MARKETING AGENCY OF THE MONTH:
COMPENSATION MODELYIELDS GREAT RESULTS IN
THE GREAT NORTHWEST
PROPERTY & CASUALTY AGENTS AGENCY MARKETING • INSURANCE MARKETS • NEW PRODUCTSNOVEMBER 2008
SPECIALTY LINES: THE SECURITY BUSINESSMARKETING: TAKING ADVANTAGE OF TRIA'S CHANGES
TECHNOLOGY: SOFTWARE FOR MANAGING LICENSES, CARRIER APPOINTMENTS & CEBENEFITS: P-C FIRM'S BENEFITS BUSINESS GROWS TO 45% OF REVENUES
ALSO: HR ASSISTANCE FOR AGENCIES
18 ROUGH NOTES
annual meeting in December wherewe show our employees all ournumbers. We show them our year-endprofit and what is going to bonuses, toprofit sharing and what amount isbeing retained to ensure futuregrowth. Everyone understands thatwe win and lose together, as a team.
“Key employees are able to buyownership on a book value basis. Wecurrently have 24 shareholders,spanning several generations,” Gregadds. “This puts us in a positionwhere we can remain independentand can focus on long-term strategies.In fact, long-term thinking permeatesthe agency. Our employees and
shareholders see that our long-termsuccess contributes directly to theirsuccess through profit sharing anddeferred compensation.”
He continues: “It’s incrediblewhat this model has produced. Itinspires teamwork. One of ourmissions is to increase cross-selling,and we have had no problem gettingour people to see the value in thisapproach. Everybody is aligned withthis mission.
“We place huge emphasis on qualitycontrol and quality management and,again, have gotten complete buy-infrom our employees who recognize thatimprovement in these areas means
better service to our clients and ourcompanies, as well as better bottom-line results for our agency.”
Everybody winsThe customer focus extends to the
insurance companies the agencyrepresents. “Our carriers are ourcustomers,” Greg points out, “and wefocus on that customer base with thesame intensity that we offer ourinsureds. We try to structure oursubmissions so the underwriter willlook at them first and give our clientsthe broadest consideration.
“We all recognize that withoutquality products from our insurers,we would not be able to answer ourclients’ needs,” he says. “We workwith our companies to make certainthat we are providing them withbusiness that meets their goals, justas we work with our clients to makecertain that we are meeting their riskmanagement needs. It is a systemwhere everybody wins.
“The companies win by obtaininggood business. The clients win byhaving effective risk managementprograms that reduce their overall costof risk and by having excellent claimservice when that is needed. Ouremployees win by having satisfyingjobs where they can do the right thingfor their customers and through acompensation structure that rewardsthem for service excellence. And ouragency wins by retaining profitablebusiness. We set a goal each year of95% client retention and regularlyachieve a better result. Last year itwas 97%,” Greg explains.
“This same intensity and focusgoes into our new businessdevelopment strategy, emphasizingmeeting client needs rather thanselling insurance.”
Deep experienceThe 170 employees who comprise
the PS&F team cover the gamut ofdisciplines needed to make certainthat their clients have a riskmanagement program that isintegrated into their strategicbusiness plan. “Our objective is to bethe trusted advisor for our clients,”Greg says. “To accomplish that, weneed to completely understand theirbusiness and develop the appropriaterisk transfer mechanisms that willbest adhere to their overall businessphilosophy. That’s true across all ourdepartments—commercial insurance,surety, benefits and personal lines.
“That process starts with athorough analysis of the client’sexposure to risk, coupled with an
NOVEMBER 2008 19
By Dennis H. Pillsbury
When Messrs. Parkerand Smith left ageneral agency toestablish their
own agency in downtown Seattle,Washington, in 1937, they resolved to structure it in a way that wouldempower employees. The idea was tomeet client expectations for service,and the placement of the insurancewould follow.
To accomplish that, they decided todefy conventional wisdom andcompensate all employees on a salary
executive officer. “Our founderscreated an atmosphere whereemployees were able to be genuineand act in complete alignment withthe values of the organization. Theywere the clock builders—not the timetellers—that the authors of Built toLast talked about.
“The end game in this business,”Greg continues, “is to be in the best position to attract and retaingreat people. And we have anorganizational structure that makesthis possible. At the end of the year,profit is distributed back toemployees. Everyone is eligible for anend-of-the-year bonus. We have an
basis, with the salary based on howwell they met client expectationsrather than on just selling something.Key employees would be given theopportunity to buy in to the agency sothat it could be perpetuated internally.
They were soon joined by Mr.Feek, who shared their ideals, andParker, Smith & Feek, Inc., was born.
Today, the agency is one of thelargest independent agencies in thecountry, with some $30 million inrevenue. It employs 170 people in itsoffices in Seattle and Anchorage,Alaska, “every one of whom isconsidered a key player in its success,”says Greg Collins, president and chief
TEAMWORK IS AMARKETING AGENCY OF THE MONTH
CORE VALUEThis Northwest agency stressed teamwork long before it became a buzzword
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The Parker, Smith & Feek team fromthe Bellevue, Washington, home office.
18 ROUGH NOTES
annual meeting in December wherewe show our employees all ournumbers. We show them our year-endprofit and what is going to bonuses, toprofit sharing and what amount isbeing retained to ensure futuregrowth. Everyone understands thatwe win and lose together, as a team.
“Key employees are able to buyownership on a book value basis. Wecurrently have 24 shareholders,spanning several generations,” Gregadds. “This puts us in a positionwhere we can remain independentand can focus on long-term strategies.In fact, long-term thinking permeatesthe agency. Our employees and
shareholders see that our long-termsuccess contributes directly to theirsuccess through profit sharing anddeferred compensation.”
He continues: “It’s incrediblewhat this model has produced. Itinspires teamwork. One of ourmissions is to increase cross-selling,and we have had no problem gettingour people to see the value in thisapproach. Everybody is aligned withthis mission.
“We place huge emphasis on qualitycontrol and quality management and,again, have gotten complete buy-infrom our employees who recognize thatimprovement in these areas means
better service to our clients and ourcompanies, as well as better bottom-line results for our agency.”
Everybody winsThe customer focus extends to the
insurance companies the agencyrepresents. “Our carriers are ourcustomers,” Greg points out, “and wefocus on that customer base with thesame intensity that we offer ourinsureds. We try to structure oursubmissions so the underwriter willlook at them first and give our clientsthe broadest consideration.
“We all recognize that withoutquality products from our insurers,we would not be able to answer ourclients’ needs,” he says. “We workwith our companies to make certainthat we are providing them withbusiness that meets their goals, justas we work with our clients to makecertain that we are meeting their riskmanagement needs. It is a systemwhere everybody wins.
“The companies win by obtaininggood business. The clients win byhaving effective risk managementprograms that reduce their overall costof risk and by having excellent claimservice when that is needed. Ouremployees win by having satisfyingjobs where they can do the right thingfor their customers and through acompensation structure that rewardsthem for service excellence. And ouragency wins by retaining profitablebusiness. We set a goal each year of95% client retention and regularlyachieve a better result. Last year itwas 97%,” Greg explains.
“This same intensity and focusgoes into our new businessdevelopment strategy, emphasizingmeeting client needs rather thanselling insurance.”
Deep experienceThe 170 employees who comprise
the PS&F team cover the gamut ofdisciplines needed to make certainthat their clients have a riskmanagement program that isintegrated into their strategicbusiness plan. “Our objective is to bethe trusted advisor for our clients,”Greg says. “To accomplish that, weneed to completely understand theirbusiness and develop the appropriaterisk transfer mechanisms that willbest adhere to their overall businessphilosophy. That’s true across all ourdepartments—commercial insurance,surety, benefits and personal lines.
“That process starts with athorough analysis of the client’sexposure to risk, coupled with an
NOVEMBER 2008 19
By Dennis H. Pillsbury
When Messrs. Parkerand Smith left ageneral agency toestablish their
own agency in downtown Seattle,Washington, in 1937, they resolved to structure it in a way that wouldempower employees. The idea was tomeet client expectations for service,and the placement of the insurancewould follow.
To accomplish that, they decided todefy conventional wisdom andcompensate all employees on a salary
executive officer. “Our founderscreated an atmosphere whereemployees were able to be genuineand act in complete alignment withthe values of the organization. Theywere the clock builders—not the timetellers—that the authors of Built toLast talked about.
“The end game in this business,”Greg continues, “is to be in the best position to attract and retaingreat people. And we have anorganizational structure that makesthis possible. At the end of the year,profit is distributed back toemployees. Everyone is eligible for anend-of-the-year bonus. We have an
basis, with the salary based on howwell they met client expectationsrather than on just selling something.Key employees would be given theopportunity to buy in to the agency sothat it could be perpetuated internally.
They were soon joined by Mr.Feek, who shared their ideals, andParker, Smith & Feek, Inc., was born.
Today, the agency is one of thelargest independent agencies in thecountry, with some $30 million inrevenue. It employs 170 people in itsoffices in Seattle and Anchorage,Alaska, “every one of whom isconsidered a key player in its success,”says Greg Collins, president and chief
TEAMWORK IS AMARKETING AGENCY OF THE MONTH
CORE VALUEThis Northwest agency stressed teamwork long before it became a buzzword
Pho
togr
aph
Cou
rtes
y of
Par
ker,
Sm
ith &
Fee
k
The Parker, Smith & Feek team fromthe Bellevue, Washington, home office.
compensation is quite expensive inthe state and the need for effectivemanagement of workerscompensation risks is absolutelyvital. “Workers comp accounts forabout 40% of our revenue,” DaveEckroth, Anchorage manager, pointsout. “We have a niche focus, withthe construction industry serving asthe cornerstone. Health care issecond,” he adds. “Workers comprepresents a big ticket for both
those niches since they areemployment-intensive industries.”
Dave joined PS&F in 1992 fromMarsh because he wanted to be withan agency that “understood the needfor long-term relationships andlooked beyond the next quarterlyearnings report. The stability ofrelationships is very important andhas led to a retention rate that hasrun above 95% for years.”
Going the extra miles“When I joined the firm, I was the
fifth person in this office; now we have19,” Dave points out. “We have fiveproducers and eight senior levelaccount administrators with averageexperience exceeding 15 years. Westrive to hire bright, energetic supportstaff who are looking for a career inthe industry and can take advantageof working alongside such anexperienced group of mentors. Wehave a claims executive in-house whoworks with clients on bigger pictureissues such as experience modificationprojections and claims trend analyses,as well as specific case managementissues including determining the costeffectiveness of light duty orvocational rehab programs.
“And we actually do sit down withour clients to accomplish these tasks,and here in Alaska that really meansgoing the extra mile or, morecorrectly, miles. You can drive 800miles in one direction and still be inthe state. To visit a client in
The PS&F account team meets with clients from the St. Elias Specialty Hospital. Fromleft: Steve Brown, PS&F Vice President and Account Executive; Jennifer Schultz, PS&FAccount Administrator; Chad Carpenter, CEO, St. Elias; Jana Smith, PS&F VicePresident and Account Executive; and Joan Green, Director of QA/Risk Management,St. Elias.
The PS&F team in the Anchorage office.
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20 ROUGH NOTES
understanding of that client’s riskappetite so we can determine notjust what coverages are needed butthe appropriate use of deductiblesand self-insurance options as well. We also work with our clientsto develop appropriate riskmitigation techniques.”
To accomplish this goal, the agencyhas eight in-house claims professionalsand three risk control experts. Theseare people who have many years ofexperience in these disciplines andhave chosen to work at PS&F wherethey can best utilize their expertise tohelp insureds. In the employee benefitsdepartment, PS&F works with clientsto implement wellness programsdesigned to improve employee healthand better manage the rising costs ofmedical care.
Nowhere is the evidence of Parker,Smith & Feek’s commitment to clientservice more obvious than in the area ofworkers compensation. The agency isunique in that its main office is locatedin a monopolistic workers comp state, while its branch office is in astate with one of the most expensiveworkers compensation systems in the country. Yet both offices provideworkers comp consulting to clients.“They look to us to provide all servicesneeded for total risk management, andthat has to include workers comp,” Gregnotes. “That is an area whereemployers feel almost continual pain,and we need to be there to help themalleviate that pain.”
When the agency opened itsoffice in Alaska, that mantra stoodit in good stead. Workers
22 ROUGH NOTES
Ketchikan is a five-hour trip by air.But that is not an impediment.Rather, we see it as an opportunity todifferentiate ourselves.
“Many of our new clients came tous thanks to recommendations fromcurrent clients because we actuallyshow up at their businesses and takethe time to keep ourselves apprised ofthe issues they are facing. Ourclinical risk manager is based in ourBellevue office, but she travelsthroughout Alaska on a regular basisto consult with and provide educationto our health care clients,” Dave says.
For the construction niche,Parker, Smith & Feek has twoconstruction risk specialists on staffwho will help clients with bid reviewand contract requirements and assist
with project-specific insuranceplacements. They also are veryinvolved with the local contractorsassociations. “We provide internaland external education so ouremployees and our clients betterunderstand insurance and riskmanagement,” Dave notes.
“Our director of education andtraining provides Insurance 101 and102 classes for employees andclients. He also will work withclients to craft an individualizedcourse for employees. One clientrecently sent 16 people to one of ourclasses, including their entireaccounting and estimatingdepartments. That course discussedindemnification through contracts,audit procedures and the impact of
written sub-contracts. This all tiesback to our having the expertise in-house and then deploying iteffectively so that our clients get toexperience a deep relationship withour people.
“When it’s all said and done,”Dave concludes, “it really is thatpersonal relationship that cementsthe deal.”
Technology helps bridge the distances
The agency also spent a great dealof time and talent on developing atechnology platform that would respondto the needs of clients, insurers andemployees. “We recognized thattechnology needed to play an importantrole in our agency if we were going tomeet the needs of our growing clientelein the technology arena as well as ourmore traditional clients,” Greg says. “Italso would allow us to communicatealmost instantaneously with clientsaround the globe,” he adds. “We haveclients that do business in every regionof the United States and on fivecontinents. Thanks to our technologyplatform and our membership inAssurex Global, we are able to servethose clients seamlessly.”
The IT platform was developed bythe chief information officer, whojoined the firm in 1999. It providesclients with direct access to theirinformation on a 24/7 basis.
The Assurex Global connectionmeans that clients with operations inother countries “are working with theleading local brokers who have thesame philosophy of service that wedo,” Greg says.
Parker, Smith & Feek, Inc., hasdeveloped a unique model forcompensating employees thatexemplifies another strength of theindependent agency system—it is asystem where entrepreneurs developa variety of ways to reach similargoals and others can learn from boththeir successes and their failures. Byall accounts, this is one of the realsuccesses. Greg reports that heregularly is asked by other agencyprincipals about the PS&Fcompensation system.
He also notes that the method hasbeen especially attractive to youngpeople who are considering a careerin insurance. With Baby Boomersreaching retirement age in recordnumbers, adding young talent to theinsurance industry is critical. PS&Fseems to have come up with oneanswer to this problem. We at RoughNotes are pleased to recognize Parker,Smith & Feek as our MarketingAgency of the Month. n
"The end game in this business is to be in the best position to attract and retain
great people."
—Greg Collins President and Chief Executive Officer
Parker, Smith & Feek, Inc.
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The Space Needle is one of Seattle’s landmarks and one of PS&F’s clients. Here, thePS&F account team meets with clients from the Space Needle and enjoys the beautiful360-degree view of the Seattle environs that can be seen from the top of the Needle.From left: Jeane Maurer, PS&F Account Executive; Shirley Guthrie, Director HumanResources, Space Needle; Peter Beck, Chief Financial Officer, Space Needle; DawnAnderson, Controller, Space Needle; Sally Borte, PS&F Account Executive-EmployeeBenefits; and Geoff Jolly, PS&F Account Manager.
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