Underperformance

Branch offices often underperform the main office. Some agency owners expect and accept this, but many underperform to such an extent that the agency would be better off eliminating them. Such poor results are often due to lack of management. With no onsite management, employees may not work as hard. They may cut corners more often. Producers may write poorer accounts. I have found low-quality work to be common in branches.

Sometimes, though, branches outperform the home office because they must– just to keep up. Their workloads are way too high, causing mistakes and increasing the agency's E&O exposures. Most often, the home office will not take their complaints seriously, so the problem continues to build until a major incident, usually an E&O claim, occurs.

Producers

Another mistake is staffing a branch with a new producer. Such producers will not get the training, mentoring and management they need. They will make mistakes; and even if they do not have a clue about they are doing, the branch-office support staff is unlikely to challenge them, because they are producers. Putting a new producer in a branch office without adequate supervision almost always results in subpar performance and huge E&O exposures.

The aforementioned problems arise through management negligence. For some reason, agency owners often believe (or at least hope) a branch office will manage itself. After all, there are only two or three people in many branch offices. How much supervision could they need? But no matter how one looks at branch offices, they must be competently managed, and a large part of the responsibility must be shouldered by an agency owner. It cannot be effectively delegated.

Before deciding to open a branch office, an agency should consider whether it really needs it. Branch offices often are too small for agencies to dedicate adequate resources to them, but still too big (in an owner's mind) to shut down or sell. This unresolved status is the worst thing for a branch office. Proper management requires either making the branch big enough to matter or closing it. If a branch office can produce only $150,000 to $300,000 in commission (maybe as much as $500,000 in some locations), the agency probably does not need it. Most of the business probably can be rolled into the main office and serviced from there. Some good accounts may be lost, but the business kept will be much more profitable.

Branch offices can offer great growth opportunities, but only if management dedicates the resources required to make them profitable growth opportunities. This entails:

–Giving the branch office incentive to manage itself and increasing its accountability. Management must be willing to implement and continuously monitor procedures for measuring the branch office's performance.

–Placing only experienced, proven producers in branch offices.

–Giving someone the responsibility to profitably manage the office.

–Assigning someone from the main office to check the branch office's work.

–Giving the branch office the infrastructure it needs to succeed–no more second-hand office equipment.

–Providing the same training to staff as that given to main-office employees.

–Notifying the branch office every time companies change rules or rates, and whenever the agency changes procedures. In fact, it is best if someone from the branch personally represents the branch at weekly, or at least monthly, staff meetings, to get the information first-hand.

–Holding “get to know your fellow workers” office parties, so employees in all locations can work together more effectively. Many branch-office people feel isolated, and this is not good for morale.

It takes a lot of work and capital to make a branch office a positive addition to an agency. Before opening one, agency owners should ask whether it really could add enough profit to make it worthwhile. Agencies with existing branches should evaluate their performance. If a branch is not meeting the mark, dedicate adequate resources to it or shut it down. Either way, you'll have a better agency.