As I see it, here is how the typical agency comes to exist.

A producer becomes successful and builds a large book of business.

— Said producer figures he or she can make more money on their own and starts a new agency.

— They continue to build that book of business and hire a couple of account managers.

— Eventually, they hire a few producers; most fail, but a couple survive and have marginal success.

— The producer/owner wakes up one day and realizes they have actually built a business; a business they don’t really know how to run as a business.

— But, the revenue pouring into their business covers up their lack of leadership, and by bottom line measurements, they are successful — in spite of themselves.

The financial reward for mediocrity in our industry has been way too high. It has built a false sense of security, resulted in very fragile business models, and covered up a lack of leadership.

It’s time to pull back the curtain

The panic in the industry is reaching a fevered pitch. Many factors are contributing to this perfect storm: ACA, new competitors, technology demands, reduced commissions, carrier selectivity, and the list seems to grow daily. It is that newfound difficulty in running an agency that is starting to expose the lack of leadership. As referenced above, the lack of leadership in the typical agency has been there all along — it has simply been ignored.

It can be ignored no longer.

Because of what we do, we talk to agency owners every day. It becomes very apparent very quickly which ones will survive and which ones won’t. Their ultimate demise or survival has little to do with their current size, resources, profitability, or location. Instead, demise or survival has almost everything to do with their level of self-awareness.

Some won’t survive

Those who are least likely to survive either spend their energy focused on things they can’t control or are focused on things that are too tactical. These are the agencies who:

— Are hoarse from yelling at carriers for reducing commissions and eliminating bonuses

— Bitch about how unfair it is that new competitors have entered their space

— Are on a quixotic search for the next product they must offer to their clients

— Think some new/revised legislation will turn things around

— Believe that doing more of what they’ve always done is the answer

I genuinely fear for their future.

Power of self-awareness

But then we also get to have calls with a completely different tone, reassuring us that, while the number of agencies/producers will continue to shrink, the independent agency system has an even stronger future than it does a past.

I received a call from an agency owner who is definitely successful from a growth/profitability standpoint, but he is genuinely concerned for his ability to continue to be successful. He didn’t call to complain about any of the challenges above; he was calling, he said, because, “I’m a great salesman, but I’m not a good manager or leader of people and I need help.”

You know it when you see it

Effective leadership is sort of like quality art; it’s hard to describe, but you know it when you see it. While it may be hard to describe, there are certain things that effective leaders ensure are in place.

— Clear vision of the agency they must become

— A documented plan of how to achieve that vision

— Consistent communication with their team regarding the vision, plan, and progress

— A healthy culture built on trust, accountability, and shared values

— A value proposition that differentiates them from their competition

— An understanding of the ideal client to whom the value proposition is attractive

— A marketing strategy to get the attention of those ideal clients

— Specific and measurable short-, mid-, and long-term goals

— Accountability for results from every role in the agency

— Processes and procedures to ensure consistent execution (of everything)

It’s kind of an intimidating list isn’t it? Of course, the need for the items on this list isn’t anything new; it’s been there all along. But revenue covers a lot of sins and the overly generous revenue of our industry has often covered the “lack of leadership” sin. As revenue streams are drastically reduced, they are no longer providing the cover they once did.

It’s time to repent, brothers and sisters! Confess to your past sins and commit to becoming an effective leader. For your own benefit, for that of your team, and for your clients.

Can I get an amen?!