Family Legacy through Many Generations
The insurance brokerage industry is unique in many ways. Many insurance agencies can trace their roots through a family legacy that goes back many years. There are agencies that are now in their 3rd generation of family ownership. They all hope to continue that legacy for future generations.
Many small businesses follow this pattern. It is admirable and has resulted in the creation of many successful businesses and family wealth. Family ownership and relatives in a business is not bad by itself, but it can create many issues.
How Many Relatives are Enough?
Sons and daughters are completely understandable. What happens when the relatives include multiple sons or daughters, often from multiple owners? What happens when the relative chain includes son or daughters-in-law, nieces and nephews, and cousins? We had a client who still worked with their ex-spouse. What happens when all of these family members work in the same agency?
As an agency owner, you are held accountable for your actions. Your decisions affect the profitability of the agency. If you make a bad decision, you have to accept the consequences. Unfortunately, our experience is that relatives are not always held accountable. The worst part of this process is that the lack of accountability ends up hurting the employee.
Relatives Need Accountability
It might be something simple. Would you accept habitual tardiness from a non-relative employee? Why accept it from a relative? In any business, we must constantly prove our worth. Our employer agrees to pay us a salary and we need to add value to the organization and support our value. If we can’t continuously prove that worth, our salary needs to be adjusted or we need to be replaced by another employee. This becomes much more difficult when the employee is a relative. We feel a greater sense of loyalty to that employee and we worry about the consequences if we take action against the relative. Family gatherings can be difficult under the best of circumstances.
Don’t Lose Perspective!
One of the biggest issues we face is when a relative employee loses perspective. Most of these individuals have been with the agency for many years. Their salary was increased and they now should be considered “highly compensated”. They view their salary as an annuity, not as something that has to be earned and justified.
Once someone’s salary exceeds $100,000, they need to be considered a leader. They must have high expectations placed on their performance. You have every right to expect that they exceed your expectations.
Don’t settle; don’t set lower standards because your family member works for you. Understand the market and understand that you deserve the best possible performance from all of your employees.
When you decide to leave your business, having a family member take over can be the ideal situation, sometimes.
Agency Valuations
As a firm, we believe answering the question “How much is my agency worth?” 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 insurance agency valuations for those who qualify. Click below to apply.
