Daniel Johnson got his start in insurance broking, but eventually founded his own company to offer a more customer-tailored service, focusing on the entire development of an insurance program.
APEX Insurance Brokers, which he founded alongside partner Darren Hutton, is now turning over more than $4 million a year.
But Johnson ran into trouble when a key staff member left the company, exposing some knowledge gaps that left the company without any plan on what to do next. Here's how they identified and fixed the problem.
So how’s the business been going?
It’s been growing nicely. Work has been great, we have lots of projects on the horizon, and we are growing within the traditional space here. We’re utilising a lot of Google marketing which is becoming a lot more popular, and we’re not necessarily trying to do purely online deliver. We’re in a relationship-driven business here, and we’re on track to pull in about $4.7 million this year.
Can you describe what happened when this particular staff member left?
We had somebody that was in a relatively senior position, and when you come to rely on people like that, it creates certain management situations. He took another opportunity with a company, an indirect competitor, and then you suddenly discover that you’re absent a whole lot of experience and support you rely on.
How old was the business?
I think we’d been running for four years at that stage, and our team had grown, with a number of skilled senior people. This particular person had account management responsibilities, and he had general management responsibilities as well.
Was this particular person valuable?
He was very good at what he did, yes. He had a good working relationship with people, a good rapport, and when you lose someone that’s a particular shock. You can’t expect people to stay in your company for life of course, but when you have people you get on well with leave, it’s a shock. And once that happened, we had issues around that person’s departure.
What type of knowledge gaps did you identify?
It wasn’t so much the structure, but the way in which we were doing business. We had found there was a concentration of knowledge and authority in just a few people, and the results of doing that are that you have less leads to work from in staff, and there were a number of knowledge gaps that emerged.
You came to rely on one person or a small team of people to try and run particular aspects of the business, and be a repository of information, and without them they know a lot more than you thought about the business. The knowledge systems there are never quite adequate because you’ve always relied on this one particular person.
What type of procedures?
This was more about background procedures and not necessarily servicing clients. But there was a whole lot more work being done to catch up.
How do you think this problem occurred?
It’s an easy problem for a business at the smaller end because you don’t have the resources to duplicate positions and so on. You want to set up procedures at that point, but the reality is most businesses just try earning income as quickly as possible. We were in the same boat.
Your focus is trying to attract new clients and satisfy the requirements of existing clients and everything else falls to the wayside. Nothing highlights cracks in the business like senior people leaving.
So what was the plan of action?
The first thing we had to do was establish what we didn’t know. The lucky thing was we had a good relationship with this person and occasionally calls were made to beg indulgence, but there are obviously situations where that just isn’t an option and in many cases they aren’t interested.
So we established where the knowledge gaps were, and then we had to start building up the knowledge that we needed. There were a few management procedures we thought we understood, but when we tried to replicate them we didn’t do a very good job.
What else did you do?
Part of what we realised at that point was that we had to diversify our knowledge base just outside the professionalism of one person. We did that by making bigger teams. So we had one or two person teams, but we expanded that to three, four and five person teams to have a broader set of knowledge.
This means you have a bigger knowledge of what is going on in the business on a day-to-day basis.
What advice would you have for businesses in similar situations?
Hopefully the ground hasn’t dropped from underneath them, but those businesses need to have those key processes in place. It can be a bit painful sometimes, but record keeping and all these sorts of processes left to one person need to be documented.
Take time to understand what people do, document those procedures, and then work on it. It’s all a risk management process because you’re insuring yourself if staff happen to leave.
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