Every plan provider wants to grow.
More plans. More assets. More participants. More revenue.
Growth is usually viewed as proof that you’re doing something right. The problem is that there is such a thing as growing too fast.
I’ve seen it happen with TPAs, advisers, recordkeepers, and other plan providers. They have a terrific year on the sales side, but operations can’t keep up.
Suddenly, emails aren’t being answered. Compliance work gets backed up. Employees who once handled a manageable caseload are drowning. Experienced employees leave because they’re burned out, and their replacements aren’t properly trained because nobody has time to train them.
The provider grew, but the service got worse.
That’s not successful growth.
The biggest problem is that deterioration doesn’t always happen immediately. You can add dozens or hundreds of new plans and celebrate the revenue while the cracks are forming underneath. Six months later, existing clients start complaining. A year later, they’re leaving.
Growth requires infrastructure.
If you’re adding business, you need enough people to service it. You need experienced managers. You need technology that actually improves efficiency rather than simply looking impressive during a sales presentation. Most importantly, you need to know how much work your employees can reasonably handle.
There is nothing wrong with saying you’re at capacity.
I’ve always believed that I’d rather do a good job for the clients I have than take on so much work that I can’t properly service anyone. Revenue is important, but reputation is more important because once you develop a reputation for lousy service, getting it back isn’t easy.
Plan providers spend enormous amounts of money trying to acquire new clients.
Sometimes they should spend a little more money making sure they can properly service the clients they just acquired.
Growth is great.
Growing beyond your ability to deliver isn’t growth.
It’s the beginning of a service problem.