This is a continuation from our previous blog post, The Marriage of Financial and Organizational Excellence. Read the introduction, here. Below is one of the three most impactful ways this union will move your agency forward.

How an agency approaches strategic plan sessions dictates how likely it is to achieve their goals.

Typically, an agency will have a facilitator, who may be an external consultant, lead the process using some or all of the employees. Some forms include trendy buzz words and “innovative” approaches. Others are the stereotypical executives in a room planning out the next five years. Either way, the gathering occurs, and goals are set in place.

The approaches all have some merits – and this is not to prescribe to a certain one – it is to highlight that they usually have a similar and significant shortcoming. Rarely are the financial implications specifically addressed, understood and accounted for.

Below is a snapshot from a fictional meeting that has too many foundations in reality:

The CEO states that the agency should easily be able to reach 12% growth a year. This is in addition to rolling out new services, redesigning the agency website, and renovating the current office space. Plus, team members will be tasked with undertaking a host of other department level projects. Aggressive. The CEO is adamant that this is achievable and rallies the troops with inspirational guidance.

Do you see the separation? What are the numbers needed behind the 12% growth? If the attrition rate is 8%, then the new business growth needed is more like 20%. That’s assuming they have a good attrition rate. Should acquisitions be a part of the number? That would help growth but will also be a weight on the organization.

Wait, how about the cost for the new website? Those are usually outside services that don’t come cheap! Is the agency prepared financially for the renovation AND are the teams ready for the disruption in their work environment? It’s going to be a big challenge to create double digit growth while the hammers are pounding in the background.

Add in all the other “department level” projects and you have a team that is pushed past capacity. The finances will be too. None of this even addresses the remote possibility that life gets in the way. Team members have emergencies. Finances face unexpected costs.

The result…

In this example, the marriage between financial and organizational excellence in strategic planning has resulted in a broken home. In the end, it’s the team member that will suffer the most from the failed results of their hard work.

Our recommendation at RD Advisory Group is that long before the strategic planning meeting takes place, the list of organizational goals needs to be measured and proved out by strategic financial guidance.

Stay tuned for parts two and three in the coming weeks!

For more information, reach out to Don ([email protected]) or myself, Roe ([email protected]). We’d love to share our insights of insurance agency financial and organizational excellence.


Thanks for reading!