How many staff members at your agency could paraphrase guidelines from the agency procedures manual or employee handbook?

It may seem tedious, but if the answer to that question isn’t “all of them,” an E&O disaster could be in your future.

Agency procedures manuals and employee handbooks are two separate, yet compatible aspects of an agency’s operational foundation. Employee manuals have a staff organizational focus—what the agency expects from employees, and what the staff can expect from the agency. By contrast, an agency procedures manual strays away from the HR realm to address the business practices of the agency, including operational standards and methodology for differentiating business practices.

“The No. 1 inside hassle of agencies is that everybody has their own preference on how to do something, but no one is telling them the agency way,” explains Big “I” Virtual University faculty member Virginia Bates, president of VMB Associates, Inc., a consulting firm that specializes in education, agency management and automation issues. “The E&O issues become understandable but dangerous mistakes. We have to stop that so everyone is using the same information base in an agency—it’s the only way an agency can focus on making every single call an opportunity to look at the account and suggest coverages.”

Bates, who has more than 20 years of consulting experience in the industry, says agencies that don’t pay attention to these materials face E&O exposures galore. Here’s why.

IA: What is the biggest issue with agency procedures manuals and employee handbooks?

Bates: Many agencies literally do not have anything and they’re very seat of the pants. Whenever they hire someone, there’s nothing to give them to say this is how we do things. There are a lot of assumptions that end up being well intentioned but inconsistent that eventually tie in to E&O problems.

Others have a manual, but it’s from 1982 or 1967 and it doesn’t address the business practices of today from the carriers or agency management systems. One of the predominant problems I find in my practices is what I call the “bright and shiny syndrome”—they’re happy to have a manual—they understand the value of it intellectually—but from an implementation standpoint, nobody is passionate about it. So they don’t follow through, introduce it properly, stress the importance of it or do management reporting to see if people are complying.

There are the precious few agencies that not only get it, but they also know how to make it happen. They can reinforce it—new people read the manual and they understand it before they’re put to work even if they’re experienced. They’re almost quizzed by management to see if they’re using the same methodology that the rest of the agency uses. They’re the people who really follow through and they tend to get a lot more done in sales and have higher retention, because they don’t spend a lot of time on processing errors.

What are some of the evolving E&O exposures agencies face when it comes to these materials?

The biggest reason I think a procedures manual makes an agency far more E&O safe is that it not only clarifies but enforces consistency among all staff people so they’re handling the work the same way at every relevant desk. No matter what customer calls or who that customer talks to in the agency, the customer is going to get predictable, sensible and consistent answers without hesitation. This way, the consumer is never left between two different ways of working, lost in the “I can’t figure this out” shuffle.

An example of that is indicating what activity codes or activity names everyone’s going to use for the same thing. If a customer calls about a certificate that has been in process and they need that certificate to get a project bided, the way to find that activity by filtering or refining can be located very easily. But if one person uses the correct code and someone else uses a totally different code, then being able to find the information for that client on where the certificate is located will not only be less quick and convenient but risks the chance of not seeing everything.

Good use of a computer system means that everybody is doing things the same way, using the same code and documenting to the same level so that anyone can help that customer at any time with speedy and accurate information. The No. 1 E&O claim is that a client doesn’t have the right coverage at the right time when they have a loss and finds a way to blame the agency. If our procedures are smooth enough that when we talk to the customer we know exactly what coverages they have and do not have, we can use that precious moment when we have the insured on the phone or in an email conversation to work with them on making the account as strong as it needs to be for the client’s protection.

What constitutes a “safe” manual from an E&O perspective?

The Big “I” Best Practices Study gave us an indication of the best way to get work done in the fewest steps. The problem with most manuals I see is they weren’t written by people who understand agency operations. They force too many unnecessary steps, creating more work for a staff that already has too much work. And the more steps you have, the greater the opportunity to mess something up.

Very often, procedures are written by people who don’t actually do the work. The procedures are therefore too cumbersome. Now we’ve documented and put in writing the wrong way to do things, and that actually takes you a step backward. When the smarter people in the agency realize it doesn’t make sense, they find their own way to do things and create even more inconsistency. When you write a manual but you don’t know all the things your system will do for you, you can’t possibly write a good manual. You think manual effort is necessary to do things that the computer is perfectly able to do for you. The procedures come out clunky and cumbersome—it has to be a professional, state-of-the-art set of workflows that you’re aiming for.

Most agencies start their procedures without writing out what their service standards are. If we don’t even agree on what we’re trying to achieve, then we can’t possibly come up with a road map to get there. It’s the service standards that have to come first.

Morgan Smith is IA assistant editor.

This article is the first in a two-part series about agency procedure manuals and employee handbooks. For details on writing, implementing and maintaining these important materials, keep an eye on IAmagazine.com and upcoming editions of the News & Views e-newsletter.