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by Jon Spaugy, BIG’s Chief Executive Officer
THE WORTH OF INDEPENDENT AGENTS According to something called the Reagan Consulting Organic Growth and Profitability (OGP) quarterly survey, independent agents and brokers posted median organic growth of 5.9 % for the second quarter of 2015, slightly higher than the 5.8% recorded in the first quarter of 2015 and second quarter of 2014. (“Organic growth” is the growth rate that a company can achieve by increasing output and enhancing sales. I had to look it up). What this means is independent agencies are growing steadily. For good reason, I might add. Insurance aggregators, like Google Compare and others, aren’t able to fully advise insurance shoppers. Sure, there are screens which offer definitions of various insurance coverages. But where is the insurance professional ready to explain whether these coverages are needed by the customer? They are working in the local insurance agency. Online shoppers don’t always know what kind of coverage they need, some thing that can hurt them when it comes time to file a claim. “I thought I was covered for this” are words that can be avoided simply by going to an independent agent/broker.
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Direct writers offer convenience and some certainly provide good coverage at a fair price. The advantage of an independent agent/broker is the variety of markets offered to customers. As we all know, neither price nor name shouldn’t be the primary drivers in deciding which coverages to purchase. Independent agencies provide the guidance and expertise that most customers need to become adequately protected from all eventualities. I realize I am preaching to the choir here, but
Big Times Magazine | Sep/Oct 2015
I just wanted to remind all of you how much your local community depends upon you to help them find the right coverage within their budgets. Most agencies can’t compete with the “big guys” as far as advertising reach and national name recognition go, and they shouldn’t. Everyone has heard the adage “being a big fish in a small pond.” In this case, that’s exactly what you want to do. Your community is your customer base. That’s where you want to spend you time and resources. People don’t want to “enter their account number and press the pound sign” when they need customer service, they want to shake someone’s hand and have a seat. They want to talk to the name on the back of their son’s Little League uniform. They want to run in to their insurance agent at the park. They want to talk to someone down the street when they have call with a problem or claim and not to some faceless person in giant call center who knows where. You don’t need to compete with the corporate giants. Studies show that insurance customers want an independent insurance professional. They want you.
BIG HOSTS ANOTHER NORTHERN CALIFORNIA MINIVENTION SUCCESS
What was once a fledgling event for Northern California producers, the BIG Minivention is fast becoming a fixture on the insurance scene. Over 200 producers and industry supporters were drawn to BIG’s annual event on September 1st for a daylong program of seminars, a trade show, and plenty of camaraderie.
The Northern California BIGGIE Award winners for 2015 are: Steve Johnson (Stillwater Insurance Company) - Preferred Marketing Representative of the Year
The Minivention was capped off with a Oakland A’s vs. Los Angeles Angels game, which was convenient as the entire event was held at O.co Coliseum. The home team received no respect as the Halos pounded the Athletics 6-2.
Ron Toledo ( Alliance United) - Standard Marketing Representative of the Year
“This event just keeps getting bigger each year, and I wouldn’t be surprised if it starts rivaling our Southern California convention in status and stature,” said BIG CEO Jon Spaugy. “We have obviously filled a niche here in Northern California, and people are coming up to us and asking when we will be expanding our program and trade show. I can say that plans are definitely in the works.”
FSC/Vertafore - 2015 Northern California Vendor of the Year
Among the packed agenda, BIG announced the winners of its “BIGGIE Awards.” The awards ceremony took place following the Minivention Trade Show, which featured 38 vendors representing top insurance companies and industry service providers.
Alliance United - 2015 Northern California Company of the Year
“BIG feels it is important to recognize the contributions made by companies insurance professional specifically in the Northern California area, something that complements the BIGGIE’s we award at our annual convention in May,” Spaugy pointed out. “The dichotomy is that SoCal and NoCal represent different communities and consumer bases, yet work united for the betterment of the insurance industry in our great state of California . That’s the spirit BIG wants to capture.”
“These awards are especially meaningful because they reflect the Northern California insurance community, a demographic that is often overlooked in favor of Southern California ,” said BIG CEO Jon Spaugy. “BIG has made impressive inroads in establishing an equal footing for Northern California through our Minivention. We recognize the uniqueness of the Northern California region and plan on cultivating a full-blown convention to equal our Southern California event.”
5 | Big Times Magazine
Sidebar with
Harper &
Heim
Lawyers
MEDIATION APPRECIATED AND EXPLAINED By Jon S. Heim, Attorney In my 32 years of California litigation, the most important and beneficial change is the development of formal civil mediation. When I started in 1982, alternative procedures for resolution of judicial disputes – “ADR” courts now call them – were few and limited. In smaller cases, courts would often order or refer litigants to a summary, nonbinding arbitration for a few hours before a local lawyer. That procedure was too superficial and uncertain. As these arbitrations were not binding, anyone dissatisfied with the arbitrator’s ruling could simply wipe it out. That didn’t solve much.
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Back then courts themselves conducted settlement conferences, and courts still do. However judicial settlement conferences have inherent limitations. Courts generally do not have the judges or other resources for the patient probing and cajoling that is often required to achieve settlement after months or years of courtroom battle. Equally important, judicial settlement conferences typically occur two to five weeks before trial, after the suit, its expenses and the emotions underlying it have been building for years. Minds may be focused by looming trial dates, but by then wallets and emotions may be
Big Times Magazine | Sep/Oct 2015
drained. The increasing time and expense of bringing substantial civil cases to trial begat a stunningly successful civil mediation industry, in which retired judges and accomplished attorneys offer their services for an hourly or daily fee to bring litigants to closure of their disputes. Mediation is often successful. In my experience, 80% to 90% of mediations lead to settlements either at or soon after the session. The process is not greatly adversarial. It nvolves no taking of evidence and no decision on the merits of the dispute. It and almost all statements in it are confidential. Mediation is begun, conducted and concluded by agreement only. If someone doesn’t agree, the case resumes as if mediation had not occurred. As mediators frequently tell litigants, mediation is your chance to control the outcome of your case instead of surrendering control to strangers. Mediation is economic. Because evidence is not formally presented for admission, much less procedure and time are spent establishing basic facts. Mediation can be scheduled before most of the case discovery (in other words, investigation on the record) or before key discovery events such as party depositions. Thus money need not be spent confirming or detailing what all involved generally know. Legal arguments can be made in brief, omitting some of the painstaking, expensive, secondary legal research that must be accomplished to present a substantial case at trial or on appeal.
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FEAR FACTORY:
Five signs you may be letting fear drive your leadership
By Dan Prosser, author, THIRTEENERS: Why Only 13 Percent of Companies Successfully Execute Their Strategy — and How Yours Can Be One of Them
As iconic horror writer H.P. Lovecraft said, “The oldest and strongest emotion of mankind is fear, and the oldest and strongest kind of fear is fear of the unknown.” But here’s the harsh truth: No matter how much you plan, no matter how many rules you put in place, no matter how much risk you avoid, you’ll never control all the circumstances that influence your business. Never. And if you can’t learn to coexist peacefully with that truth, you’ll never live up to your full potential as a leader. Too many leaders live in fear of the unknown and of uncontrollable events in their business. The consequences can be devastating. There’s no faster way to turn good employees into cynical and nonproductive ones than to stress them out through your efforts to control the possibility of failure. Fear spreads quickly from leaders to employees. It stifles individuals and groups, prevents productive risk-taking, and turns engaged innovators into disconnected clock-punchers. Ultimately, the harmful side effects of fear prevent your company from effectively executing its strategy.
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The future of your business exists only in your declaration. You must declare for something that doesn’t exist yet. Leading by fear is the antithesis of that. Fear holds you in place. You can’t declare for
Big Times Magazine | Sep/Oct 2015
great outcomes because you’re afraid to take the actions necessary to achieve them. To shut down the fear factory inside your company, you have to gather your courage and take a close look at what fears are dominating the way you lead. Here are five behaviors that indicate you are a fear-driven leader: You value “not failing” above all else. As I wrote in THIRTEENERS, 87 percent of all companies with a strategic plan will fail to execute it. That’s because those companies are pursuing the simplest yet most damaging strategy: the strategy to avoid failure. You might ask, “Are you saying my strategy causes failure because I’m focused on making sure I don’t fail?” Yes, that’s exactly what I’m saying! Most people are invested in not failing, and they’ve taught all their employees to value that execution model over taking the kind of risks that have the potential to pay off. Everyone’s doing it, and it’s costing your company on a grand scale. You cling to old strategies simply because they’re familiar. Many companies that fail often appear to be operating under full sail. Yes, there’s lots of action happening in these organizations, but it’s usually the wrong kind of action. It’s what earned success in years gone by. Leaders at these organizations think that if a strategy has worked before then it’s got to work again—and that more of the same can only be better. They go out of their way to
convince themselves that the old strategy is working—especially when it isn’t. The difference between a rut and a grave is only about five and a half feet. Instead of digging themselves out of the rut they’re in, leaders who cling to old strategies end up just digging themselves in deeper when change occurs in the marketplace. Suddenly, they realize the competition has caught up or customers are starting to disappear. You assume you (and you alone) “should” have all the answers. Fearful leaders often operate like lone wolves. They have to do everything themselves to feel confident it will be done correctly, and they resist considering (much less relying on) the opinions and recommendations of others. This is like taking a test from memory when you have the option to use not just the textbook, but the whole library. You’ll never know how talented your employees are if you think you have to have all the answers. Why not partner with your people to generate radical and revolutionary innovations for the future—a future that does not represent your fears of repeating the past? Let go of how you think it has to be and trust the process, allowing others to contribute ideas and get connected to your vision. Your knee-jerk reaction to chaos is to do something—anything. Whether you’ve just learned of an unexpected drop in quarterly earnings, gotten bad news from a client, or had a promising deal fall through, you’ve no doubt been faced with chaos, disorder, or confusion. Prosser wants to know: Did you remain calm and thoroughly assess the situation, or did you panic, rush to judgment, and act without thinking? When you’re faced with unexpected chaos or anxiety (especially anxiety that implies you’re not equal to the challenge at hand), it’s easy to think, I need to do something right now. And so you lay off employees, switch to a new strategy, pull a product off the market, or make some other move that makes you feel better in the short run that you did, well, something. But knee-jerk reactions made out of fear can have a long-lasting negative impact on your organization. You find yourself constantly addressing symptoms rather than searching for root causes. When disrup-
tive issues pop up in the workplace, the first thing we want to do is—naturally—snuff them out as fast as we can. Often, that’s because we fear not just the consequences of the disruption, but also the damage that might occur to our own reputations. However, treating only the symptoms rarely works. Most of the time, it just temporarily masks the real problem, which continues to damage workplace performance. As long as you’re addressing only the symptoms and allowing core issues to remain, similar problems will just show up somewhere else, and you will go through the same exercise of pulling people in and talking through the problem (actually the symptoms) again and again and again. If any of these behaviors seem familiar, fear may be holding you—and by extension, your organization—back from executing your strategy. Only by becoming aware of your automatic thought pattern about the circumstances you face (that you can’t do anything about) and by becoming unattached to the outcomes will you be able to get yourself, first, and then your company, out of its rut, get your people engaged and connected, and move ahead. Becoming a successful top 13 percent company takes a leader with a high level of desire and a fearless willingness to lose everything (i.e., no attachment to a particular outcome) to produce breakthrough results. That requires changing one’s perspective, modifying one’s own thinking and behavior, and conquering well-entrenched beliefs and habits. Don’t make the mistake of believing that just because you’ve earned a leadership position you’ve finished working on yourself. About the Author: Dan Prosser is author of THIRTEENERS: Why Only 13 Percent of Companies Successfully Execute Their Strategy—and How Yours Can Be One of Them. As CEO of The Prosser Group and BreakthroughSchool. com, he has over 45 years’ experience building his own companies, while for the past 13 years, he has been speaking; teaching; mentoring; and coaching business leaders, entrepreneurs, and micropreneurs to cultivate an uncommon and breakthrough approach to helping people build an extraordinary competitive edge for their businesses.
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Q&A: Dana Borowka by Don Lukenbill
One of the secrets to success for any agency or company is hiring good people. Letting a bad apple slip by can cost a great deal in wasted salary and lowered production, not to mention having to begin another candidate search. Fortunately, there are Human Resources experts who can help with assembling the best team you can.
the more critical every new hire is. For example, when a 10-person company hires one new employee that employee represents 10% of the workforce. Same proportion if 100 people are hired by a 1,000-person firm. The impact (positive, negative or neutral) of 1 person in a small company can be same as 100 people in a larger organization.
Dana Borowka is one such expert. BIG Time Magazine readers have enjoyed his occasional columns about human resources, making the right hires, and creating a winning team. He is CEO of Lighthouse Consulkting Services with over 25 years of experience in business consulting. He has an undergraduate degree in Human Behavior and a master’s degree in Clinical Psychology.
Companies large and small are best served by adopting a hiring process supported by three pillars: interviews, background checks, and work style personality assessments. The high cost of short-cutting this process is explained in a 3-minute video we have available at www.lighthouseconsulting.com.
He, along with his wife Ellen, authored the books, “Cracking the Personality Code” and “Cracking the Business Code. The Borowkas are also nationally recognized as experts in their field. They have appeared on television and radio and have been published in various national and international publications. We decided to do a quick interview to get some insight about one of the biggest company responsibilities any business owner has. BIG Times Magazine: Let’s start at the beginning. What led you to a career in Human Resources and Performance Management consulting?
DB: Not having a clear job description including a 30-6090-180 goals and objectives to measure against. Also, people tend to rush the process. There needs to be a phone interview, several face to face meetings and an indepth work style and personality assessment as part of the process. By doing a thorough job, it is sending a message to the candidates that you really care about who comes aboard. BTM: How about the kinds of errors management makes when creating a training program?
BTM: On your website, you state that “hiring the right people is only the first step. High performance companies invest in the development of their people to boost performance and retain talent.” Elaborate a bit.
DB: It is important to ask candidates what their best training experience that they have ever had and then tailoring the onboarding to their needs when possible. Whenever possible tailor the training methods to the individual’s preferred learning method. Learning styles can be assessed through using an in-depth work style assessment during the hiring process and through very specific interviewing questions. Also, regardless of age, people learn differently – some learn best by listening, others by reading, still others by doing, etc.
DB: In order to retain top talent, organizations need to invest in providing opportunities for learning and expanding. This can be delivered through offering classes, coaching, seminars, etc.
BTM: Recently, I was reading an article about the kinds of interview answers HR likes to hear. What question(s) should always be asked and what kinds of answers reflect a solid candidate?
BTM: Many of our members run smaller insurance agencies with less than ten people. Some might say that your expertise is applicable to larger companies, but not to smaller ones. How do you respond?
DB: The best questions ask the candidate to discuss what they’ve accomplished and how they did it – the process they followed, how they led others, how they made important decisions, etc.
DB: First, no matter what the size of the organization, hiring right is a priority. In fact the smaller the company
BTM: You and your wife, Ellen, wrote two books, “Cracking the Business Code” and “Cracking the Personality Code.”
Dana Borowka: I’ve always enjoyed helping people discover and leverage their talents. So business consulting in the HR and Performance Management field was a natural place for me.
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BTM: What would you say are the most common mistake or mistakes people make when hiring employees?
Big Times Magazine | Sep/Oct 2015
What do you mean by “code?”
Consulting?
DB: We used the word “code” since it implies using a system to find signals or patterns.
DB: Insight to solving business challenges and opportunities, rapid and thorough delivery of services, and an empathetic team that truly cares about you and your business.
BTM: Speaking of family businesses, many of our readers own and operate what could be called legacy agencies. What’s your advice for spouses/families working together? DB: Learn to set boundaries and have open lines of communication. BTM: Now to end on somewhat of a personal nature. First, if you could travel back in time and talk with Dana in 2005, what would you say to him? DB: Great question! If I could go back to 2005 and give myself some advice it would be a very long conversation indeed. First and foremost I’d say, “Dana, listen more closely to what is being said by others and what is not being said.” I’m a good listener today, but I’ve really had to work on it. I wish I had acquired listening skills earlier in my career (and so does my wife). BTM: Now fast-forward to 2025. What do you want to hear from Future Dana?
BTM: Any final thoughts? DB: When hiring, be thorough and don’t shortcut the process. Be strategically minded as to the type of personalities you need to fit into your culture and to meet client needs. If you don’t know what personalities fit best in your culture hire a consultant to assess the personalities of your team and advise you what to look for in new employees. Don’t rely solely on the interview process and resume. You’ll get burned. Invest in an in-depth work style and personality assessment, plus a background check. Have on-boarding programs that reduce the learning curve. If something goes wrong with the new-hire during the first 30 days, do not wait until the 31st day to address it. Discuss the issue immediately and either you’ll continue to move on or make a change quickly.
DB: “Dana, because of your exceptional listening and assessment skills you have made a major contribution to individuals and businesses around the world.” BTM: What is your philosophy for succeeding in business and life? DB: Follow your natural inner compass. The true or real self is the life-giving core of our being. The real self holds all the beauty and light of whom we are—it is the soul of the individual. When your life is aligned with that core self then harmony and success – whatever that looks like for you – will be generated. We wrote a good blog post on this subject last year. http://lighthouseconsulting.com/ success-work-starts-with-understanding/ BTM: Leaving room for a quick plug: What can people expect from a professional relationship with Lighthouse
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GOVERNOR BROWN SIGNS BILL TO REMOVE THE TERM “ALIEN” FROM CALIFORNIA LABOR CODE Governor Jerry Brown recently signed SB 432 by Senator Tony Mendoza (D-Artesia), Chair of the Senate Labor and Industrial Relations Committee. The bill modernizes outdated law by deleting the term “alien” from the California Labor Code, as a definition for an immigrant individual. The new law goes into effect on January 1, 2016.
specified public works contracts - first to citizens of the United States, second to citizens of other States in the United States, and third to aliens. The Legislature repealed most of these Labor Code sections in 1970. Unfortunately, the definition for “alien” and the order under which employment is to be given to “aliens” was not repealed and are still found in the Labor Code.
“I applaud Governor Brown for signing SB 432. My bill modernizes the Labor Code and removes the term “alien” to describe a person who is not born in or a fully naturalized citizen of the United States,” said Senator Tony Mendoza. “Alien is now commonly considered a derogatory term for a foreign-born person and has very negative connotations.”
SB 432 deletes the term “alien” as a definition for an immigrant individual and the outdated requirement the law which prescribes an order for the issuance of employment under public works contracts to citizens and aliens.
The United States is a country of immigrants who not only form an integral part of our culture and society, but are also critical contributors to our economic success. Immigrants work and pay taxes, create new products, businesses, and technologies and generate jobs for all Americans. In 2013, according to the Bureau of Labor Statistics (BLS), there were 25.3 million foreign-born persons in the U.S. labor force, comprising 16.3 percent of the total (Bureau of Labor Statistics, “Foreign-Born Workers: Labor Force Characteristics in 2013”). The BLS also found that foreign-born workers were more likely than native-born workers to be employed in service occupations. Furthermore, the U.S. Department of Treasury notes that immigrants own 10.8 percent of all firms with employees, providing job opportunities for thousands of Americans. “California is among the top destination states for immigrants in the United States. Given the abundant evidence of their many contributions, it is imperative that any derogative references to foreign-born individuals be repealed from state law,” added Senator Mendoza. In 1937, the Legislature enacted various provisions regarding the employment of “aliens”, who are defined as any person who is not a born or fully naturalized citizen of the United State, and a provision which prescribes an order for the issuance of employment under
12 Big Times Magazine | Sep/Oct 2015
Under current law, all employment protections, rights, and remedies available under state law, except as prohibited by federal law, are available to all individuals regardless of immigration status. (Labor Code §1171.5) Over the last few years, several bills have been passed and signed into law which has strengthened labor law protections for immigrant workers. “The word “alien,” and any law prescribing an order for the issuance of employment to “aliens”, have no place in the laws of our state and more importantly, should never be the basis for any employment hiring. SB 432 deletes this outdated, discriminatory and unnecessary reference in state law,” said Senator Mendoza. According to a study conducted by the Pew Research Center, the use of “illegal alien,” a term considered insensitive by many, reached its low point in 2013, dropping to 5% of terms used. It had consistently been in double digits in the other periods studied, peaking at 21% in 2007. Senator Tony Mendoza, a Los Angeles native and former elementary school teacher in East Los Angeles, represents the 32nd Senate District encompassing portions of Los Angeles and Orange Counties.
DON’T LET DISASTERS LEAD TO AGENCY DOWNTIME By Jeff Valentine, Chief Marketing Officer, Fonality
September is National Preparedness Month, a time when the Federal Emergency Management Agency (FEMA) encourages Americans across the country to learn how to keep their loved ones, belongings, and themselves safe during an emergency or natural disaster. Ready.gov tells us “Don’t wait. Communicate. Make your emergency plan today.” Great advice! As individual in the insurance industry, you’re probably pretty ready on the personal front. But how prepared is your agency? FEMA’s tools don’t cover how those who serve those impacted by disaster should get business-ready. In your line of work, you probably know better than anyone that unexpected events can be just around the corner. Whether a natural disaster or just a power outage at the office, these disruptions can cause far-reaching impacts for your employees, your agency, and your customers.
With more than a decade of success for businesses, a cloud-based VoIP – or voice over Internet Protocol – phone solution now offers much more than just the ability to take and make calls. Top-performing agencies are turning to UC for built-in collaboration features, instant access to customer information, and the ability to be accessible wherever and whenever you want. It’s an easy way to take an agency’s communications to increase productivity and mobility and to reduces costs all the time. During a natural disaster or just sitting in a bad traffic jam, phone communication is essential for addressing client requests and claims. And with 65 percent of individuals in a recent poll saying their agents provide “below average” customer service, a better phone system can give you a huge competitive advantage – particularly during stressful times. Virtually disaster-proof
Yet business owners often overlook the importance of business continuity. How fast can you get back to helping policyholders and prospects when something goes wrong?
Not only can a modern business phone system improve your agency’s communication, it scales with your business and creates redundancy a traditional phone system can’t offer.
I’ve got good news! Technology offers an easy solution to prepare your agency for the bad times – and the good. It’s as simple as getting a modern business phone system combined with unified communications (UC) software. Not only will this dynamic duo help avoid downtime and lost business in the aftermath of most business disruptions, it can improve daily business processes as well.
With the ability to scale quickly, it’s easy to add new lines and users when call volumes are high. Powerful reporting helps you decide when to add staff or change your business hours. And if you have more than one office or remote employees, it’s easy forward communication to another location in the event of office power or Internet outages, snowpacked roads, or high call volumes.
Communication is crucial
In addition, your hosted PBX provider gives you access to the kind of system redundancies it doesn’t make sense for most agencies to invest in. The server where your phone system lives is in our data center with data backups, redundant servers, and even the ability to switch over to a different data center if one of ours is affected. This offers the kind of reliability and reinforces the ability to get back up and running quickly even when your own office or home may be affected by weather or other circumstances.
Successful agents know the telephone is the lifeline of your business and invest in business communication improvements. You’ve probably already got a website, at least one social media profile, and a smartphone to communicate with customers. Thousands of agencies have upped the ante with a modern business phone system.
14 Big Times Magazine | Sep/Oct 2015
Ready for remote work Whether in bad weather or under crystal blue skies, agents and customer service representatives need to be accessible. If power is down at the office or road conditions are not drivable, the option to by work remotely usingmean a softmay be bound words that objectively “I phone on yourdo” laptop or an yourthought mobile“well, deeven when theapp partyon privately -- if everything still looks good.”the 2014 vice becomes maybe even more important. During winter storms in the Northeast, quite a few Fonality Obviously, whenever you are entering into a customers toldlegally us they took their you desk phones and binding contract, need to know it. headsets homeJust since they work thetell same at the ofremember you can’t fromas a title alone. Youto must entire contract binding or fice. All they had doread wasthe plug into theirforhome netsome cases you mayEven also work using andisclaiming Ethernet words. cable In they already had. have to consider what actions taken pursuant to blizzard conditions strand their an LOIcouldn’t may suggest that you thusbusinesses. mean or don’t mean to be bound.
All this is to say that work no longer needs to be just As a matter of professional preference and style, a location when you have a modern communications I dislike the title LOI and prefer to avoid it. For systems designed to let or you work fromforanywhere on my money, more properly my esteemed almost any device. clients’ money, a writing of commercial terms is either a binding contract or preliminary ne-
gotiation, and it should be called only what it By being strategic about its business phone system, really is. Nothing in between and nothing with an agency cananprotect against disaster and encouraging title is natural useful. Indeed anything prepare for future It doesn’t to cost a hybridgrowth. can be confusing to allhave and disappointto onelevels side. But cause hereexpertise. was lost longIt lot or demandinghigh of my technical
simply requires agencies to carefully consider their options when it comes to technologies and service providers. When properly envisioned, installed and employed, a modern phone system can position an insurance agency for increased productivity and continued business growth. And isn’t being ready for anything that comes is all sure
ago. title what LOI willNational never be banished from Month ourTheway Preparedness the commercial lexicon; yet the nature of an LOI about? Staying safe. And, this year, making will never be standardized. We’ll all keep using your is prepared, LOIs, evenbusiness though most do either tootoo. little or too much, and even if we aren’t sure what any particularAbout one really thedoes. Author
Jeff Valentine is chief marketing officer for Fonali-
Call Jon Stanley Heim at (510) 725-7593, or ty, ahim provider of leading business phone solutions e-mail at jshinslaw@gmail.com or harperandheim@gmail.com. for the insurance industry since the company was
founded a decade ago. Today, Fonality’s VoIP phone solutions and award-winning Heads Up Display (HUD) unified communications software help more than 2,000 insurance agencies increase internal collaboration, sell more effectively, and deliver superior customer service. For information, visit www.fonality.com/insurance.
15 | Big Times Magazine
WHAT TO DO WHEN YOUR TRUSTED EMPLOYEES DEFECT TO THE COMPETITION
By James Pooley, author, Secrets: Managing Information Assets in the Age of Cyberespionage.
In today’s competitive global market, managers know that employees (including really valuable ones) are likely to change jobs every few years or so. Like it or not, employee mobility has just become a fact of life. But even worse than the cost of recruiting someone new to fill the vacancy when a key employee leaves, there’s one big, looming worry that’s sure to ratchet your anxiety up to critical levels: “She knows everything!” The fear of an ex-employee sharing your vital secrets with her new employer is, indeed, a well-founded one. In the hands of the competition, information about your products, processes, strategies, and client base can dull your competitive edge and hurt profitability at a time when every penny counts. Sometimes it can even bring down a company. For employers whose main capital base is intangibles like goodwill or know-how, the thought of losing employees who have access to information assets is an absolute nightmare. After all, HR can get back a departing employee’s keys and laptop—but they can do nothing to remove the valuable knowledge in his or her head.
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At the extreme end, situations like this can threaten a corporate empire. For example, when an executive with knowledge of the Thomas’ English Muffins ‘nooks and crannies’ recipe left to join a competitor, he was stopped by a court. Every
Big Times Magazine | Sep/Oct 2015
business, whether or not it has a ‘secret recipe’ or highly specialized technology, almost certainly has information that gives it a competitive advantage, and it usually has to be shared with employees who may not be around tomorrow. The good news is there are ways to mitigate the risk. Here are nine ways for employers to minimize the risk associated with departing employees: Realize that no one––not even your protégés–– will stay forever. One mistake leaders often make is assuming that, because of either loyalty or gratitude, the employees they’ve trained and closely mentored will stick around indefinitely. But the truth is that all employees—even protégés— come and go. And if care isn’t taken to prevent it, they can leave with sensitive information. Know what the law does—and doesn’t––protect. The law protects only trade secrets, not employee skill or general knowledge—but what’s the difference? The skill a worker acquires practicing her craft over time is hers to keep. The same thing may also apply to techniques and information she has learned over the course of her employment. However, if any of those techniques or pieces of information give her employer a competitive advantage, are not generally known, and are safeguarded to a reasonable degree by the company, they are likely to be considered trade secrets.
Clearly convey your expectations to job seekers. Applicants probably aren’t thinking much about trade secrets, but it’s still a good idea to be clear about your expectation that they will not bring with them information that could get you in trouble. A pre-employment interview agreement that spells out what prospective employees can and can’t use or disclose from their previous jobs is an indispensable precaution against inadvertent information theft. Proactively re-recruit your best knowledge workers. Of course, the best information retention strategy is also an employee retention strategy: Hold on to your key people whenever possible. Proactively incentivize them to stay with your company by ensuring that they remain happy, appreciated, and well compensated. Yet also keep in mind that money usually isn’t the primary driver for loyalty. Take advantage of nondisclosure agreements. As their name suggests, these documents legally bind employees not to share certain information assets (often trade secrets). Employees are less likely to compromise confidential information when they know it’s of such importance that the company has tied it to a document. Likewise, competitors are less likely to encourage new employees to divulge information acquired from previous employers if a nondisclosure agreement exists. Use noncompete agreements with care. Increasingly unpopular with judges (not to mention employees), noncompete agreements can be expensive to enforce and sometimes backfire. The terms of this kind of agreement can range from compensating workers for not seeking employment with any competitor to simply prohibiting competing for a certain period of time within a particular geographical area. (This is in contrast to nondisclosure agreements, which allow ex-employees to continue working in the field so long as the confidentiality of their former employer’s trade secrets is respected.) Be sure to directly address the digital risk. While departing employees have always been able to take secrets with them, the chances of this happening have increased dramatically for many companies in the digital age. It’s critical for employers
to be aware of the particular risks posed by employee-owned devices, the Cloud, file sharing, and more. Take potential security breaches seriously. If you think one of your staff may have violated your confidence, don’t hesitate to determine what trade secret information he regularly had access to and whether there is any evidence of unauthorized access. Investigate whether the employee has exhibited any unusual behavior such as excessive copying, downloading, emailing, or erasing of records. If permitted by company policy and law, make a copy of the employee’s hard drive. Review his files, emails, and telephone records to determine what (if any) company information has been disclosed outside and, if so, to whom. Only after gathering this information and consulting with legal counsel should you confront the employee. Never skip the exit interview. Even with voluntary departures, it’s important to share your concerns and learn about the employee’s plans. The potential for harm isn’t limited to “stolen” data—simple misunderstandings can also lead to distracting, expensive litigation. If there is no reason to believe that the departing employee has any intent to breach company confidentiality, simply arrange a meeting to learn more about her decision to leave and to reinforce your concerns and determination to protect the organization’s interests. Profitable secrets falling into the wrong hands really can spell doom for a company—especially in a time when the vast majority of information is shared across the global network of the Internet. It’s essential for any organization that deals in information to actively protect its intangible assets from the watchful eyes of competitors. Fortunately, with responsible practices, secrecy is still possible in the online age. About the Author James Pooley is the author of Secrets: Managing Information Assets in the Age of Cyberespionage. He provides international strategic and management advice in patent and trade secret matters, performs pre-litigation investigation and analysis, and consults on information security programs.
17 | Big Times Magazine
fun facts
September marks quite a few milestones. The last “Monday holiday” of the year (September 7th), the first day of Fall (September 23rd), and of course, one of the most tragic days in our nation’s history (September 11th). Barbecues are put away – except in sunny Southern California where the calendar means nothing. Fashionistas put away their white clothing and stores begin putting up their Christmas decorations (!). To commemorate what was once the 7th day of the year, before Julius and Augustus Caesar were immortalized, we present some September Fun Facts.
The name September comes from the Latin septem for seven, since this was the seventh month of the Roman calendar. The month was named during a time when the calendar year began with March, which is why its name no longer corresponds with its placement in the Julian and Gregorian calendars September starts on the same day of the week as December each year, but does not end on the same day of the week as any other month in the year. September has three birth flowers: the forget-me-not, the morning glory and the aster. Forget-menots represent love and memories, asters represent love as well, and the morning glory represents unrequited love. These are all very passionate flowers. The birth stone for the month is the sapphire. The sapphire represents clarity of thought, intuition, and peacefulness. In traditional medicine it is used to treat fevers and reduce inflammation. Sapphire reduces anxiety and procrastination and gives the wearer luck. President William McKinley was shot on September 6, 1901 while attending the Buffalo Pan-American Exposition in New York. He passed away eight days later on September 14, 1901. The 1st Continental Congress was called to order on September 5, 1874.
September 9th is National Teddy Bear Day.
The Continental Congress changed the name of the United Colonies to the United States on September 9, 1776. September 24th, 1789 - the US Supreme Court was established. September 16th is National Play-Doh Day. September 5th, is National Cheese Pizza Day.
World War II began in September, 1939, when Hitler invaded Poland.
September 12th is National Chocolate Milkshake Day.
The Great Fire of London occurred on September 2, 1666. eptember is National Chicken Month as well as Cholesterol Awareness S Month in America.
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“TOTAL MARKET” Still misunderstood by marketers
By Terry Soto, President and CEO of About Marketing Solutions, Inc.
I just spent three days at the Multicultural Retail 360 Summit in Anaheim, California where I was invited to MC for a day. A new and fun experience for me! The conference agenda was solid and the speakers were great! But here’s the thing that caught my attention. Total Market is still a misunderstood concept. As much as Total Market was discussed during the sessions, companies are still confused and speak to multiple definitions of Total Market, and they question its value, purpose and how it should be executed. Integration, Total Market’s predecessor is a topic I cover extensively in my book, Marketing To Hispanics – A Strategic Approach To Assessing And Planning Your Initiative. In my book I explain the premise behind integration as taking a company’s stated growth platforms and acknowledging that the company’s highest potential targets vis-à-vis its growth platforms likely include non-Hispanic whites, Hispanics, Asians, African American and other ethnicities and nationalities who fit specific consumption, attitudinal and lifestyle profiles given a brand’s positioning. Stakeholders would then consider these racial, ethnic and cultural backgrounds as they think, plan and implement solutions relevantly across every area in the company that plays a role in the creation and production of the products and services, how these products and services are made available in the marketplace, how consumers are serviced pre, during and post purchase across all channels and how the company communicates its offerings – marketing. Stakeholders would also work to align and coordinate back-end operations which support the deliv-
20 Big Times Magazine | Sep/Oct 2015
ery of its products and services, including human resources, suppliers, infrastructure, customer service centers, and reporting. Total Market is no different. And, it is not a concept that only applies to marketing communications, it is a way of doing business which must be applied more broadly to how a company organizes to operate more relevantly. Total Market does not mean a brand is all things to all people as I heard some folks say in disapproval. It is not about finding the common denominator marketing insight at the expense of more engaging cultural insights as some marketers have adopted it. It is not about creating one size fits all marketing communications that reaches all target consumers in the same way in order to create efficiencies in agency services and production. Total Market is about creating alignment within an organization so a company’s go-to-market strategy is optimized for relevancy among its target consumers in context with how a target normally interacts with a category and how it fits in targets’ lives. This type of alignment requires some organizational and operational optimization (yes, change). It also still requires leveraging diverse target insights to plan and implement dedicated marketing efforts based on what is most engaging to each cultural sub-segment under an umbrella consumer
that otherwise could have been avoided. There are some companies who have just fell on hard times and are really well managed. Left alone and ABOUT THE AUTHOR target and allowed to strategy. work through the problems, they will be fine and will become great firms again. This ar- Stephen Santoro is a former senior executive officer from TWOcompanies Fortune 200 Insurance Holding Companies. In my the concept of Total Market, is meant to advance from a homogenous to a global ticle is view, NOT targeted at them. were/are on the NYSE. His background consumer view within our own borders because this Both is thefirms reality of thetraded U.S. consumer market today. The on reinsurance U.S. decide consumer market is far from the way it used to befocused even just 5 years ago.in both USA and tax haven venYou folks! ues. Stephen has worked in the insurance business and related businesses since 1981. Stephen also has owned If companies growth in today’s increasingly shopper environment, companies must evolve Thank you to want Jon Spaugy and the Board of BIG diverse controlling interests in 3 managing general agencies in their thinking approaches. Today, simply and to think that anyCA and GA. Contact himunprofitable at (310) 305-0459 or ssantoro@ for allowing myand viewpoints. I’ll be back it’s next time! counterproductive thing but a Total Market approach will place companies on an accelerated growth path. stephensantoro.com.
About the Author Terry Soto is President and CEO of About Marketing Solutions, Inc., a Burbank, California – based strategy consulting firm specializing in helping her clients to dramatically improve overall business performance by optimizing their strategies to also succeed in today’s diverse U.S. market. She can be reached at terrysoto@ aboutmarketingsolutions.com or 818-842-9688.
Some things are
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25 | Big Times Magazine