Employee Ownership Unifies Unity Group

Key Producers Dictate Fate of Insurance Firm

 

by Barry Bowen

 

The Unity Group, an insurance and financial services firm headquartered in Bellingham, traces its professional roots in this city back to 1929.

With 54 employees and year 2001 premium values of $58.5 million, the firm now serves Washington’s Interstate 5 corridor from Seattle to the Canadian border. The firm is banking future success upon its unique commitment to employee ownership, a renewed focus on cultivating customer service excellence and making sure bigger is actually better.

A common model for insurance agencies is to have a principal owner with salaried or commissioned agents who work for the owner. The Unity Group could not be more different. Of the 54 employees, 16 employees who are “producers” — agents or managers — own 99 percent of the company. An Employee Stock Option Program (ESOP) enables all other employees to own a small piece of the firm.

“I think our firm’s strongest value is that it is locally owned,” says Robb Dale, chief executive officer of the Unity Group. “If you are a producer or a manager here, then you can directly influence the growth and direction of the company. Everyone in these positions — and this includes some people who we added only 18 months ago — has an ownership stake in the company.”

Moreover, according to the firm’s president, Barry Hanson, all principle stakeholders are treated equally in corporate decision-making, regardless of their percentage of ownership. Ownership among the 16 producers ranges from 0.5 percent to 18 percent.

“In the history of this company, there has never been a vote by the number of shares owned,” Hanson remarks. “Each one of the producers gets one vote. The 16 principal owners pick a board of directors and the board picks the management team.”

The management team now consists of Dale as CEO, Hanson as president, Jim Brontoli as operations manager and Judy Foster as chief financial officer.

Broad-based ownership is notable not merely for its uniqueness, but for the manner in which it fundamentally restructures the incentives for agents to ensure clients are served well. In a typical agency with commissioned agents, it’s common for the best sales turf to go to the highest producer. This makes it easier for the “king of the hill” to maintain the top spot. That can foster unhealthy competition, animosity and a culture where one producer benefits from another’s failure.

“Employee ownership makes for better teamwork within the agency,” says Hanson. “I think there are fewer dropped issues and people make sure they close the loop on client calls. I got a call from a client recently and I told him I could not help him but there was someone else in the agency who was a real expert in this area. I made sure they got on the line and the client was better served. The incentives for our firm to work across functions is a real strength.”

Customer retention is one metric of success to which the firm points. The average client stays with the firm for nine years and customer retention is running at 92 percent.

 

From generation to generation

Employee ownership has shaped the evolution of the Unity Group over several generations, since three competing local agencies teamed up in 1970 to form Griffin, Garrett, Johanson & Schacht. It is also a fundamental motivation for the firm to recruit and mentor talented younger producers.

According to Dale, the firm has a history of retiring senior producers “in style.” Dale, who served 2 1/2 years as president before rising the No. 1 spot vacated by retiring Ken Culver, says he is looking forward to that success continuing. The 47-year-old Dale joined the firm in 1980 and became an owner in the firm in his late 20s.

To profit and begin to cash out the value of ownership in the firm, a retiring owner sells back shares to the company that then are purchased by current producers and shared with the ESOP pool. In a very real sense the financial security of the most senior people in the firm rests upon the talent and vitality of those they have mentored to replace them.

 

Focused on customer service

The Unity Group’s mission statement calls for the firm to “provide superior value to our clients and the communities we serve” and Dale says he takes this very seriously.

“Everybody has a copy of this at their desk,” he states. “Every time we get together as a company, I reinforce our mission. This is why we are here: to take care of the customer.” Producers of the firm are not there merely to sell products to clients but to “partner” with clients and provide risk-management consulting services, says Hanson. Rather than simply sell a client an auto liability policy, for instance, the firm will organize a driver safety seminar to ensure a client’s losses are minimized over a long period of time.

To better achieve its mission, the firm has embarked on a comprehensive initiative to not only revamp and standardize procedures, but also to monitor and assess performance and provide employee skills assessment and training.

Playing a central role in this endeavor is Jim Brontoli, who joined the firm in 2000 from TCI Cable, a very different world from insurance. Brontoli concedes the lack of insurance experience presents a steep learning curve. That demands learning a great deal but also frees him to apply new operational models to traditional agency functions.

Dale specifically wanted to hire someone from outside the insurance industry in order to boost customer service. The insurance industry simply is “not very customer-friendly,” says Dale, so hiring from within the industry didn’t make sense. “That’s just not the way these people were brought up,” he remarks.

Brontoli oversees everything from information technology sytems to how the phones get answered and the speed with which employees respond to client and insurance company queries.

“The game plan is to invest in training our people to serve the customer and to focus on specialization within each of our business lines,” says Brontoli.

One example is a workshop on reducing claims for errors and omissions — asking the right questions of clients, doing all the necessary research and documenting the information properly. This is not only a good business practice, says Brontoli, but it is important for the legal protection of the client, the insurer and the Unity Group.

Ensuring what they want to be done is what actually happens is the purpose of activity reports and a comprehensive audit program recently launched in the large commercial accounts division. The audit program monitors six basic areas of work flow, from billing to documenting interactions with clients and tracking the time frame for new and renewal business.

“Our goal is to monitor 38 percent of the businesses we work with each year,” says Brontoli. “If we can reach this level, we believe we will have a very good picture of our own performance.”

The skills assessment and training program coupled with more tightly structured work-flow procedures enables the firm to continue looking outside the insurance industry for talent.

“We started focusing on good, extremely positive, customer-oriented employees and then teaching them the insurance business,” Dale states.

 

Ensuring bigger is better

Since the formation of Griffin, Garrett, Johanson & Schacht (GGJ&S) on Unity Street in 1970, the firm grew slowly. In the mid-1980s, it adopted an aggressive growth strategy. After acquiring the Ireland and Bellingar Agency in 1987, its largest competitor in Bellingham, GGJ&S changed its name to The Unity Group.

With acquisitions, mergers, and expansion up and down the I-5 corridor, the Unity Group now fields offices in Lynnwood, Everett, Sedro-Woolley and Bellingham. In 2001, it partnered with VanDalen Insurance in Lynden to establish a part-time presence in that community. This year, the firm plans to make its Lynden presence full-time with a senior partner and support staff.

Being larger than most all local competitors can be a plus or a minus, concedes Dale, but he is determined to ensure that, in this instance, bigger is better.

“We are the only agency in this area completely delineated by lines of business. This enables greater specialization and expertise,” the CEO remarks.

Commercial insurance is the largest of three profit centers, generating 58 percent of the firm’s revenues. Personal insurance lines account for another 26 percent. Life insurance products, including employee benefits and financial services, provide 16 percent.

With five offices and three profit centers, one aspect of Brontoli’s work has been to standardize the way business is done within each line of business, regardless of office location.

The size of The Unity Group also means they can get things done for clients that other agencies cannot, says Dale. While the firm can write policies with hundreds of insurers, there are about 20 with whom Dale says it has achieved a strong business relationship that he characterizes as a partnership.

“We have personal relationships with the top management of several insurers we work with. That’s what we bring to the table,” says Dale. “We have been able to get policies written that no other insurance company in Whatcom County could get approved. That’s because of our track record, profitability and the sense of trust we have built up with insurance providers. We can be a more effective advocate for our clients.”

The firm’s size also enables it to give more back to the community. It encourages employees to be actively involved in local community and professional organizations. The firm organizes an annual charity golf tournament where winners earmark the charities to benefit. The last event produced $15,000 in contributions, says Dale.

 

Looking forward

In 2002, the firm will continue to refine its management functions to enhance customer service, make changes in its office structure and be very attentive to the dramatic changes in insurance due to the terrorist attacks of Sept. 11.

While the firm looks to expand services in Lynden this year, it also keeps an eye on how consolidation can boost efficiency and customer service. Past acquisitions of offices in the San Juan Islands and Ferndale, for instance, were consolidated into the Bellingham office and ended up delivering better service for the clients, says Dale. And the 2000 acquisition of Doorn & Associates in Sedro-Woolley enabled the firm to consolidate its Burlington office to that location, creating the critical mass necessary for a responsive office. Consolidation of the Lynnwood and Everett office is likely this year, Dale says.