Every plan provider wants to grow.<\/p>\n
More plans. More assets. More participants. More revenue.<\/p>\n
Growth is usually viewed as proof that you\u2019re doing something right. The problem is that there is such a thing as growing too fast.<\/p>\n
I\u2019ve seen it happen with TPAs, advisers, recordkeepers, and other plan providers. They have a terrific year on the sales side, but operations can\u2019t keep up.<\/p>\n
Suddenly, emails aren\u2019t being answered. Compliance work gets backed up. Employees who once handled a manageable caseload are drowning. Experienced employees leave because they\u2019re burned out, and their replacements aren\u2019t properly trained because nobody has time to train them.<\/p>\n
The provider grew, but the service got worse.<\/p>\n
That\u2019s not successful growth.<\/p>\n
The biggest problem is that deterioration doesn\u2019t 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\u2019re leaving.<\/p>\n
Growth requires infrastructure.<\/p>\n
If you\u2019re 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.<\/p>\n
There is nothing wrong with saying you\u2019re at capacity.<\/p>\n
I\u2019ve always believed that I\u2019d rather do a good job for the clients I have than take on so much work that I can\u2019t properly service anyone. Revenue is important, but reputation is more important because once you develop a reputation for lousy service, getting it back isn\u2019t easy.<\/p>\n
Plan providers spend enormous amounts of money trying to acquire new clients.<\/p>\n
Sometimes they should spend a little more money making sure they can properly service the clients they just acquired.<\/p>\n
Growth is great.<\/p>\n
Growing beyond your ability to deliver isn\u2019t growth.<\/p>\n
It\u2019s the beginning of a service problem.<\/p>\n
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