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March 2010: Succession Planning

Introduction
You are sitting at your desk opening your mail when you come across Bob Summers retirement party invitation. At first you disregard it but then make a note of the date. What you may have missed is that Bob is one of your top producers, and you stand to lose his entire book-of-business because he does not have a successor that will be loyal to your organization.

Your agents will not be around forever. It is important for you that they have solid succession plans in place. A brokerage without a succession plan can be a vulnerable weakness to your bottom line. A brokerage that has included your success in their succession plan is one that should be recognized as strategic to your business.

Your Role
As a member of your management team, it is important that you incorporate succession planning as a way to gauge the performance of your broker/agent network. Consider the cost of losing your most loyal players and having to scramble to find alternates.

The Question
Can you currently measure the impact of brokerage succession planning on your organization?

Example

Weight Question/Answers Points Explanation 60 Does this broker/agency have a succession plan? This question is worth 60% of the broker/agency score. a) No -1 This question is answered in the negative. This broker/agency has no plan. b) Incomplete -1 The broker/agency plan is to hand the business off to the owners children (who are still in school). The score reflects that this answer is the equivalent of a “No”. c) Don’t know -1 We have not asked the question, or the broker/agent is not willing to share this information. d) In progress 0 This broker/agency has a plan to hand the business off to their senior agents. Work is being done to formalize the process. e) Yes 1 A successor has been selected and agreements are in place. A timeline for transition has been defined and the plan has been shared with existing clients. f) Corporate 1 The broker/agency is a large publicly traded corporation. The board of directors deals with leadership transitions as a part of their governance. Agents are employees and are rotated through the client base so as to maintain a corporate relationship rather than a single individual. 40 Is the succession plan advantageous to our relationship? This question forms 40% of the broker/agency score. a) No -5 If executed, the broker/agency plan will not be a good one for an ongoing business relationship. The book-of-business is at risk. b) Don’t know -1 We have not asked the question, or the broker/agent is not willing to share this information. c) Opportunity 2 The plan provides an opportunity for us to grow the book-of-business we derive from the relationship. Work needs to be done to foster the potential. d) Yes 5 The succession plan is favourable to our relationship. e) Not applicable 0 Should be used if the answers to the previous question were “No”, “Incomplete” or “Don’t know”.

The Solution
When evaluating performance it is easy to manage by the numbers, but that does not always give you a well rounded impression of performance. Combining both quantitative and qualitative measures in your metric basket will virtually eliminates subjective decision-making.

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