Stories of Success - Interview with Jon Miles

Welcome back to another episode of the Agent Leader Podcast. My name is Brent Kelly, your host, also the vice president of the Sitkins Group, and I'm delighted you're with me on another episode. Now this is going to be another episode where we're going to have a member interview from our Profit networking live event. So hopefully you're enjoying this series of interviews from our members who are sharing some of their successes, some of the failures, very practical things that they shared from our live stage that you can take back to your agency. On this episode, I'm going to share an interview with Roger Sitkins. Interviewing president of EHD Insurance in Pennsylvania, John Miles. EHD is a newer member of our Sitkins Network, our private client group. And again, if you're interested in learning more about the Sitkins Network and what that could mean to your insurance agency, go to sitkins.com and you can learn more about the network on our website. But John Miles is the president of EHD and we had the opportunity, they joined the network the beginning of this year. They have some people who go way back in doing some work with Sitkins Group as a whole, and their sales manager, Jim Lewis, heard me speak at an event with Selective Insurance about a year ago. We then continued to have conversations and they attended one of our camps just to kind of get another feel for it and immediately wanted to join the network. And so they started with us at the beginning of 2019 officially, and we've already done a private producer camp for their group and got to know a lot of their, obviously their team, get a sense of their culture and had the opportunity to finally meet John Miles, the president, in person. And I can tell you, getting to know John on a few different occasions now, John's the real deal. I'm a believer of the John Maxwell philosophy that everything rises and falls on leadership. I really believe that. And as I work with agencies, I think it's true. It's why I'm passionate about this podcast and getting to know John, his philosophies, how he thinks, how he executes, how he balances care and candor in his leadership. You can see why EHD is an agency that has been very successful and will continue to be highly successful. In this interview, John shares a lot. There are some strategy and tactics with some of their processes and how they do things. But I think what you'll find most impactful I did in this interview is a leadership perspective, how to lead an agency the right way and not being a leader who it's about my position or Title or you have to listen to everything I say because I said so. But again, being able to balance care and candor in the right way to get results and help people achieve their true success. Being a leader is getting people to do those things that they may not do on their own. And that's what a great coach and leader is all about. So enjoy this interview from John Miles of EHD Insurance. I think you'll get a lot of takeaways. So have a pen and paper, your notebook ready, take a lot of notes because you're going to learn a lot.

John, Brett and I just went out and did a private producer camp for them as part of the network because of the fact we had 4. How many people were in the camp? 40. 35.

40.

About 40 producers in the camp. So when we have a new member that size, it's more economical for them to fly us there. We charge them a lot more. It's fine.

Platinum membership.

Platinum membership, absolutely. Instead of flying 40 people to Florida twice. I was really impressed from day one with the agency and Jim Lewis, who was the executive vice president was checking us out. He came in, he attended a couple events, wanted to see what Sitkins was like now versus 20 years ago, ET cetera. And they as a team decided to join us. As I mentioned, Brett and I went there and I got to really meet John and talk to him for the first time in a long time. And now as his role as a CEO. And I started listening to the things that. How he just the culture and how he was the leader. There's no question who the leader is there. And you're going to learn that there are a lot of owners, but he's the leader. He's the chairman, he's the CEO, he's the president of the agency. The agency itself. Make sure I've got my numbers right here. Has. This is interesting too. I said, I asked ahead of time, what are your revenues? 23.2 million. Not 23 million or 24. 23.2. And I also know that some of the things that he carries with him on a regular basis. I saw at the meetings, he knows his numbers so well. This year they're shooting for 25 million of revenue. It'll be the first time in the history of the company they got that large. They have 109 employees. Okay. And their revenue per employee is $214,000. Their organic growth rate over the last three years has averaged right about 7 between the three years you gave me, which is about 2 points better. Almost two and a half points better than the industry. And then their EBITDA margin is at 21.5%. So they've got a great organization. So when I was looking at all of this and just said, okay, I've got to ask John and I just again on the spot said, hey, I want you to come to our event. So give us a quick overview history of the agency.

Well, first of all, I just, I would be remiss if not saying that since we're a new member, I really appreciate being part of this group. And this at the end of this year, I'm going to be approaching 40 years in the business. I did not start right out of grade school either, so. And I'd like to think that I know a lot, I've had a lot of experience, but I'm always reminded and humbled when I come to meetings like this. I use the term abl, always be learning. Because while I think I know a lot, the list of things I don't know is always a lot longer. So. And I can tell you that I really appreciate being here and learning from all of you, not just from Roger, but quick history of the 80s. We've been around since 1896. And I learned from Roger that that's not really something to brag about when you've been around for 123 years. Because the stereotype is that, oh my God, you're old, you're stale, you're resistant to change, whatever. So I like to say that we have experience, we're a renewed agency. We have just gotten started. So I'm very proud of our company. We're about 75% commercial property casualty, not unlike a lot of you. 25% employee benefits. We have a full service risk management claim tech operation, which is risk control and also claims management as well. We have a full time nurse on staff that manages and owns our wellness program. We put our money where our mouth is. We bought it for ourselves as well as provide it, you know, for our clients. So we're very, very proud of that. In addition to Roger, we utilize Bobby Reagan's group and we were very proud last year that there were 1500 agencies nationwide out of the approximate 35,000 that were nominated for the IAB and Reagan Best Practices Award. And of those 1500, only 262 were able to earn that honor. We've done it for three years in a row now, so we're very, very proud of that.

Great job. Great job. Give them a round of applause. Absolutely. So I was going to ask you what the one thing that you're the most proud of. I know that's part of what else. What's the one thing where you just say, you know, when I look. Sit back and I look at my team, what's the overriding pride you have as the grand pooba?

And you're gonna accuse me of stealing this? And I'm not opposed to stealing. I always say if you steal from one source, it's plagiarism. If you steal from a number of people, it's research. I've heard the word culture a lot over the last couple of days, and I actually had written that down as the thing that I'm most proud of until terms of our company. And culture, to me, is not a warm and fuzzy thing. I think that it has meaning in terms of your numbers and your business. And as a private company, our two main constituents are our customers and our employees. No question about it. If you take care of those two main constituents, I think really good things happen with respect to your numbers. And I heard Mark say something this morning that I like to relate to as well. I like to say to our employees, to our community, that we need to have strong muscles and strong minds to be able to get things done for our customers, but we also need to be a company that has a heart and a soul. And that, first of all, that's my own personal philosophy, my own personal feeling. But the unintended, positive consequences of that, I think it bleeds into how customers feel about our company, about our reputation, how insurance companies feel about us, about our integrity, and even in terms of attracting and retaining employees, particularly young people these days, who are so cynical about every single institution in our country, with the possible exception of the military. And corporations are kind of in that boat, too. And when they feel as though you're a company that has a heart and a soul, has a noble purpose, that cares about them, cares about the community, they tend to gravitate towards you and want to stay with you. So that's the thing I'm most proud of as culture.

Brett and I had a really interesting experience when we were at your agency. It's the first time this has happened that I can certainly remember. At the end of the event, with 40 some people there, it was touching that probably 85 to 90% of the people, if not 100, every one of them came up afterwards, shook our hand, and said, thank you so much. I really appreciate that. So that said to me that there's an attitude of gratitude amongst the whole Organization. That doesn't happen. You know, producers are out of there. They're gone. But I remember saying that to you after I said, wow, that was really impressive to me.

Thank you.

That permeates through the whole company.

Thank you. Some of the most powerful words are one word please, two words. Thank you. In three words. I appreciate you. I mean, think about it. Very simple words, but they have such meaning and such power.

Same again.

One word please, two words. Thank you. Three words. I appreciate you.

Yeah, and that's what we felt when we were in there. There was no, no question about thank you, Roger. So when you look at this, you've made an absolute commitment that you're staying independent.

Okay?

That's what you and your partners are doing. So what's the biggest challenge? First of all, getting to that point and maintaining it. Because right now you guys could make a hell. I mean, you know, you take your numbers times 10 with an earn out, 12, 13. That's a big, big number. What's the big challenge?

Well, the big challenge is, first of all, I agree with what Chet said. You have to be intentional about whatever you're planning. You have to really prepare to think about what you want to do personally and as well as the agency. And we are very attractive. I get calls all the time. I'm not alone with this. And I like to say when I go away to meetings and CIAB conferences, whatever, I'm like the prettiest girl at the prom. I'm not really that pretty. Everyone wants a piece of you. It's like a meat market. But we are very committed to remaining private and independent. And we're very fortunate that at key mileposts in one two, three, year old history, the key owners at that time felt a responsibility to remain private independent and perpetuate internally rather than go to the outside world. So again, I don't judge anybody that does end up selling. Everybody has their own issues, but we are intentional about remaining private independent. And I think that also is attractive to certain kinds of producers that were coming on board. Word that they know that we are committed to do that. And the challenges are we sacrifice a great deal of internal return in order to invest in our perpetuation. 70% of insurance agencies in the United States do not have a perpetuation plan, simply do not. And that's why, you know, combined with the private equity groups and the other large agencies, those are two forces that lead to a tremendous amount of mergers and activity, mergers and acquisitions. There's a lot of money out there willing to be invested in our industry, coupled with 70% of agencies that don't have a perpetuation plan and are not funding that perpetuation plan in some form or fashion. That's why you see so much M and A.

So what's your structure?

Well, our structure is we have, and we just made a change. As you know, we talked about this. We're not an ESOP, but we had 11 shareholders, three recently retired, and we just added nine new shareholders. So we're up to 17 shareholders now, and we'll probably finish this year around 117 employees or so. So it's still a relatively small percentage of our company. 12 to 15% are owners. But we've decided that our deal was to start adding new producers to the company and rather than having just relegated to people in the management group, obviously start offering ownership to some of our top producers. Not having them wait around, not forced them to go into management in order to do that. Some of the greatest athletes make the worst coaches. Some of the best salespeople make worst managers. And they shouldn't feel as though they have to follow a management path in order to get a piece of ownership. So we created, in addition to continuing to reward managers, we created a psip, a producer Stock Incentive Program. And it's basically an opportunity. There's two main elements that are a little bit different than we had for our other shareholders. And the two elements are they're not getting a tremendous amount. It might be 1 or 2%, but it still can be very lucrative. And I put in a clawback provision which basically says in the first five years after getting ownerships, if you, you excuse my language, if the bed, we're going to claw that stock back from you. Because in earning stock, and there's objective and subjective criteria to earn shares as a producer, I say this is an investment in you. This isn't a reward because you've arrived. You can't retire when you own something. What's that mean? That means you take care of it, right? You appreciate it, you love it, you do whatever you can to increase the value of that. And that's how we, how we look at that and we provide them with funding. So if I told you a story and said, I'll tell you what, then I'm a bank, you come to me and I'm going to say, for an initiation fee, right? For a buy in, an initiation fee, I'm going to give you a beautiful asset and I want you to take care of it, help us improve the value of that. And I'LL tell you what, once that initiation fee is paid, I'm going to provide you with some funds to help you pay the mortgage and the interest on that asset. And you keep that asset. Right? Make it pretty, take care of it. And at the end of your career, when it's time for you to sell that asset, if it's quadrupled, quintupled in value, you get to keep that asset less, maybe what's left on that note. And we provided you with the funds to do that. And I'm sorry, by the way, if you have a tax liability as a result of owning that new asset. Now we're going to give you some money to help cover that as well, but that's my final offer. Okay, so again, how many of you.

Would sign up for that? Yeah, yeah.

So they get the story and that's a positive thing and they get very excited about that, and it's a whole new level. So we think that was an important thing for us to do when we were taught.

Talked about that when I was there, because you had three or four guys, producer were lined up for that. But like you just said, it was subjective and objective. Subjectively, what is it? Because objectively, they've got to do business, et cetera. But what is it that makes or breaks that. Yeah, that person's going to be a shareholder in your life. And who makes the decision?

Yeah, that's a good question. First of all, objective, you all know, it's growth, it's sales velocity, it's retention, it's all those kinds of things. And the subject of criteria, though, I think is also important because going back to the culture of your company, the what is easy. Those are your key performance indicators. Those are your financial metrics. Those are all easy to figure out. It's the how that's always important. I look at that as how you conduct yourself. What's your attitude? You know, people can be really smart and apply knowledge, but it's can you play well with others? Right? Can you finish a job? Do you care about other people? Are you a good teammate? And do you invest in yourself? Are you somebody that takes care of your professional development? Are you involved in nonprofit boards? Are you involved in your community? Are you the kind of person that everyone gravitates to? Are you a mentor for others? So those are some of the subjective things that we look at when we're making an investment in a new producer.

Has that created some tough conversations then?

I'm assuming it has. Absolutely. And, you know, one of the things about A culture that I want to make clear is that a culture doesn't mean that you're soft on people and you just spoil them. You know, I found that, you know, being a good coach or a good leader, like being a good parent, is making people do things they don't want to do in order to reach their potential.

Yeah.

I mean, think about that. So sometimes you. I remember the times in my life when people told me things where I was falling short. People could say, you're great. You do this, you do that. But the people that have the courage to tell you, these are the things that you need to do in order to achieve a goal that you want. And here's where you're maybe not being as effective as you need to be. Those are the people that you real. That you know, care about you.

And I think longer term in life. Even when you were saying that, I'm flashing back to some coaches and mentors I've had that have had to say some really tough things to me that I needed to hear. How many of us have some situations like that that maybe we've not dealt with yet? Be honest. Okay. Might want to put some notes down on that. When you Again, on the surface, it's like, holy smokes, things are great. But what's the biggest frustration you have in the agency today?

Oh, my. I have a lot of frustrations, but I want everything done yesterday. But I want to be able to maintain what I consider the great strengths of our agency. We have an outstanding service platform, a lot of unique resources. Our retention last year, our revenue retention last year was 98%, which was awesome. We're very profitable even with the investments that we make in a lot of different things. So I want to maintain that as well as our culture. But if I can just fix one thing, it's our sales velocity. It really is. We were fortunate last year that our retention number was over our goal, but our new business number was below our goal added together, that was great. But if you're going to have 7, 7.5% average annual growth, which is what we'd like to have, organic growth, and your normal attrition is about 5%, which ours normally is. Do the math. You need to have 2012 and a half percent sales velocity. And we've been more like 9 or 10, sometimes 11.1, and. But the good news for Roger is that's why we hired him. Right. I'm really happy help us do that, because some projects are do it yourself, and some projects, you need to understand that we've tried everything ourselves to try to fix this and attack this. And sometimes you need to bring in a craftsman. And I don't think that's a sign of weakness. I think that's a sign of strength. When you try to bring somebody in to help you get at something that you understand is a weakness and something.

That you know, obviously self serving, I'd agree with you. But think of what Mark Rollins talked about. I mean Mark has spent between the two mastermind, the mastermind he's in and the private coach and some other stuff he's doing now. I'll guarantee he spent 30, $40,000 this year on himself. On himself. And one of the things that we talk about, we mentioned a little bit yesterday, the whole concept of the 2 percenters that the best firms and Brett talked about this. The best firms will spend 2% of their revenue on team development, whatever it may be. And it's not just technical, it's all the stuff we do. So you guys are constantly investing. If you could start over, not in the agency overall, but at the point of leading up to where you became the chairman, president, CEO. First of all, what year was that when you took all three of those titles?

I became President and COO in 2013 and then I became, excuse me, President and COO in 2013, then became CEO in 2015, then I became Chairman, President and CEO in 2016.

Okay, so in that timeframe that you were accelerating, if you could start that whole process over again, what's the one thing you'd do differently?

Time travel? Well, to be honest with you, this sales velocity issue has been there. We've done a number of things. We really re engineered our company in many ways. We've gotten a lot younger. 40% of our company is now kids in their 20s and 30s and we need to do that 40% and that could be a little scary. And it's of kind caused us to have to do a lot of re engineering of onboarding. We now have full time training and development people that we didn't have before. We now have full time marketing and communications people to manage our social media drip campaigns, do all those kind of things. And so I'm proud of a lot of things that we've done. But I would have honestly, and I'm not just saying this to, you know, schmooze our host, but we would have hired you right from the very beginning. I'm fortunate too that the way we're structured and this isn't for everybody, but I won't get into you Know how many shares that I have or whatever, that's. That's private. But I do own 53% of the voting shares of the company, and we've been intentional with that for the last couple of owners. And the pitfall of that is, if you have a knucklehead with that much power, it could be a problem. So I work really hard not to be a knucklehead. All right. The good news is that it's very clear who the leader is. I do care very much about hearing everybody's voices before we make decisions. But I know some firms that have gone through transitions, and they've had four people with equal ownership, and they've been very close. But many times there's paralysis by analysis or conflicts occur, and it becomes tough to make decisions, even on small matters. So for us, it works, and that makes it easier. But I would have hired you earlier. The other thing I would have done if I had the chance to start over is I would have learned a lot earlier in my life, similar to what Chet said, is to have balance in your life. I talk a lot personally about faith. Family and friends come first, and then your career and then. And then the Pittsburgh Steelers. But honestly, I would do that if I had to start over, because early in my career, I was a hard charger, worked a lot, and sacrificed a lot of my family time for my own career. And I come to find out later that if you have more balance in your life and you spend time on your faith, your family, and your friends, I find you're actually more productive at work because you get away from some of that hysterical activity that you.

Yeah. You know, when you're talking about being the leader and having the majority of the votes, it reminded me of something I learned a long time ago from a great agency leader. And he said, you know, because I asked him, I said, how do you get the consensus? I'm referring to you here. And he said, it's pretty simple. He said, when I have my meetings with my team, the leaders, when we're in the office together, we can disagree. In fact, it's healthy to disagree. If everybody just goes, yeah, and they don't agree, then you're in trouble. Okay. He said, however, once we break the huddle, he was an old football guy. He said, once we break the huddle and I call the play, you've got to support it. Like, you were the one that brought it up. And that's a crucial part, is you've got to get the buy in. And again, we break the Huddle. Everybody agrees upon it. When we leave, you leave my office. We're in charge. So.

Okay, that's a good point. And I think the other thing too is you have to, mark, use the term surround yourself with people that are smarter than you. There has to be an understanding amongst your team that you are open to changing your mind. Because most of us get in leadership positions, we have pretty strong feelings about things, we have no problem advocating our opinion and sometimes the loudest voice in the room, you know, wins the day. But you have to have a team that's good, comfortable about telling you. And I like to use the term. Alright, where are we at? Where am I effing up? Remember that that's an important thing. And know that you have a couple people that have the courage to be able to answer that question honestly. All right, here's where I think we're going with this. Where am I effing this up? Honestly? And I think that's, that's a powerful thing to have.

And I saw that in action. I saw you talking with Jim and others even at the event, and I see the interaction you have with the team. So the last two gentlemen that have talked to you here have given you some insight from some really, really big organizations. And I hope that all of you have got a tremendous amount out of this. So please help me thank John for sharing his experiences. John, thank you so much.

Hey, Brent Kelly here, back at the Agent Leader podcast. Hopefully you enjoyed that interview. I'm sure you did. I sure did. And it gave you some insight and values that you can take back back to your agency right away. Also want to ask you a couple things. Number one, if this podcast is adding value to your life and your agency, please go to itunes or stitcher or wherever you listen and give me a rating. I would much appreciate that. And secondly, if you're an agency leader that's ready to take your game to the next level, you know these member interviews that we are having and giving you, these are from agency owners who are open to coaching, are open to changing, are open to truly being their best version possible, and ultimately being what we call the top 2 percenters that are seeking freedom financially, freedom with relationships, freedom of their time. And if that sounds like something you want to learn more about, reach out to us at the Sitkins Group. You can go to sitkins.com and learn more about our private membership in the Sitkins Network. We'd love to talk with you and see if it's a fit for you. Wishing you all the best in your success.