Hiring a Producer... Need Advice!!!

[Guest]

I own a small agency (about $750K in AP) and I am interviewing (or will soon be) candidates to come in and work for me as a producer. Their primary responsibility will be to write new business. I've decided to set a quota of 25 P&C and 2 life policies per month. If they miss the quota one month they can go on probation, if they miss it two months in a row then termination. I think that is a very obtainable goal, if you disagree I'd love to hear your thoughts.
My main struggle is determining how to compensate them. I'm thinking about a monthly guarantee and then 50% of all NEW commission, but nothing on renewals. If I do the monthly guarantee I was thinking $1600 a month. That should provide a decent safety net (works out to about $10 an hour) and keeps them motivated to write business and earn commission.

So my questions...

- How do you feel about the quotas? Do you think they are reasonable? Should they be higher/lower or do they sound ok?

- How do you feel about the compensation structure? Any changes you would make?

I'd love to hear from some folks who have hired their own producers, or from producers who work for an agent. I really need some advice!

 

[DiegoInsGuy]

On the P/C side if its regarding personal lines it will have a lot to do with how well the flow of leads are. If they are able to quote atleast 4-6 households a day then that should be good ( walkins, internetleads, directmail callins) I don't think you would attract an allstar with that comp but definitely someone capable.

 

[Ron0]

I think your quotes are OK...You need to change the compensation structure..

 

[scooter33]

I own a small agency (about $750K in AP) and I am interviewing (or will soon be) candidates to come in and work for me as a producer. Their primary responsibility will be to write new business. I've decided to set a quota of 25 P&C and 2 life policies per month. If they miss the quota one month they can go on probation, if they miss it two months in a row then termination. I think that is a very obtainable goal, if you disagree I'd love to hear your thoughts. My main struggle is determining how to compensate them. I'm thinking about a monthly guarantee and then 50% of all NEW commission, but nothing on renewals. If I do the monthly guarantee I was thinking $1600 a month. That should provide a decent safety net (works out to about $10 an hour) and keeps them motivated to write business and earn commission. So my questions... - How do you feel about the quotas? Do you think they are reasonable? Should they be higher/lower or do they sound ok? - How do you feel about the compensation structure? Any changes you would make? I'd love to hear from some folks who have hired their own producers, or from producers who work for an agent. I really need some advice!

I had the same compensation package in mind when I started looking for a new producer for my office. Talking with other agency owners, sounds like the ones that go 50 on new and 50 on renewals... Or some other form like that said their producers got lazy after a year or so. I think the key is to make them an employee and not a contractor so you have more control and at the same time employee could financially benefit for their hard work ASAP.

With all that said, I am finding it extremely tough to find good producer. So for now I ended hiring more office help, that way it frees me up to produce and sell.

 

[ncagent83]

I'm thinking about hiring a producer as well at our agency. The plan is similar to yours but my concern is trying to find a quality producer to take the job. I would have to find someone to train them on our management system, get them licensed, and ultimately get them appointed through our markets. You may want to take those expenditures into account as well.

 

[bobson]

If you are looking for a closer then that seems fair. But if you expect the guy to go out and find the business and not pay renewals I don't think it will work.

 

[bbuckley]

I am brand spanking new to the industry, so take this for what it's worth (with .99, it will get you a hamburger off the .99 menu). Don't even have my license in hand yet (took the class, passed the test, applied for license, got fingerprinted and had my back-ground checked, but the state is being very, very slow about getting my license to me).

Is seems to me that 25 P&C policies and 2 life policies would be a flawed unit of measure. Is the quantity of the policies written more important than the value of the policies? If so, then shouldn't the quantity at least be weighted by value in some way?

It only seems natural to me that 1- $100,000.00 policy would be better than 10- $10,000.00 policies. In my former career, I always prefered better sales over more sales.

 

[Aram Fingal]

Is seems to me that 25 P&C policies and 2 life policies would be a flawed unit of measure. Is the quantity of the policies written more important than the value of the policies? If so, then shouldn't the quantity at least be weighted by value in some way?

It only seems natural to me that 1- $100,000.00 policy would be better than 10- $10,000.00 policies. In my former career, I always prefered better sales over more sales.

Policy count quotas tend to exist more on the captive side because that's what the companies are evaluating production by. I don't know if dubya is captive or not, but it does tend to be a captive side measure. On the independent side it's all about premium volume since that's how we get paid even though realistically that's how captives are usually paid too. The good thing about using policy count is it can help keep producers active even when they make a few good sales. The bad thing is you can end up with a bunch of $300 annual premium policies instead of what you're really looking for.

However, the one disadvantage to a single large premium policy, is it hurts a lot more if you lose it. Using your example, if you have 1 policy for $100,000 and lose it that really sucks. If you have 10 policies for $10,000 and lose even two of them, it sucks less. Even losing half of them is still way better than losing that one big one.

 

[ioenter]

A weekly guarantee is essential. Try providing a guaranteed draw vs commission. If they exceed the weekly draw (say $500) Give them the higher amount for their hard work.
Before you hire, compose a script for candidates to read with basic guidelines and ask questions to see how they respond to resistence.

 

[tsa0282]

Pay rates depend on where you live and that is what you should base your pay structure on. Before opening my current brokerage I worked for two other brokerages and the first had a great pay structure 50% broker fee and 50% residual on new and renewals. However, most of your day was spent calling boo boo the bear!

The second brokerage had excellent leads and a horrible pay plan $10/hr and 10%-15% on new business only. Both companies only purchased leads from the internet. Hence open my own brokerage and buy leads.

I am located in Southern California and to have a decent life...meaning able to pay rent and make a car payment plus all the misc bills it is almost impossible to make less than $100k. You would need welfare and three jobs to accept the rates that were mentioned above.

By the beginning of 2015 I will start hiring producers and I will have to start with college students, interns, assistants and anyone that lacks professional experience and lives at home with no social activities.