Over the past 45 years I have watched a number of once premier life insurance agencies in our area become a shell of their former selves or, in other cases, disappear altogether.
The agency that used to be the second largest in the state today has only a handful of agents left and just two belonging to the local National Association of Insurance and Financial Advisors association. This is an agency that previously supplied a number of strong leaders (including several presidents) of our local and state associations. Today the agency is a shambles–and I am told it doesnt even employ a single secretary or other support staff.
Essentially the same thing can be said of at least five other major agencies. No doubt there are a number of reasons that explain why this has happened. In a couple of instances the change has been deliberate because the company altered its course and changed its focus. But for the most part, I do not believe this decline has been intentional. So, this raises the question: How did these once fine companies manage to destroy their field forces and, in a few cases, themselves?
In my view there are a number of ways to accomplish this, and I believe at least some of the following factors have been at work in every instance of the aforementioned declines.
Perhaps the most effective way to kill a sales force is to put someone in charge who dislikes salespeople or has no respect for the work they do. This is not as strange as you might think and it manifests itself in other businesses as well. I have known numerous car dealers who have regarded their sales people as strictly a “necessary evil.” Unfortunately, it is true that this attitude does exist in some home offices and it trickles down into all levels of management.
At a banquet held at a convention to which I had been invited to speak, I was seated next to the company vice president in charge of investments. Most of the evening this person regaled those of us at his table with stories of his relationships with bankers and investment houses. His comments were laced with no small amount of snobbery and ego. I do not believe it ever occurred to him that the premiums harvested by the agents at the table provided the fodder he fed to his investment cronies. One irate agent finally reminded him that it was one of his banking buddies who was eating his lunch in his town with their mass marketing of mortgage insurance. The V.P. shrugged off the challenge as inconsequential.
Fortunately, such attitudes are not universal. Many CEOs have attempted to stamp out anti-agent feelings within their companies with varying degrees of success. Others have tried to lead in this area by example. A good illustration of this occurred in a recent interview of Sy Sternberg, CEO of New York Life, by the New York Times.
In the interview he stated: “I spend a lot of time with our sales staff. I learned how hard their work is at a summer job during college selling Colliers Encyclopedias–I lasted one day. They dropped me off some place on Long Island, and I started knocking on doors. Only once did someone invite me in … and that was to show me their set of the Britannica. Maybe thats why I hold our agents in the highest esteem. I know I cant do their job.”
There is truth in the adage, “Never judge a person until you have walked a mile in their moccasins.”
Another destructive course is to view agents merely as producers–much like a hen producing eggs. We recruit people into our business on the premise that they can build their own business. And yet when they start acting like business people and aspiring to ambitious undertakings, it is not unusual for management to come down with a heavy hand. I was fortunate in that my first manager saw each agent in his shop with career paths that were unique to each person. He unselfishly guided his people into areas that allowed them to grow, even though it may have cost his own shop some lost production.
Every agent who has been recruited, financed and trained owes a certain amount of loyalty to the management and company who did this. However, they do not owe a lifetime of servitude at the expense of their own hopes and plans.
A third proposition relates to the product an agent is expected to sell. Company loyalty is earned more by good products than by good intentions. A company chief actuary once told me that he did not believe any company had the right to expect their agents to sell a product that was non-competitive. He was dead right, for it is the agent who feels the heat from the consumer if things dont work out as proposed.
This of course imposes a high level of responsibility on top management to properly manage the company finances. It is worth noting that the agencies that have vanished from our area represented companies that ignored rules of sound investing–a catastrophe for policyholder and agent alike.
I believe that failure to develop depth of management is also a formula for trouble–if not failure. Developing such depth requires that top management be able to tolerate strong people in subordinate roles, particularly as they grow into top management material. Sounds simple, but it is surprising how often the person at the top acts as though he will be in charge forever, giving little thought as to who will follow.
It is a great comfort to people in the field to be able to look at the lineup of prospective leaders being groomed for greater responsibilities. On the other hand it is disturbing when the torch is passed to an outsider who may have little grounding in our business. Sometimes it works and sometimes it doesnt, but I do not believe a company should plan on being able to suddenly pluck talent from another company or another business as a succession strategy.
An important factor in preserving and building an effective field force is to express belief in the people who comprise it. This breeds confidence and loyalty, both important to the success of the company. The wise CEO understands that not much happens in the rest of the company until a sale is made.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 13, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.