Page 1


a first financial bank company

Fall 2017

Destination: Next Generation 5 Ways to Attract Millennials Page 4

Developing a Leadership Roadmap Page 12


With multiple generations sharing the workplace, what can each generation learn from the other? Review the workforce graphic below and learn more on page 6.

Fall 2017 Publisher Oak Street Funding Editorial Director Stefanie Neer


Contributing Editor Sharon Robbins

Born 1978-2000


Art Director/Designer Aidreen S. Hart

Baby Boomers: N bo ex rn te af rs: te 1r 2 3% 00 0

Born 1946-1964

Graphic Contributors Beth Winchell, Beth Rogers


Generation X: Born 1965-1977


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4 Five ways to

attract Millennials Recruit this generation as customers and top talent

in 10 Gen-X the C-Suite

How this once-overlooked generation is making a move for the top

down the 14 Passing family business Learn how to work through the details of a succession plan

The Bridge is a newsletter produced by: Oak Street Funding 8888 Keystone Crossing, Suite 1700 Indianapolis, Indiana 46240 844-370-5757 Loans and lines of credit subject to approval. Potential borrowers are responsible for their own due diligence on acquisitions. California residents: Loans made pursuant to a Department of Corporations California Finance Lenders License (#6039829). The materials in this paper are for informational purposes only. They are not offered as and do not constitute an offer for a loan, professional or legal advice or legal opinion and should not be used as a substitute for obtaining professional or legal advice. The use of this paper, including sending an email, voice mail or any other communication to Oak Street, does not create a relationship of any kind between you and Oak Street.

© 2017 by Oak Street Funding LLC. All rights reserved. Any duplication without prior written permission is strictly prohibited.

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At the end of each day, the most valuable business assets leave the office. Successful business owners believe this to be true and run their businesses accordingly. Whether you are in growth mode or starting to think about retirement, having a clearly defined plan for employee and leadership development makes the future uncertainties of your business that much easier to navigate. In this edition, we will explore what we as leaders can do to motivate our colleagues – new-comers and longtime employees alike – to work collaboratively, to learn and grow as your business evolves, and to eventually be strategically positioned in your succession plan to become the leaders when the time arrives. With multi-generational teams making up today’s workforce, inevitable conflicts occur over issues such as management and operational styles, the use of technology and overall decision-making. By strategically

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offering the next generation meaningful opportunities and autonomy, managers and organizations can provide alignment, and feel confident that these employees will stick around to help the company grow today and into the future. At Oak Street Funding we are here to help you to realize today’s dreams and also to help fund tomorrow’s. Whether you are in need of capital, are growing your business, or are planning to acquire or retire, we’ll get you there.

Oak Street Funding® Vision Statement Oak Street Funding utilizes industry knowledge, well-developed technology and passion to deliver best-in-class service and capital products to insurance and finance professionals nationwide. Our customer-focused mindset and access to capital will allow us to continue to fulfill customer needs, identify growth opportunities and provide an empowering work environment for employees. 844- 370- 5757 • w w w. o a k s t re e t f u ndi n g.c o m | 3

ways to attract Millennials recruit this generation as customers and top talent Millennials, defined as individuals born between 1981 and 1997, are the new darlings of the modern economy. As spenders, Millennials represent more purchasing power than any other generation, so capturing that market share should be of top concern to any growing company. As a working force, Millennials bring the right mix of passion and engagement to the corporate environment, so employers looking to thrive in the digital age should consider this group in their recruiting efforts. But Millennials won’t respond to traditional ways of marketing that worked on the Boomer population and Generation X. How can you get Millennials to buy into your services, as well as consider insurance as a worthy profession? Here are some strategies for success:

Attracting Millennial Customers to your Insurance Business:

Below are five ways you can win over more Millennials as insurance customers:

 Go Digital: Millennials are often

described as “digital natives,” meaning that they grew up using technology that previous generations had to learn later in life. In other words, Millennials use the Internet and social media to communicate and interact with their world. This generation can seamlessly navigate between devices - texting, shopping online, blogging and using social media with ease. As a business, you need to not only be visible to these digital natives to attract their attention, but you need to be able to communicate and market to them digitally in the form of

unique online content, digital advertising and other online channels. Your insurance company, at a minimum, must have a good website presence, capable of delivering value and providing self-service capabilities such as online quotes.

 Be Searchable: Gone are the days

of yellow page advertisements and other directory listings. Along with a solid digital branding effort, your new Millennial customer needs to be able to find your company via a web search. Most Millennials rely on Internet searches to research products and services before purchasing, and if your company doesn’t show up in search results, it is left out of the decision set. Search engine optimization (SEO) techniques to ensure your website is listed among the top insurance companies in your market will give you an edge over competitors. One way to do this is to modify your existing website content to focus on popularly searched keyword phrases, and initiate a comprehensive content marketing effort, which includes tactics such as weekly blogging and social media marketing. If you don’t have the staff to do this, hire or outsource it.

 Look Within: Does your company

have Millennials on its team? If so, find out what makes your company attractive to their generation, and use this information to make your company stand out. Implement a referral program or discover other unique ways to drive awareness and interest among the Millennial

4 | w w w.oakstree tf un di • 8 4 4 - 3 7 0 - 5 7 5 7

crowd. If your company does not have Millennials on staff, consider the benefits of generational diversification within the workforce, and the benefits that hiring a Millennial could bring. At the very least, consider outsourcing contracts to Millennials.

 Mind your Mission: Millennials are

a very cause-driven generation. When they make a purchase, they tend to favor companies and brands who want to make a difference in the world. Is your company involved in the community in some way? How can you highlight your community efforts to get the attention of the Millennial generation?

 Service Sells: While excellent

customer service is important to every generation, Millennials demand 24/7 information and support, because they are accustomed to the speed and efficiency of the digital era. Make sure your agency offers some type of round-the-clock service, whether it’s an instant online quote, a chat feature or a mobile app. These features may make a difference when the Millennial chooses a provider.

Attracting Millennial Talent to your Insurance Business:

One of the best ways to gain a large Millennial customer base is to hire more of them as team members. Here are some suggestions on how to recruit and retain Millennial employees:

 Offer Flexibility: More than any

other generation, Millennials value flexibility in their careers over other perks such as salary or benefits. While they are passionate about their work and personal interests, they want to live a life outside of the workplace. Offering flexible schedules, telecommuting or other perks that encourage a work-life balance will be more appealing to a Millennial job candidate. Also consider flexibility in job responsibilities to make work life more interesting to Millennial talent. This flexibility may be key to retaining Millennial candidates, with average Millennial job hopping every 18 months, according to the U.S. Bureau of Labor Statistics.

 Feed the Culture: Fun is nearly

as important as flexibility to the Millennial employee. Creating an enjoyable atmosphere with a unique company culture can attract good Millennial candidates to your business. Consider posting on social media activities such as company outings, parties and get-togethers to give candidates a feel of your company culture. Highlight your employees’ stories on social media too, which will give job searchers a chance to visualize working with your team.

Use social media to communicate about open positions and to market your fun, flexible atmosphere and company culture.

 Give Back: Insurance is about

helping people, so Millennials will likely be drawn to this type of profession as a meaningful career choice if you highlight this aspect in your recruiting. Millennials like companies who are actively involved in causes, so be sure to tout these efforts on your blog and social media pages.

 Mentor Them: Contact college

When you hire a new Millennial to your staff, make sure you offer them guidance through a mentorship program established with more senior employees in your business, and pay for continuing education to sharpen their skills on the job.

Millennials: The Key to Business Growth

Millennials might be a vastly different generation than their predecessors, but they can also bring a unique value to your customer and employee base. By understanding them better, you can find ways to attract them as customers and team members. Doing so will set your business apart and help bolster its growth into the next decade.

campuses in your area and consider starting an internship program to recruit potential employees from the financial, accounting, business or marketing departments. Consider speaking to students to help them understand and visualize a career in the insurance industry.

Use Technology: The Millennial generation not only uses technology to communicate in their personal world, they prefer to work for a technologically-savvy company too. To attract new talent, ensure your company’s online presence is solid and your website is searchable. Start incorporating technology in your business and use it to streamline efficiencies within the organization.

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.X With multiple generations sharing the workplace, X . what Gen can each generation learn from the other?

The multi-generational workforce has become the new reality, with many Baby Boomers and even a few pre-boomer Traditionalists delaying retirement in favor of staying in the workforce. Yet, the Generation X and Millennials now make up a majority of the workforce. With this environment comes many challenges, as each generation has differing values, attitudes, approaches and working styles. So how can all generations come together and work cohesively toward a common company goal? And what can each generation learn from the other? Understanding the unique characteristics of each generational group can help insurance owners effectively manage their team, the individual needs of its team members and expectations.

Understanding the Generations:

Agencies today can consist of three, four or even five generations of employees. Today’s workforce consists of the following age groups, according to Emsi ( •T  raditionalists/The Silent Generation: Born 1900-1945: 1-3% of workforce •B  aby Boomers: Born 1946-1964: 27% of workforce •G  eneration X: Born 1965-1977: 27% of workforce •M  illennials/Generation Y: Born 1978-2000: 44% of workforce •N  exters / Generation Z: Born after 2000: 3% of workforce These percentages are constantly changing, as Traditionalists and Boomers reduce their working hours and eventually retire, and as Nexters become of working age and join the working class. With each generation comes different working styles, attitudes and behaviors that will 6 | w w w.oakstree tf un di • 8 4 4 - 3 7 0 - 5 7 5 7

surely transform the work environment. Along with globalization, technological advancement and a fluctuating economy, generational differences will create a new workforce of the future. Employers that don’t prepare for the relationship management expectations and challenges that come with managing a diverse generational workforce will face significant obstacles in the future. Considering this new reality, how can agencies sustain a successful work environment that accommodates all ages?

Views of the Workplace:

One of the first keys to developing an intergenerational workforce is to understand how each generation views work and life. The Traditionalist and Boomer generations view their careers in a much different light than the Millennial and GenX populations. Having been impacted by the Great Depression and world wars, the older generations launched their careers in an era where jobs had longevity and employees spent decades at one company. Generation X workers, many of whom saw jobs impacted by an economic downturn, show much less loyalty to companies, and have been forced to become self-reliant due to lack of uncertainty in the marketplace. Millennials came of age during economic expansion, are more entrepreneurial in nature, and tend to be more open to positions which offer personal fulfillment rather than a steady paycheck. Both Millennials and GenX value flexibility and work-life balance over traditional perks such as title or hefty paychecks. What does this mean for your multi-generational business? Knowing how each generation values different aspects of their careers can help managers hire, motivate and retain employees.

Overcoming Stereotypes

While managers can seek to understand how each generation “ticks,” employees must also come to an understanding of how they see themselves as well as how they see other generations. Each generation tends to have pre-conceived notions about another generation, and if these are not kept in check, it can seep into corporate culture, leading to misunderstandings and dysfunction

within the team. For instance, Millennials often feel like the older generations view them as “entitled” or “lazy,” while they see themselves as most productive. Older generations are often labeled as “tech-challenged” or “workaholics” and “uncooperative” but instead view themselves as “friendly and helpful.” To avoid these negative stereotypes, leaders must communicate that they respect and value what each generation brings to the table, and encourage diversity, flexibility and acceptance among all employees.

Integrating the Generations

To create a positive and effective inter-generational workforce, companies should strive to create a work environment that suits all generations’ needs, preferences and values. For instance, older generations might be more accustomed to working longer hours, while younger generations might place more value on results. Companies should be flexible to meet the needs of both sides. Leaders should incorporate the management style, organizational processes and group team-building exercises that foster cooperation and joint participation. The more each generation interacts with one another, the more they will come to understand and learn from one another. When leaders create new projects or teams made up of multiple generations, this can help their employees overcome initial stereotypes, gain respect for one another, and in the process, learn valuable skills from one another. As they learn about each other’s strengths and abilities, the team can build upon those and blend ideas and tactics effectively for the greater good. And when it comes to perks and incentives, agencies should consider incentives and retention plans that take each generation’s needs and desires into account. This, in turn, will minimize conflicts related to hiring and retention, impacting the company’s bottom line.

Communication Style

With each generation comes a distinct and preferred style of communication. In the workplace, this can present many challenges, as generational groups are expected to work effectively together. As older generations tend to be less comfortable with technology, they

may rely more heavily on face-to-face meetings and traditional ways of learning and communicating. GenX and Millennials tend to be more independent, preferring to use technology to learn and interact, as well as to multi-task and improve efficiency. For multi-generational employees to communicate well with one another, each generation needs to be open to communicating in a style that benefits the entire group and its needs. This could take some experimentation to find the right mix of communication methods to meet everyone’s needs, as well as the efficiency of the organizational process. A culture of flexibility will ensure that older generations adapt to using new technology to communicate, while allowing younger generations to recognize the value of some face-to-face interaction. Again, seeing the world from another generation’s perspective can help employees learn and grow from one another.

Management Style

Leading and managing each generation is another challenge business owners must face. In some cases, GenX and Millennials are taking the leadership helm for companies and must learn to hire, manage and retain employees of all ages. If leaders consider the benefits, company culture and even management style preferences of each generation, it will ensure that they create a diverse workforce that feels challenged and valued. In addition, these employees will be more effective on the job. Traditionalists and Baby Boomers value rules and procedures and tend to stick to the status quo, with less flexibility in new ways of doing business. GenX and Millennials are open to new processes and innovative solutions, particularly when it comes to automation and efficiencies. Older generations prefer personal feedback and interaction as a management style, and are used to a traditional hierarchy of structure in an organization. Younger workers are used to flatter organizations where all layers contribute to the success of the company, and they desire to be respected and valued for their achievements, regardless of their age. While these are generalizations about each generation, it helps for managers to have an idea of an employee’s view of


authority and leadership preferences to properly communicate as well as motivate and reward them for their efforts.

Working in Harmony

Offering some sort of multigenerational training within your organization will allow employees to learn and understand each other and discover better ways to communicate, problem-solve and improve employee relationships. Another way to ensure inter-generational workforce success might include starting a formal mentorship program. Pairing an older and younger worker may provide an opportunity to encourage acceptance and mutual respect, and allow each generation to learn skills and experience from the other. Aside from work-related projects and tasks, help your inter-generational employees get to know one another on a personal level by offering opportunities to interact in a non-working environment. Some ideas for doing this include hosting company luncheons, regular social outings or even teambuilding exercises or seminars. Such activities bring the generations together and can help employees see each other as people rather than as separate groups. Consider seeking ongoing feedback from employees to ensure that all employees’ needs are being met, and to encourage new ways of interacting and doing business.

Benefits of CrossGenerational Teams

Despite the challenges of a workforce spanning multiple generations, the benefits of having a diverse team far outweigh the trials. With generations working together, agencies can improve positive communication and company morale, which can boost company performance and can even trickle down into customer satisfaction. These healthy, crossgenerational teams can also boost the company’s bottom line, reducing turnover rates, and lowering the hiring, training and retention costs needed to maintain staff. When each generation is valued for its contributions and respected for its unique perspective on the business, companies can thrive as productive, successful team members working toward a common goal.

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:industry news

Employer leadership: The power of returning to work after a disaster Businesses and their leaders have a unique role to play in helping communities and individuals recover from the devastation of storms like the recent hurricanes. According to an expert in relief and recovery, businesses should not underestimate the power of getting employees back to work and re-establishing routines. Not only

6 things your small business needs to spend more money on According to a study by the U.S. Small Business Administration, more than half of small businesses fail within a single year of starting. One consistent cause of failure is lack of capital, and by

does returning to work provide income, but studies show

extension, lack of investment. What are the top

it provides tremendous psychological and emotional

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benefit. Also, “one of the things that helps keep people

investing in to thrive? They are graphic design,

buoyant, that encourages their spirit, that helps them feel

marketing, technology, legal advice, accounting

like they’re doing something important and effective is

services, and insurance. From a strong logo to

giving them opportunities to help.” Having a team

define your brand as professional to having

identified within your organization to help with local

appropriate insurance coverage – it may be time to

efforts can benefit everyone’s wellbeing.

invest more to increase your chances of success.

Should you use Facebook® for marketing your small business? A survey by G2 Crowd states that 80% of business owners use Facebook®, making it the most popular tool for businesses in the digital world. What’s more important than simply creating a profile, however, is getting creative with ways to leverage the platform, potentially investing in advertising, and maintaining a consistent personality for your brand. These methods may help you increase your number of followers and eventually your clients.

Creating a positive relationship with failure The concept of thinking about failure with gratitude may feel like rubbing salt in a wound. In business, failures both big and small can regularly be experienced. Whether it is a lackluster

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Equifax® Cyber Insurance: Enough to cover breach? Equifax Inc.’s insurance against cyber breaches is likely inadequate to cover the credit-reporting company’s costs tied to one of the biggest hacks in history. “Equifax carries cybersecurity, crime, general-liability and other lines of insurance, and we have begun discussions with our carriers regarding the incident,” a spokesperson said. The company holds a policy that would probably cover about $100 million to $150 million, however “our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur,” Equifax said in the filing. 844- 370- 5757 • w w w. o a k s t re e t f u ndi n g.c o m | 9

GEN-X in the C-SUITE

How this Once-Overlooked Generation is Making a Move for the Top


ne leadership group that is poised to jump to the forefront as the Baby Boomer generation retires is Generation X. Born between 1965 and 1977, this once-ignored and underappreciated generation has slowly emerged to take over the C-suite. With multi-generational teams making up today’s workforce, inevitable conflicts occur over issues such as management and operational styles, technology use and overall decision-making. Can Generation X provide the leadership qualities to merge the generations? And what are some of the most influential qualities that Gen X leaders possess that can help take our organizations successfully into the next decade?

X Marks the Spot:

The power of Generation X lies in its good blend of traditional Boomer values and the technological savvy and entrepreneurial bent of the Millennial generation. As the economy continues to evolve and grow – globally and technologically – GenX can help companies evolve with fresh ideas and perspectives. The GenX employee has lived with less wealth than their Boomer parents, yet has developed a healthy balance of saving and spending, making them masters at doing more with less. GenX is used to working in flatter organizations with fewer middle-management positions, as opposed to the hierarchal structure of the Boomer generation. Thus, they are used to doing more with less, remaining agile and nimble in their quest to improve efficiencies and produce cost savings within the organization. Despite their frugality, GenXers have enormous spending power and tremendous influence in the world economy. According to the US Department of Labor, Gen X currently spends more money per household than any other generation. Generation X workers are very educated, with more than 35% of them having college degrees. They are also great innovators and entrepreneurs. Successful GenX entrepreneurs include Elon Musk, founder of PayPal®, Tesla Motors® and SpaceX®; Michael Dell of Dell Computer®; Sara Blakely of Spanx®, and Jack Dorsey of Twitter®. Most GenX entrepreneurs were entering their careers about the time of the dot-com boom and bust of the 1990s, so they possess the innovative spirit of the new Millennials with the practical and traditional values of the Boomer generation. Many World-class brands such as Microsoft® and Yahoo® have begun placing Gen X employees in leadership positions, recognizing 10 | w ww.o akstree tf un di • 8 4 4 - 3 7 0 - 5 7 5 7

the value they bring to the boardroom. In preparing for the inevitable exit of the Boomer generation in the workforce, Generation X leaders will emerge and take over the helm successfully, while providing the mentorship opportunities for Millennials to continue to grow and emerge behind them.

Closing the Digital Divide

One of the biggest benefits and influences of Generation X is their ability to bridge the digital gap within the new, multi-generational workforce. They’re technologically savvy, like Millennial digital natives, but they can engage and reach out to communicate effectively in person as well, like their previous Boomer generation. Because of this, they are great influencers and mentors to both the older and younger generations, making them great leaders for today’s modern companies. Their management style combines relationship-driven methods with automated digital communication to balance the needs of all generation of workers, while using technology to work smarter, not harder.

Can Generation X Leaders Succeed?

The effectiveness of Generation X in the C-suite depends on their ability to manage several crucial factors, including how to: • Navigate growing cultural and generational divides • Adapt to increased globalization and competition • Utilize new technology to communicate, automate and streamline business As agencies look to transition leadership to the new generation, they must embrace these changes occurring in the marketplace and in the technological world.

A Smooth Transfer of Power:

Companies looking to trust executive leadership to a Generation X employee should start by creating a long-term vision and strategy for the succession planning process. They should start by identifying any potential candidates internally, and then evaluating their skills and qualifications for leadership. Following the identification process, they can put training and development programs in place to groom future leaders for taking over the C-suite. Finally, companies should start giving Gen X leaders the opportunity to manage others, take on important projects, get involved in community efforts, and gain visibility in an executive role. Ongoing mentorship with potential GenX leaders will help boost confidence and help them feel comfortable taking over the role when the timing is right.

#OakStreetCares Giving back is very important to Oak Street Funding®. This year, our staff has participated in many local and national events and charities. We collected 400+ teddy bears to help reduce trauma suffered by children in violent scenarios, have tutored children – helping them learn how to read, as well as provided school supplies and clothing, have sent supplies for pets affected by the hurricanes, and even have volunteered with Big Brothers Big Sisters. We are very proud to say we have been busy.

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developing a


Roadmap He’s a great employee with a good head for business. You’ve hired well over the years, but he really stands out. As you watch him deal with your clients and analyze his numbers, you’re confident that, when the time is right, he’ll be ready to take your business’s reins. But if you had a crystal ball, you’d know that he’s going to take a job with one of your competitors in two years. When it happens, that news is going to stun you and the rest of your staff. Down the road, when you look back over your month-to-month results, you’re going to see a significant dip that followed his departure. Not only did you lose his revenue, but the rest of your team lost their way for a while, because they saw the concern and uncertainty in your eyes. You thought you were doing all the right things. In your mind, you had a timetable for your retirement, and knew how you would handle succession when you were ready to pull the plug. There were three problems with that approach. First, the plan was in your in mind, and you hadn’t shared it with anyone else who had a role. Second, you didn’t have any kind of a fallback position. You were so busy grooming your expected replacement that you neglected the rest of the team. Finally, you never asked what it would take to keep him happy. Your competitor did, and look what happened.

It’s your responsibility

If you have a plan for the future of your business (at least more than just a vague idea), good for you. You’re already ahead of many of your peers. But if you don’t also have a plan 12 | w ww.o akstree tf un di • 8 4 4 - 3 7 0 - 5 7 5 7

Becoming intentional about the future of your business

to mold and prepare the people who make that future happen, you’re just gambling. If you’ve planned properly, you should be able to identify everyone who will play a leadership role in the future of your company and where you may have gaps that you need to fill. But identifying your future leaders is only the first step. You also need to help them develop the skills and knowledge they’ll need to serve in those roles, and have a way to monitor and track their progress. After all, you don’t want to ride off into the sunset if your team is only 85 percent ready. In addition, you know that turnover is costly and want to identify ways to encourage top employees to stick around. The most effective retention strategies are those that focus on developing career paths that keep employees challenged and make them feel like important contributors to the company’s success. Team members like to know where the business is headed and the role they’ll play, and those who see their part as important are less likely to be pulled away by an aggressive competitor.

Using data to track

Adding a rigorous data-capturing element to your personnel management process can play a critical role in the leadership development aspect of your succession planning. By quantifying and tracking your team members’ levels of skill and knowledge, you can immediately identify gaps you need to address. Just as important, a good data-based system will allow you instantly determine how many potential candidates will be available for each role within the next year, the next

five years, and so on. That way, you can clarify whether you need to perform any outside hiring and exactly what those new team members will need to bring with them. To determine what data you need to measure and manage, start by identifying the job skills and leadership characteristics that you view as most important to the future of your business. Look at your current performance assessment tools to ensure that you have a way to measure those factors. You’ll want to be able to address categories such as experience, strengths, weaknesses, and career goals, so you can quickly see what kind of training, mentoring, and experiences each team member needs to bring them to your goal.

What do they want?

Many business owners believe that they know what their employees want from their jobs and careers. Those are the business owners who become surprised when those employees move to a competitor or different career. It’s important to talk with your employees on a regular basis (at least twice a year) to understand their own career goals and level of satisfaction with their positions. They may be hesitant to share this information at first – especially if there hasn’t been an opportunity to do so in the past – but when it becomes a habitual practice, they’ll begin to open up. For one thing, it’s not the same as a performance review. Instead, you’re discussing opportunities and helping the employees identify what both of you will need to do to prepare them for those opportunities. You may be surprised to discover that an employee who seemed content to perform a lower-level job may actually be quite ambitious. As you develop a roadmap for that team member’s future, be sure to include measurable objectives, so you can share their progress. And, in future conversations, ask them to assess their own progress. “Jane, when we met earlier this year, you expressed a desire to get better at sales, and we sent you to classes. How did that affect your confidence with your sales skills?”

If you’ve planned properly, you should be able to identify everyone who will play a leadership role in the future of your company and where you may have gaps that you need to fill. Business owners that take the time to learn what’s important to team members, and then invest in helping those team members enhance their skills and abilities will strengthen loyalty and create a psychological “debt” on the part of employees. Most will feel that they owe their allegiance in return for the investment that’s been made. If this is an ongoing process, you’ll simultaneously be able to improve their skills and shape them for the needs of the positions you have in mind.

At the ready

Businesses that take the time to handle succession planning and leadership development in this manner create a strong pool of candidates who have the right skills when positions become open. Because they’ve built leadership development around the business’s strategic planning, they don’t have to settle for candidates who offer just some of the desired qualities, but that offer all of them. Just as important, they don’t have to resort to bringing in outsiders who may not be compatible with the company culture. The internal candidates have been steeped in that culture, so clients are assured of consistency. Another benefit of this type of analysis and reporting is that it gives you options if an employee leaves unexpectedly, dies, or encounters significant health issues. Instead of being left in a lurch, you can quickly determine which current team members are best suited for the vacated role – along with specific areas in which they will need to sharpen their skills. In the meantime, other employees who have those skills can fill any gaps.

Number one

This approach to leadership development is especially valuable for the employees who may ultimately serve in the company’s top role. We’ll

use CEO for that term, although it could just as easily be something like General Manager or Managing Agent. When a CEO retires, dies, or otherwise steps out of the role, the immediate temptation is to find a replacement whose style and approach are similar. That’s why it makes more sense to use the business’s strategic planning as a foundation for leadership development. The person who will serve as the next CEO should be the individual who has the best skills for the business’s strategic needs. It may be that the current CEO reached success through sales skills, but now that the company has multiple strong producers, it may make more sense for the next CEO to be more of an administrator or a visionary. One thing to keep in mind when developing a plan to replace a CEO from within the company is that the promotion will cause a ripple effect through the organization chart, opening a series of positions. The plan should consider each vacancy that will be created and identify candidates to fill it.

Asset protection

Successful business owners are given to saying their businesses’ best assets are their employees. As the industry becomes more competitive in the coming years, top-quality talent will be in high demand. By developing a leadership development program based on the business’s strategic goals, you’ll not only prepare the business for growth. You’ll also reduce the chances that key employees will depart for what they perceive as better opportunities. Having a clearly defined succession plan and supporting it with leadership development makes the uncertainties associated with a job change less appealing. In fact, you could call it a form of insurance.

Passing down the family business Many family-owned businesses tend to outperform non-family owned businesses due to less bureaucracy, greater loyalty, long-standing values, and an emotional and financial commitment. However, few family-owned businesses survive past the first generation of ownership. With only 30 percent of such businesses surviving the first generation and a mere 10 percent lasting through the third generation1, poor planning, lack of interest and lack of proper skill set has led to the demise of the family business over time. In addition, family businesses often have a greater challenge when selecting new ownership and management. The familyowned business succession plan must carefully work through these details, leaving a clear path for future owners to follow, while considering the needs and desires of surviving family members and future generations.

Planning Process

When passing on a family insurance agency, developing

a succession plan helps ensure the survival of the business. This succession plan will should include a well-thought-out business and operational strategy that family members can follow upon the absence of the current owner. Safeguarding the success of the business is even more important in a family business because the next generation(s) may depend on the income generated from the agency. What are some considerations agency owners should keep in mind when developing a succession plan for a family business? What tax and legal implications might impact the decision? How can an agency owner select the best candidate to take over the agency?

Valuing the Business

While business valuation is part of any business succession plan, agency owners must place careful consideration on this part of the process, even if the business is never sold: Owners should work with a knowledgeable and reliable financial advisor or certified valuation appraiser

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to determine the value of the net assets, market share, income and more. They also must consider any of the following conditions: • Family member employees and salary implications • Impact on the business owner’s exit to the worth of the agency • Gift implications for the owner’s children or grandchildren • Implications of death or divorce • Life insurance costs and needs • Compensating heirs not involved in the business • Tax and estate needs of the retiring or exiting owner/family • Optional buy-out or alternative plans if the business is sold

Choosing a Successor

Deciding which family member is best suited to take over the family business can be one of the most emotional aspects of succession planning for a family-run agency. Having a strategy team that involves both family and non-family members will help ensure that

owners keep a clear head and objective viewpoint throughout the process, and make decisions in the best interest of the business and everyone involved. Agency owners should not simply choose the first-born son or daughter or a surviving spouse to take over the business due to birthright. In some cases, this plan can backfire if the chosen person is not well-suited to lead the agency, or has apathy about taking over the position. In addition, those who wish to take over leadership may not be qualified to do so. Consider potential conflicts which may occur within siblings or family members and set up the proper controls within your succession plan to alleviate that risk.

Moving on

Agency owners should invest time and energy to educate the next generation of potential candidates for their company leadership. This can and should be done years before implementing the succession plan – ideally from three to five years before the targeted exit date. Plan to have the new family successor(s) get involved in running the business (if they are not already). They should start developing relationships with key clients, represent the company in public, and get a solid sense of how to run the business. It’s also important to assimilate the new leadership into the business culture and allow them to develop positive relationships with the current employees, vendors and partners. When the succession takes place, the former leader should encourage the new leader(s) through ongoing communication, mentoring and advising, whether in an informal or formal fashion. 1 Knowledge@Wharton. May 31, 2016. “Are Family Businesses the Best Model for Emerging Markets?”


MarshBerry’s Peak Performance event is the preeminent event for specialty distributors in the insurance space. Peak Performance creates an intimate networking opportunity for executives to learn and help improve their business – while enjoying the slopes of Park City, Utah.

AGENDA HIGHLIGHTS • State of the Industry for Specialty Distribution


• Keynote Address by Jack Uldrich, Global Futurist, Scholar & Author: The Big AHA – How to Future-Proof the Insurance Industry Against Tomorrow’s Transformational Trends

• Wholesale Brokers, Managing General Agents (MGAs) and Program Administrators

• Industry Panel Discussion: What’s Next in InsurTech?

• Reinsurers with Specialty Books of Business

• Current Perspectives on Specialty Distributors

• Specialty Retailers



Sunday, January 28 - Tuesday, January 30, 2018

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The Bridge: Fall 2017  

Information, insight and industry news for insurance agents.

The Bridge: Fall 2017  

Information, insight and industry news for insurance agents.