Do You Measure Up?

In fewer than 10 years, an insurance brokerage in a depressed area of The United States—an area with a declining population—managed to increase its annual revenue from less than $5 million to more than $20 million.

How?

We’ve all read stories about the quarterback who rallies his downtrodden teammates to a come-from-behind, against-all-odds victory. But in business? Is that really possible? A recent study by Atlanta-based Reagan Consulting found that it is.

But what does it take? What are the qualities of successful leaders in the insurance industry, and how do they guide their firms to market dominance? The Reagan survey provided some interesting answers.

Reagan asked 400 insurance leaders to identify the industry’s best and brightest, then studied 60 overachieving CEOs recommended by those leaders.

Among the 60, seven in 10 were college business majors. Among those, the most common majors were business administration (30%), economics (19%), accounting/finance (11%) and risk management (7%). Nearly a quarter (24%) of the CEOs were liberal arts majors (most commonly, history and political science).

A total of 31% came from another industry, of which 13% had sales experience. Of those hired from within the insurance industry, 31% came from a carrier, and 35% came from another agency or brokerage. Six in 10 started in their current company as a producer or sales manager.As the future CEOs gained experience, other characteristics emerged that differentiated them from their peers. They thought strategically, which would enable them to effectively set their firm’s vision and strategy. They possessed an unusual ability to establish strong connections with their employees, which would enable them to motivate their team and build consensus around key initiatives (think of that winning QB). This combination of skills propelled them into the ranks of management and eventually into the role of CEO.

Top producers who stay on the CEO track and who possess these skills are often outstanding at managing their time and setting priorities. They don’t waste time on any task with a long, uncertain horizon or with a low probability of success.

So who are these super humans? It’s rare for anyone to have a balance of sales success, strategic thinking, people skills and time management. But a combination of these talents, according to Reagan, produces the unique DNA of a top CEO.

What about those firms that look at their top producer as their next CEO? Is that a good idea?

Reagan contrasted the top CEOs with the more common “lone wolf” superstar who produces tons of new business but who might lack the management skills or the aptitude for strategic thinking needed to be an effective leader. Reagan found these producers are best left to do their thing and to be rewarded appropriately. An agency needs them, Reagan found, but not necessarily in the corner office.

“The lone wolf top producer can be a real challenge,” says Bobby Reagan, who oversaw his firm’s study. “If asked to lead, they often fail because others refuse to follow them. On the other hand, if they are passed over, sometimes they’ll refuse to follow the leadership of another, which can lead to organizational paralysis.”

The median age at which the top leaders studied by Reagan became CEO was 39. The average time from entry-level sales to CEO was 12 years. That means the median CEO started with the company at age 27.

“Your agency principals need to remember that the lunch you’ve scheduled to interview that 27-year-old producer prospect might just be your most important meeting of the day,” says Reagan partner Kevin Stipe. “You might inadvertently be interviewing your agency’s next CEO. If you need another reason to take your producer-hiring program seriously, this is it.”

So what do the CEOs think? According to the Reagan survey, they say their most important priority is, first, setting their company’s vision and strategy; second, pursuing acquisitions, investments and new initiatives; and third, managing direct reports and recruiting key employees.

They agreed there was not enough time for the top priority, and they are always seeking ways to increase that time. Yet despite their lack of time, they frequently view setting vision and strategy as their greatest strength.

As one CEO put it: “My greatest accomplishment is creating a vision for our company with my management team and then getting the entire company excited about it and in a position to execute it.”

So what are the greatest weaknesses of these top achievers? According to them: (1) recruiting key employees, (2) corporate marketing, (3) making acquisitions and investments and, perhaps surprisingly, (4) managing sales.

This is surprising because most CEOs (57%) rose from a strong sales background. Most are effective producers who enjoy sales. Yet they said they don’t feel they are particularly good at managing salespeople and want to spend less time doing it.

“The most common statement I hear from CEOs about sales management is, ‘If a producer needs to be managed, we would prefer they work somewhere else,’” Stipe says.

Most of the new high achievers are white males, leading Bobby Reagan to conclude that the insurance industry needs to do more to foster female and minority leadership.

The time seems right. Although recruiting key employees is an ongoing issue, CEOs are finding this is an unusually favorable time to recruit. Following the financial meltdown of 2007–2009 and the subsequent weakened economy, talent is available. And these days the insurance industry, because of its lack of volatility, is considered by many to provide a more attractive career path than other financial services.

Bottom line: Your next hire could be the star quarterback of the future.