It is the law of nature that one has to leave and there are other people available to replace that person. The same principle is applied in companies as well where the leaders and the managers have to leave after a certain time and their replacements take charge. Succession Planning cannot be the same for two different organizations, therefore, before devising a plan for it, you must be fully aware of everything about your agency.
We recently worked with a prospect and asked them to provide us with detailed information about their agency. The reaction was priceless. They commented that the information was really helpful to manage the agency and that they intended to continue to create those reports. How could they plan their Perpetuation if they didn’t understand their business?
The basic principles of a Succession Plan (“The Plan”) are more or less the same for all companies. Here are 8 Principles of Succession Planning for Insurance Agencies:
The Plan Originates from the Organization’s Strategic Planning:
The Plan is an extension of the organization’s own Strategic Plan. Before coming up with The Plan, it is essential to keep in mind how the organization has operated historically and how it plans to operate in the future.
Think Long Term:
Long-Term planning involves more than the one or two years after the current leadership is transitioned. Succession planning involves more than selecting the individual needed to maintain relationships with key existing customers. It requires the selection of the individual who can lead the next generation of clients. If you aren’t thinking in this manner, Succession Planning should be limited to selling to a third party.
Get to Know the Right Talent:
One must be aware of all the possible candidates who qualify for the position. Is the right talent the person with the largest book of business or the best new producer? Leadership of an agency involves much more than being able to produce new business. A leader motivates others and sees trends and risks before they impact the agency.
Develop Generations of Successors:
Do not just think about one single successor, plan for the future. Do you plan on retaining your equity interest in the agency? Perpetuation doesn’t always involve a sale of your stock. If you intend to remain as the owner of the agency you will need to come up with a number of successors who will be ready to take the position at any time if the predecessor leaves for any reason.
Open and Transparent Communication:
There must be open and transparent communication in the Succession Plan so that all the candidates, as well as other members of the company, are fully aware how the plan has been devised and how it will be implemented. Change is intimidating to most employees. The goal should be to make the transition as seamless as possible.
Balance between the Values of Fairness, Accessibility, and Transparency:
The principle values of fairness, accessibility, and transparency must be there. No candidate must be given any favoritism and the process of decision making should be very fair and transparent.
The Plan Should be Aligned with Current and Future Business Goals:
The decision of coming up with new leadership should be aligned with the current and future goals of the company. Why did you decide to perpetuate the business and not sell it to a third party? Does your Plan meet those goals?
Aligned with the Rest of the Senior Members of the Company:
It is very important to come up with an individual that is viewed as a leader by the rest of the key employees of the agency. If the first reaction of those people are “Why would they select him/her? Your Plan is most likely doomed to fail.
It seems as though Succession Planning occurs for one of two reasons. The first reason is that the agency owners wants the agency to be owned by a legacy. The second reason is that the owner wants to remain actively involved in the business on either a part-time basis or in an oversight role. These roles become much more pleasant and rewarding if the initial decisions are implemented properly.
The Value of Your Agency
As a firm, we believe an accurate valuation is part of our responsibility and the foundation of a great working relationship – even if that is further in the future. Because of this we, unlike most firms, offer free insurance agency valuations for those who qualify. Click below to apply!
