Rapid growth is what every entrepreneur wants, but Damien Honan found that managing success can be as tricky as achieving it.
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Entrepreneur: Damien Honan
Company: Honan Insurance Brokers
Business type: Insurance brokers
Founded: 1964
Employees: 50
Turnover: (2004 - 2005) About $50M
Head office: Melbourne; other offices: Sydney; member of the Worldwide Broker Network
Contact details: +61 3 9813 1244
The Honan Insurance Brokers Story
When Geoff Honan broke his leg skiing in 1983, he asked his 22-year-old son, Damien, to watch over his insurance business in his absence. Twenty-three years later, Damien is still at the company. Damien says: “You fall into the insurance business, you don’t choose it.”
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Key learning points:
- Mentors - Don’t re-invent the wheel. Find a person who can advise you on managing staff and growth.
- Engaging staff - Get staff involved in the business by asking for their opinions on problems facing the business and helping to hire new employees.
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In 1993, G Honan and Associates was renamed Honan Insurance Brokers. Turnover that year was $400,000 with a staff of five. With the introduction of compulsory superannuation, Damien decided to refocus the business from super and life insurance to general insurance/property and casualty.
Growth since then has been rapid. By last 2004-05, Honan Insurance’s turnover had reached $50 million and it had a staff of 50.
The Challenge
In the late 1990s, the business was expanding rapidly but Damien lacked staff-management skills. He says: “Suddenly, I had to put on more staff and all I knew was to say, ‘Go into the corner and work’. I wasn’t very sophisticated.”
Damien needed a mentor and he found it in 2000 in Don Fraser, the father-in-law of his best friend. Fraser - a former managing director of Safeway Australia and now chairman of Honan Insurance - saw that the business needed to restructure, with new systems for rewarding and engaging staff.
The Solution
In 2002, Damien went to the United States to see how big insurance brokerages manage their staff. He says: “They explained how they created stock options for staff and that’s the model I chose.” With Fraser’s help, Damien created structures to enable his company to expand: profit share, staff coaching, a bonus system, regular meetings, and a general manager.
There are now 11 shareholders in the business including Damien. “Our good producers [insurance brokers] have shares and dividends. I wanted them to feel ownership of the company and be rewarded for their efforts.”
In order to get the most out of support staff, Damien introduced a bonus system. “We set up a bonus pool and how people perform to their KPIs determines how much of that pool they get.” The producers work on a different bonus system.
Damien says that many producers who had worked at large institutions were overly protective of their clients. Damien wanted clients to have the relationship with the business and not with individuals. “We’ve had some tremendous challenges getting stockholders to understand that what’s good for the company is actually good for them.” So Damien developed the Honan Way, which gives people credit for helping others produce. If producers still won’t work their clients as part of a team, Damien gives those clients to other producers.
As the business grew, Damien was constantly on the road and needed someone in the office to keep staff motivated. In 2001, he appointed a general manager, an ex-school teacher called Chris Glass. Damien says: “He had no knowledge of insurance. But he was such a great people person.” One of Glass’s important roles is to listen to staff members’ problems.
Now there are regular meetings in which staff can air concerns and identify problems. Damien involves staff in the hiring of new employees. Candidates first meet Damien and his senior managers. The final interviews are with staff working in the particular area that the candidate would join. Damien says: “This process makes staff feel they’ve had a hand in employing that person.”
Damien tracks what is happening among staff by reading minutes and he attends meetings spontaneously. “It shows people you still care. If the boss doesn’t care, no one else is going to care. If the boss is not passionate about saving money, being frugal and prudent, the staff certainly won’t be.”
Damien says money is not a big motivator for staff. “I would say out of ten, money would be in the middle. People are motivated by culture, enjoyment, communication, camaraderie, appreciation, client feedback and workplace comfort.”
The Results
Damien says his strategies have kept staff loyal and engaged, with minimal staff losses. “I’ve only lost one that I didn’t want to lose.”
Honan Insurance Brokers is now one of Australia’s top 12 private insurance brokers and belongs to the Worldwide Brokers Network.