There comes a point in the life of any agency when the owner needs to ire a producer to assist him/her in growing the agency’s book of business. This manual is not intended to be the total solution when hiring a new producer. Rather, this manual is intended to provide guidance for agency owners on a suggested process to follow to increase the success of hiring and managing a new producer.
Interview and Hiring Process
So, as an agency owner you have made the decision to go out and hire a producer. Where do you start?
Finding Candidates: First, you need to take the time to start a search and gather a list of candidates. You can start by looking to some of the following sources:
- Proven salespeople in other fields or industries.
- Graduating college seniors with a marketing degree.
- Company underwriters looking to move to the agency side of the business.
- Even some claims professionals have proven successful.
You can also place ads on sites like Monster.com, LinkedIn, Careerbuilder.com, etc. This search will then provide you with a list of potential candidates for a new producer.
Interviewing: Once you have narrowed down the list of candidates, you need to follow a process for interviewing and vetting those candidates. In the interviews look for professionalism, presentation and language usage. Make use of some simple tools like: ‘would I buy something from this person?’ These people will be dealing with other local business owners just like you.
Testing: An important part of the vetting process is utilizing formal testing to qualify the individual. These tests have been developed over years using massive amounts of data in a scientific format. Many people downplay these tests, however, we have seen the usefulness of the information that they provide and we believe that not using the test is ignoring a major tool in this process.
The candidate takes an online individually-answered assessment, which takes about 45-60 minutes to complete. This assessment tool looks at all of the skills needed for success in the insurance industry.
The test will not only give you an idea of the strengths and weaknesses of a candidate, it will also give you a question guide for any subsequent interviews with a specific candidate.
(SIAA utilizes PeopleSense Consulting and has discounted pricing for members. Robin Eichert has worked with many SIAA members in the hiring of employees).
You then need to interview the candidate and see if they will be a fit for your agency and its people. Once this has been completed, you can look to the next part of the Hiring Process.
Now that you have the ideal candidate, you need to formalize the relationship. Ideally, you’ll provide an official offer letter outlining the proposed relationship (this becomes part of the permanent employment file). The final step is a Producer Agreement.
Agreement: You must have an Agreement in place with any producer. Failure to do so can open up your agency, your income and your value to risk. It is extremely important to protect you and your agency as well as your clients’ information.
Non-compete vs Non-Piracy: Non-competition agreements are no longer valid in many jurisdictions, however, a good producer agreement has a non-piracy agreement, allowing the person to continue to work in the insurance business while not taking your clients for a period of time. In order to be enforceable, these agreements must not be overly burdensome; however, you do have a right to protect your value and confidential information.
Agreement Options: SIAA has provided a sample agreement. There are numerous versions of producer agreements throughout the industry. A good agreement will cover term and termination, compensation, non-piracy, duties of the producer and so forth.
You are urged to use an attorney familiar with your state regulations prior to entering into any of these agreements.
You have found a good candidate through the interview and testing process, provided a Producer Agreement for them to review and sign, and are working on making them an offer including compensation. In order to develop this new producer and see them succeed, you need to be up-front with them and provide a written Validation Schedule. All amounts are for example purposes only. We see agencies pay anywhere from 40-50% for new business and 25-35% for renewal.
Validation: A validation schedule shows the producer:
- Expectations of the Gross Commission Income (new and renewal commission paid to the agency) that needs to be produced each year to pay for the producer.
- Additional expenses for which the agency will pay – such as mileage, phone, entertainment, etc.
- Additional income that they can generate for themselves if they meet or exceed their product validation.
*Note that the Compensation/Validation Schedule should be part of the Employment Agreement
Managing and Monitoring Your Producer
After completing the hiring process and making the compensation and validation clear to the new producer, it now becomes important to review the progress of the producer on a regular basis. Simply hiring a producer will not make you more successful or grow your agency.
Targeting the right classes: It’s important that your producer have a good understanding of the classes of business that your carriers can aggressively and competitively write. Going after risks and classes of risk for which you don’t have carrier access can become a significant time waster, is inefficient and ultimately expensive. Chasing accounts for which you do not have markets will most likely spell failure for you and the producer in this venture.
A producer in an agency will become successful over the long term by building good prospecting habits and continuing to gain new product knowledge. It is the responsibility of the Agency Owner to take an active role in building these habits and knowledge with the producer in order to create success. The insurance industry and how products are distributed are changing, and successful sales people will be prepared to compete in this new world.
Monitoring and Coaching: The Agency Owner must meet weekly with the producer to see how the prospecting process is going. This can be done by means of a Weekly Producer Report. The report can be adjusted to your specific needs, but it measures:
- How many prospecting calls the producer is making.
- How many of those calls capture an expiration date.
- How many of the calls turn into an initial appointment.
- How many of those appointments turn into a closed sale.
The producer would be the one to complete these weekly reports, then the Agency Owner can meet with the Producer to review where progress is being made.
Education: The other part of the long-term success of a producer (whether experienced or new) will come from the ongoing increase of product knowledge.
It’s worth noting that a recent survey revealed that consumers made the assumption that your producer has coverages and technical knowledge as simply the ‘price of admission’ in speaking to them. What consumers really wanted to see is that your producer has knowledge of their specific (personal or industry) needs!
(SIAA members can purchase full access to the Training & Learning Center for education on specific products such as BOP, WC, etc. It also includes sales training and full access to the broad array of products through WebCE).
Insurance companies have created many professional training programs to help a producer ‘grow’ their knowledge of coverages and available products.
Formal Sales Training: Whether new to the business or a seasoned sales professional, everyone can benefit from formal sales training. The most successful producers are constantly updating and honing their sales skills.
(Producers who find themselves becoming challenged at building a successful sales system in today’s environment have tools via the SIAA Training & Learning Center such as QuickStart and BIA).
Termination: Simply said, don’t hang on too long. If you have exhausted all of your own mentoring and coaching skills and they have participated in formal training, whether through SIAA TLC or elsewhere, and are still not meeting validation numbers, make sure you have a well-documented employee file and move towards termination. Studies show that many agencies hold onto ineffective producers for too long and a producer failure costs agencies over $100,000 on average.