You are here:HomeMember BenefitsPublicationsAgent to AgentEssentials of Producer Hiring and Management

Agent to Agent: Essentials of Producer Hiring and Management

Al Diamond photo_cropped_149x200.jpgBy Al Diamond

Is hiring a producer an art or a science? As we visit agencies across the country, we encounter some phenomenal producers. We also come across some producers who are certainly not cut from the same cloth. Chances are, when we hire a producer, we are looking at the upside potential, identifying their best traits while overlooking even the most evident problems. After all, it is easy to justify the hiring decision with simple logic: if the producer cannot perform to the sales expectations we agreed to, we will let them go.

Good managers monitor activity and performance of producers, and great managers mentor and coach producers into a position of success. But a distasteful part of a manager’s job is to discipline and terminate poor producers, and so it is often simply not addressed in a timely manner. Instead of addressing the issues head-on, emotion takes over, leading to a tense and uncomfortable atmosphere in the agency and between employees. Generally, owners know whether a producer will succeed or fail within three to six months. Conversely, owners and managers know within just two months if the producer is performing as billed in his interviews. Most owners are compassionate and want to see the producer succeed, giving them many more chances, even after they have a track record that indicates a change in their performance is not likely. Once financial desperation or emotions become a factor that exceeds the patience of the manager and the owner, then the separation occurs.

When we analyze agencies with these issues, we find some common practices that set the agency up for failure: Too much reliance is placed on profile testing rather than the historic track record or personal background when hiring a producer. Insufficient training, coaching and counseling from managers leads to continued performance without corrections. Often we expect them to generate their own leads and business opportunities, even though the agency has a recognized brand and the carriers indicated which types of clients they could write. And improper compensation without monitoring results or adjusting compensation based on actual performance.

With those four common practices in mind, there is a better method for hiring and managing a producer into success.

First, find the right personality before asking about experience or skills. Only one out of every seven people naturally has that sales personality. Experience is a measure of time spent in a role and is not a guarantee of success. A producer who has been employed at four or five agencies for a few years at a time can accrue many years of experience, but his lifespan at any given agency is short-lived. That should be a key indicator of their future at your agency. We can all identify the person with that sales personality, that one in seven person who can win the trust of people simply through conversation. Often, we encounter these people in a different profession or industry. You can validate your feeling with a personality test like the ACG Hiring System (http://acghiringsystem.com), but this should be a part of the hiring process and not the final determination of hiring.

Next, plan on spending as much as six months coaching, counseling and training that producer. Even seasoned producers bring their bad habits with them. Make sure that the producer is representing the agency in the way that you would if you were personally on the sales call. Six months of close action with the manager or owner will reinforce those sales techniques that led to your success and will give you the confidence that the producer is going to have the best chance for success every time they step foot in front of a prospect. When you have that confidence, so does your producer.

Create marketing programs to provide prospects to the producer. As an owner or manager, you are expected to generate your own leads, but your producer has a specific function: Create, grow and foster relationships with targeted prospects that leads to new accounts with customers who were not already associated with the agency. Prospecting is not a primary part of that role. As an agency, you have much more recognition in the community and a much greater ability to reach out to the target markets that are best suited for your carriers. Each time you reach out to a prospect, your producer should appear at their door within a few days to reinforce your marketing effort. That contact creates the relationship that most agents don’t continue following after the sale. The relationship is the glue that bonds a client to an agency.

And create a proper compensation program from Day 1 when a producer is hired. When setting the salary or draw for a producer, what the new employee wants is not as important to you as what he needs. The lower you can keep the initial salary or draw, the sooner you will be able to validate the producer’s compensation and allow them to enter into a tiered, commission-based compensation program or allow them to enter into a bonus program and build their income from renewals. If the initial draw is too high and is based on unrealistic or unproven expectations, the producer risks increasing his deficit to the compensation package to the point where he cannot earn his way out and is terminated.

To create a safety valve, consider a Self-Adjusting compensation schedule that bonuses exceptional performance AND adjusts compensation downward if the activity levels achieved by the producer prove insufficient to generate the required amount of gross commission to satisfy his salary or draw. The Self-Adjusting schedule is based on Sales Call Activity, which is a face-to-face meeting with prospective decision-makers. Phone calls and email do not count as activity. If the producer sees enough people enough times, they will sell enough accounts to earn a living. By making his compensation sensitive to his achievement of a sufficient number of sales calls in a week, month and year, the result should be the sale of sufficient insurance programs to support his draw or salary.

With that in mind, should the sales call rate slip consistently, it is apparent that he will not achieve the required results and compensation should be adjusted down accordingly. Agency Consulting Group has successfully instituted this Self-Adjusting Compensation concept in many agencies over the last thirty years and can report successes in agencies of all sizes around the country. We can also report a high retention of successful producers as those who fail to meet their activity levels leave the agency or are terminated.

Hiring good producers is hard work. There is an art to finding the right candidate to become your next producer, but there is a science in the process of hiring, training and retaining that person. Consider looking outside of the industry for the right person, then entice them with the concept of renewal commissions. Train them to be technically competent, but also in the techniques to build the relationship and when to close the deal. Provide the producer with their leads to get the best return on your investment rather than spend their time prospecting. And compensate them fairly and properly based on the expectations of their activity level.

Al Diamond, president of Agency Consulting Group, Inc., has been consulting since 1980. With clients across the United States and Canada, Al and his staff have been responsible for over 1,000 annual agency valuations, published the Composite Groups for the insurance agency industry (including over 4,000 contributing agencies) on an annual basis, and has published the PIPELINE, the newsletter for Agency Owners and Principles, since 1987. Al can be reached at (856) 779-2430 or email info@agencyconsulting.com. You can also visit Agency Consulting Group’s website at www.agencyconsulting.com.