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                    Last update February 25, 2005


Using Consultants

Using a consultant is different from outsourcing. You don't bring in a consultant to do the work, you hire him to show you how your permanent people can do the work better. The idea is to make improvements and then have the consultant go away. If the work is going to last more than several months, you would probably be better off to hire someone with the required expertise, even if it took him longer to get the results.

On the various consultant web site discussions, there is much made of the necessity to carefully define the project or the problem to be solved, the results expected, and the details of contracting with a consultant. Setting aside the Sarbanes Oxley work currently under way, I don't that works very well for a life insurance company. You seldom have problems that can be defined in any meaningful way. You need more production and lower costs. The subset of that is making sure your products are profitable, are underwritten properly, your agents and policyholders are getting optimal support, and your operations are efficient and effective. These are the things discussed on this web site. Some of these are susceptible to short run solutions, and some are not. Here I will discuss the various situations a company might want to improve, and how consulting might work, or might not work, in those situations.

If you put "using consultants" into Google (which is a good idea) you will see a some good advice on work that has a project orientation. and emphasis on carefully defining the work, the results desired, and the time span. For an excellent many sided discussion, don't miss What's Wrong with the IT Consulting Model?




The agent often hears the objection that the prospect is "insurance poor", meaning he already has more than he thinks he can afford. Of course it is not life insurance paupering him, it is car, medical, house and so on. Right now you may feel "consultant poor", since you have Sarbanes Oxley "consultants" running all over the company. However, this work is not intended to improve production or lower expenses or to provide any other benefit, other than that of meeting an artificial legal requirement. Your stockholders will be poorer as a result of that work, not richer.

I had originally hoped that those SOX flow charts could be used to eliminate or improve clerical work, or at least to save some time for managers or administrative systems people. However, it is like trying to judge intelligence at an Easter egg hunt. There would have to be a very major problem for anything to stand out, since it is just not the purpose of the exercise. SOX people are looking to document controls or the lack thereof in areas that have never caused you any problems. Useless work or byzantine work flows are fine, as long as it fits a plan or makes an adding machine tape.

As for plans, an amusing example is the apparently universal requirement that there be a written plan for IT activity so that top management can be sure IT is doing what management wants, rather than running off on their own doing other stuff. You may have problems getting much out of IT, but it unlikely they are busy building programs you didn't request. Email me if you have that problem. You may have some genius on your staff.

On the other hand, an operations consultant will help you adjust controls as necessary, but they are so easy to establish that no one is going to produce documentation of the SOX variety.


There are actually companies that have a satisfactory level of production of new business. These are the dream situations where all you have to worry about are persistency, product profitability and so on, where the approaches are fairly straightforward. Unfortunately most companies are not in that situation, and the need for increased production puts all other problems in the shadow. In those situations about all a consultant can do is to advise you against most of what you are considering, and to concentrate on your own niche and making small improvements wherever possible.

A company that has inadequate new business to sustain itself needs to make a clear cut decision. The choices are to do what you are already doing, but better, or to consciously focus on running off the in force business, maximizing profit by not investing in new business. A consultant can help a company face this, but only if the question is posed in that way. If you just ask how can you increase production, anyone can tell you you need more agents, or a bigger share of the production of the agents you have. To get that done, you don't need a consultant, you need a talented agency officer, and a lot of time.

Coming out with new products is not going to increase production. You just get the agents substituting the new for the old and doing the same job. Nor can a product get you more agents, unless it is one that everyone else is refusing to write.

Trying to enter a new market is just a way to spend a lot of money on something you know less about than the fellow that is already there. Beware of the "workplace market" and the experts you can hire to put you in it. Your existing agents aren't going to switch, and if you have the 20 or so years to "build a new agency force", it really doesn't matter what the niche or the market is.


It is possible that there are fairly straightforward changes that can be made to increase profitable production, but that the agency officer is hesitant to adopt, or just can't see after so many years of doing it the existing way. A consultant can suggest these changes, but experience suggests that the agency officer is unlikely to move on them unless the CEO is part of the process. This is also important because sometimes the change you need is the agency officer. However, unless the CEO can take over, or you have a promising replacement, in house or in your agency force, you are unlikely to be able to hire from outside successfully.

A consultant is not going to make the standard suggestions you hear from the field force, or possibly from your agency officer, such as higher commissions, automatic issue, or different products. He will suggest simple things that will be difficult or time consuming to implement. If you are on the treadmill of hiring experienced agents, and you have a captive or loyal field force, training neophytes may be considered. If you have a lead program, improved sourcing or distribution, such as through a private web site, may be suggested. An expanded, or simplified, commission structure may make sense. A rational look at what is being provided terminated or low producing agents may be in order.

Most important, the person making the overall decisions, including that of the retention of the agency officer, needs to observe this full process, not only to see the reactions of the officer, but also to make sure the consultant's suggestions make sense. Everyone thinks they know the answer, but there is no answer. Agency operation is a puff of smoke. Implementation and human relations.

This is off subject, but important. Why is it nearly impossible to hire from outside an agency officer that can turn your production around? The agency job is the toughest in the company, requires real talent, and therefore has the highest turnover of any of the major positions. There is a version of the Peter Principle that works here. Hardly anyone stays in the position permanently because they either fail, or get promoted to president. An agency officer who has previously had that position and is looking for another was let go from the last one.

Consulting can be very effective in improving operations, but only if used in conjunction with your own staff. A consultant that has seen many companies can instantly see most of what needs to be to be done, including identifying disorganized or useless work. To actually make the changes requires action by the manager in charge, and almost always, the officer in overall charge of company operations.

A consultant can survey your operations in a matter of a week or two, and make more suggestions (which are obviously valid) than the company can implement in a year. The most immediate profit is in eliminating useless activity, or reducing the time required to do real work. To be effective, these steps need to be taken right on the spot, and that requires the manager of the department, or often the manager of another department that is causing the work, to agree and implement. The biggest and most common waste of a consultants time, and your money, is to ask for a bunch of written reports of all the things the consultant has found, suggested or done. Actually, a bigger waste is saving up all the finds for one final big written report. Most of the little, and easiest to implement, finds will be forgotten by that time. If you must have reports, get a brief one paragraph from the consultant, just identifying the managers and departments worked, and time, and get your detail from the managers. If the manager is asked to report what the consultant suggested, or better yet, all the great things the manager found and changed (with minor help from the consultant), you will get some real improvements, fast.

It is a truism that 30% of all work in a company is useless make work. This is not time at the water cooler or checking personal email, this is work that people actually consider productive work. Usually when such activity is pointed out to the manager, you will get one or more of three responses: he didn't know it was being done; it is contrary to his instructions; or management told us (or it is a legal requirement) to do it this way. Part of the consultant's service is to quickly get confirmation from management or legal that these requirements, shrouded in mist and tormented by the flames of their inner anguish, are imaginary.