Citing tough economic times, an agency producer has ventured into a multi-level marketing operation and has sold energy conservation devices to several existing agency customers. The agency owner is concerned on many levels, not the least being the agency's potential liability for one of these defective products. How should this situation be handled?
"I have a commercial producer who has been struggling with the overall insurance market conditions and our state's depressed economy. He came to me yesterday and explained that he has had to get another job which he started two weeks ago. The agency's employment manual reads: 'It is acceptable to work two jobs as long as there is no conflict of interest and the additional hours do not affect your productivity or performance.'"
"The second job that he has is as a gas and electric reseller. He has already sold this product to one off his commercial customers saving them approximately 21%. He was feeling wrong about doing this on agency time so he came to me and confessed, asked me to forgive him, and assured me he would no longer be doing this until 'after 5pm and on weekends.'
"He wants to approach all his insurance clients with this savings opportunity. The two items that concern me are: if this product underperforms it’s possible to jeopardize the insurance account and if he put more effort into producing isn’t he more likely to get farther ahead?
"On the other hand, if the other job provides him with some residuals and a better lifestyle, I don’t want to deny him that opportunity. Many people and agency principals have hobbies that turn into second jobs, etc.. What kind of advice and direction can you give me?"
Acknowledging that we are not labor law experts and certainly are not providing any kind of express or implied employment practices advice, the VU faculty below have expressed some opinions on this. Their feedback is followed by a subsequent question and additional responses.
You need to discuss this with your personnel attorney. If you don't have one, get one--it's the best money you will ever spend. You need to clarify your position on this issue with the help of your attorney. Then you need to communicate your findings to this employee. Then you need to revise your manual.
This is a tough one. Certainly, working on the outside job "inside" of your agency hours is unacceptable. Even if there are disclaimers, the connection to these clients is through your operation and problems may well inure to you. Just because sales are often touted as "savings opportunities" doesn't mean that they are such! It is good that your manual talks about conflicts of interest, and I guess you have to determine what that means. I would be much more comfortable if sales were being sought through some population of prospects not taken from your client base.
The best advice I can give is for any manager to only make and enforce as many rules as are absolutely necessary. It will be the manager’s call as to whether there is a conflict of interest when a producer sells non-agency products.
I feel for the guy and admire his approaching you the way you describe. You mention that if it underperforms...what if it works great? It could enhance the image. I think a clear separation between the insurance and the second gig is needed, but the key will be in his communication with customers. If he can pull it off, I say go for it.
Many people are in need of a second job in this economy. I do have a problem, however, of him using the agency clients as the source of prospects for his new job. I vote no as you never know what the residual effect may be down the road.
It appears benign at first. After all, you’re giving the client a new benefit and you could even share some of the revenue with the employee (couldn’t he pay the agency a bit since he’s doing it on company time and selling to company clients?). But the precedent you set can be very difficult to shut down. How will your clients feel when a CSR tries to sell them cosmetics or the next producer wants to promote the latest kitchen gadget?
Few agencies allow their producers to have material outside jobs because it takes too much away from their agency efforts. This is especially true in sales where so much time is spent after hours, there is not much time left for anything else. The second part is that I have never seen an agency allow a producer to bring a second set of products/services to cross market on their own. The only way to make it fair is to make the cross-sell through the agency, assuming the agency wants to do it. Otherwise, there is no upside to the agency, only downside risk.
I don’t think there is any simple answer to this. First, I’d check out any legal or regulatory issues. Absent that, how do your customers view this? It doesn’t sound like this product has any direct insurance/risk management relationship. Personally, I’d be puzzled if my agent approached me about something like this, perhaps even offended. Also, how does this impact agency staff? Are CSRs going to be handling calls for him about this product? Is there any split for the agency? I’d be concerned that he would ignore the insurance needs of his customers and jeopardize the accounts. Again, there is no simple answer, but I’d consider all the pros and cons for him and for the agency and its staff.
"This is a follow up to my original question. I had my talk with my producer and it went very well, except for something I'll get to later. One side of this I did not present and which I wish I would have, thus this follow up question. What if due to the producer's efforts in marketing his energy saving product (which is an multi-level marketing system by the way), he is able to bring 'value added' to a new account and then is able to write that new account for the agency? He did agree not to solicit any agency accounts, including his own, but if he uses this to get into new accounts, couldn’t that be considered a double standard? How do I navigate this mind field? I commented during our conversation that maybe he should quit insurance and go full time into this since 'its so lucrative.' He didn’t like that idea too much.
"Now, getting to what I said I'd get to later, I did find out the very day that we had our talk that he approached a client of his (after he agreed not to) and was using the agency email system (after 5pm) for communications. I'm a little incensed right now. So, hopefully I can calm down while I wait for your responses."
You guys need to nail down the details of your agreement in writing if you continue this. The way you describe things however, it doesn't look good for the future. If I were you, I'd have one more heart to heart about it with the producer and if you both don't feel confident, you can work it out to your mutual satisfaction, then part company. I wouldn't let it become a greater distraction.
I’ll stand by my original response and suggest that he not allow this; that there be a high wall between the agent's noninsurance sales activities and the agency. He is opening Pandora’s box.
I'm sorry to say that it sounds there is a trust issue here. I guess it's up to you to decide if his value to the agency is such that you can overlook his failure to abide by agreements.
I think you need the advice of an employment practices attorney and/or an HR expert.
According to the Bureau of Labor Statistics, 7.8 million Americans held more than one job in 2023. Do you know what other jobs your employees hold?
Updated: Novermber 29, 2023
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