Scale Your Force

By: Brian S. Cohen

The commercial lines industry has never been more dynamic.

More markets are available today, new specialty programs launch monthly and many brokerages that focus on commercial lines are experiencing record results. Interest in acquiring commercial brokerages has never been higher and values are at all-time highs.

But underneath all this positive news lies an ugly truth: Most commercial brokerages plateau well below the expectations of their leaders. And the reason in almost all situations lies with the leader of the organization.

Follow these leadership strategies to drive growth in your agency:

Let others succeed. This means avoiding micromanaging. Most agency principals started by selling, and many are still doing it. They know what it takes to successfully drive clients and premium through the organization. But their early success typically creates structural problems.

As the agency grows, the leader hires a support team for assistance. When the book becomes too much, the leader must hire new agents—and often hires employees similar to themselves. But because the leader had such a head start, they are always the top salesperson in the organization. The problem? Organizations driven by one person aren’t scalable. At some point they plateau—the structural barriers created by a hierarchal organization inhibit growth.

Build a scalable model. Most agencies and brokerages never create a process to scale their growth. While most organizations measure success by written premium, policies in force and commission and fee income, this focus on “bottom line” metrics misses the most important one: the source. An organization anchored by one producer who brings in most of the firm’s revenue is not a scalable business. By contrast, an agency that develops a process to recruit, train and retain a strong lineup of new producers drives continuing growth.

One caveat: It’s easier to target producers at existing firms, but research shows that in the long run, training new recruits creates a much more sustainable business model than poaching from competitors.

Brian S. Cohen is an operating partner with Altamont Capital Partners, a private equity firm.

Stay Selfless

Commercial lines is a people business. Complex coverages and the unique nature of each client lend themselves to a consultative sales and service process. Agencies that focus on their people and develop strong cultures that cultivate an environment of success excel.

A great example of an organization that built a strong culture? The San Antonio Spurs. It’s a team where each player knows their role and gladly fits there—no one star dominates. The culture doesn’t tolerate selfish play. Your agency should have the same goal. —B.C.