. But their excitement was infectious. Their level of
excellence went out of sight. Their teamwork was nothing short of a joy.
Their level of performance relative to the benchmarks is higher than the
industry and they are just getting started. They are learning to flow
chart using processes with which they are familiar. This last week, they
did a flow chart of how they come to work. I am going to continue
teaching them flowcharting using common stuff, not work stuff. It
translates easily and they are already beginning to think about it in
their work flows.
There is that part of the firm which we call the old culture. Those folks
are watching, waiting for this to fail. However, they are getting no
attention. Their abusive conduct is so glaring now and it gets them no
where. I don't even council with them anymore, I just ignore them and go
our way. I have obtained some converts who want to be included, a few
have left the firm and we have replaced only one. That one was employed
into the workgroup as a condition of employment. The workgroup did the
final interview and made the final decision.
It's Monday morning as I am writing this. I am thinking about today and
the things I need to do today. I can say honestly, I have never before
wanted to go to work as bad as today. This season of my life is a
honeymoon. I have all my kids out of the home and at college. My wife
and I are sharing some of the greatest days of 28 years of marriage. I
love being home. But...thank God it's Monday. I'm really looking forward
to working with those people today. What a privilege it is to be at this
side of my career, being a part of this these times.
-- Tom Burke Poway, California toburke@cts.com