Author: Al Diamond
Retaining your good producers and losing your bad ones increases your agency growth and profitability without any other changes needed. Adding more good producers and avoiding bad producers can add growth mathematically and profit exponentially.
Retaining your good producers and losing your bad ones increases your agency growth and profitability without any other changes needed. Adding more good producers and avoiding bad producers can add growth mathematically and profit exponentially.
Definition: A “Good Producer” is a producer who retains more than 95% of his clients (controllable retention) and grows his book of business every year at a cost to the agency that permits a fair profit based on the producer’s efforts.
Definition: A “Bad Producer” is all other producers.
An insurance agency’s life depends on three things: retaining the business for which you have fought and paid to generate, growing the revenue base consistently and doing both at a total cost that permits the agency to earn a fair profit on its revenue.
If you have a motivated producer who is focused on retention of his clients and growth of new ones and can do so at a fair return to him that also permits the agency to generate a fair profit, his loss would hurt the agency in a number of ways. You will lose more of his customers without his personality. You will no longer have his growth potential for the future. The successful producer’s presence likely caused the other producers and staff to perform at higher levels. You have lost that motivator, as well.
Your “bad” producers, and all “bad” employees, cost you much more in future performance, growth and profit than you could ever imagine. Most agencies keep marginal employees until they decide to leave, retire or die. If, instead, we identified our weak links and either further developed or replaced those who could not or would not do what is necessary to make them successful within your company, then we eliminate roadblocks to the success of those individuals who would perform better in a different role or in a different business, and also of your agency. The rest of your agency staff is certainly as aware as the owners of the marginal performers. The elimination of those poor performers actually enhances the morale of the rest of the staff.
Producers are a strange breed. Most are very motivated when they start a new job. They stay motivated if they find that they are able to meet their own and the agency’s needs with their skill set. If they find that they can’t perform to their own needs or to the expectations of the employer, they do NOT tend to honestly admit their shortcomings and leave. Rather, they seek reasons and, eventually, excuses and stay as long as the boss permits and continues to sponsor them.
Even successful producers face challenges through their career that can result in temporary or permanent reversal of their success due to circumstances within our outside of the agency. When a formerly successful producer appears to change, don’t assume it’s a phase that from which the producer will rebound. Probe and find out what happened and what needs to be done for the employee to recover. This will probably not be comfortable for the employee or for the employer – but it is necessary to determine if the person is recoverable or if he has moved from being “good producer” to a “bad producer”.
Some producers and other employees Retire In Place (R.I.P.). This usually happens when a producer has reached his level of comfort, satisfaction or competence and determines that he has “paid his dues.” He feels that he can manage his book of business and replace lost accounts with referrals and no longer needs to grow to consider himself successful. Of course, he would take on new clients if they came to him, but the “fire in the belly” is gone. At best he has become an Account Executive, willing to work his client base for their retention and well-being, instead of a Producer, trying to find new clients and more interested in creating the relationship than in servicing it.
At the very worst, he expects to be paid renewal commissions and will expect others in the agency to perform the functions needed to satisfy most of the insurance needs of the clients. He will devote his time to social, recreational, political, professional and personal activities at the cost to his sales activities – regardless of the fact that his compensation will no longer grow. His goals and yours are no longer in sync.
If you feel that the producer’s problems are temporary, help him solve those issues to put him back on track to advance his goals as well as the agency’s goals. If the problem is permanent, either change the employee’s role to one that will permit him to continue to add value to the agency (i.e. make him an Account Executive for his book of business) -- or -- be prepared to eliminate the employee. If you keep the employee, the ramifications to your other employees, both the other “good producers” and the support staff, will be severe. Morale will decrease and your agency will go into free-fall until the situation is resolved. Free-fall is the totally reactive mode in which your success or failure is more the result of circumstances around you than resulting from your proactive business actions.
Most agents know that we are strong proponents of assessments to determine which producers have the Emotional Intelligence and the Personality to perform in the role and the technical, intellectual and emotional skills to be successful within the values and culture of your agency. We suggest that all producers in the agency are given assessments in order to determine the cultural characteristics of your successful employees. Then all prospective producers are also assessed and measured against both the traits needed as strong producers and the culture and values that are reflected in the agency’s current staff.
The three questions raised by the assessment process are:
Call Agency Consulting Group, Inc. if you would like recommendations for the appropriate tools for your organization to identify the best solution for your evaluation of producer competence and for the selection process for producer candidates. You can reach us at (800) 779-2430.
Reprinted from the PIPELINE, the national newsletter for agency principals. The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 20 years. Call 800-779-2430 for information about the content of any of these articles or PIPELINE subscription Information:
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Last Updated: June 4, 2010
Copyright 2010 by Agency Consulting Group, Inc. Used with permission.