What should you be paying your agency office staff members, other than producers? It is not a sufficient answer to say that you pay the prevailing clerical wage rate of your locale. In addition to compensating at the community level, your office compensation should attract, retain, and motivate a high quality clerical staff. It should be based on a balance involving the needs and interests of each employee and of your agency. It is more than assigning a dollar value to each clerical position, as difficult as that may be. Each position should carry the level of compensation which treats that position fairly with respect to other positions, and foster productivity, loyalty, and high morale.
A good agency clerical compensation plan should meet certain standards. They are:
Equity: Quite simply, persons within the agency should be paid similar amounts for similar jobs. This is not say that similar jobs must be compensated in equal amounts, but it does mean there should be no serious discrepancies in compensation between persons holding similar positions. For example, should you find that several positions in your agency with similar tasks, duties, responsibilities, and qualifications vary by more than 18% to 20%, you may wish to make adjustments in the compensation with respect to these positions. The 18% to 20% rule is only a rough guide and when comparing the positions, one should give consideration to any wage differences for the position occupants because of length of service or other unusual qualities.
We are hearing today, in some states, Comparable Pay for Comparable Worth. Loosely translated, it means equal pay for all manners of occupations, even though they may be totally different and totally unrelated. Note the emphasis on worth, rather than on occupation, duties, or functions. Those states which have moved in this direction, notably the state of Washington, have a horrendous task of equating worth. We are not talking necessarily about the worth concept here, unless your state is about to enter this quagmire.
The thrust of your effort is to provide equivalencies among the agency staff positions which, essentially, are all the same kind of occupation. A note of caution. If you decide to move toward equality of pay for similar positions, it should be done in several annual increments, especially should the existing pay differentials be large. Should you inform the underpaid individual of your intention to increase their pay not only because of annual merit consideration, but as an adjustment in income? Yes. Do not make your intentions obscure. The recipient knows a pay differential exists and it has generated resentment. Be upright and upfront, or your pay equity efforts will be less than successful.
Compensation rationality. Your compensation plan should make sense in that it rewards differences in skills required and in length of service to the agency. Many agencies tend to flatten the top of the wage schedule on the basis that older employees, in terms of service, are reaching levels which the agency owner or manager believes are close to a maximum the agency wishes to or can pay; thus, annual increments for these positions become smaller. Meanwhile, starting wages for new agency employees have increased, mostly because of inflation, causing a compression of the entire agency wage scale. This reduces the range between the top and bottom wages, causing dissatisfaction on the part of the older employees, creating morale problems and lower productivity. As a rough rule, there should be at least a 10% differential between those supervising and those who are supervised.
This matter of wage compression is quite serious. Loyal, older employees wonder why their years of service and acquired expertise do not cause a greater difference in compensation compared to newly-hired persons. The tendency to flatten the top of the wage schedule should not have occurred, and would not, if the agency had planned an equitable, rational wage schedule. It is true the older employees' wages may be sizable, but that should not be disturbing if they are quality employees deserving of good compensation.
Unfortunately, some agencies continue to increase the wages of older employees, knowing full well they are less than adequate or competent. Eventually, they compress the top of the wage schedule, using the excuse that one or more of those employees are now being compensated beyond their worth. The net result of this decision is that everyone is unhappy. The older employees, in their unhappiness, spread dissatisfaction to other levels of employees.
Competitive compensation. If your agency staff has been turning over at an increasing rate, perhaps your compensation scale is not competitive. In smaller cities and towns, agents tend to be well aware of the community clerical wage rates, especially those prevalent among insurance agencies. In metropolitan areas, this may not be the case. A comparison of compensation for similar positions may be in order. Perhaps conversation with some of your friendly competitors will develop this information for you.
In some areas, chambers of commerce publish an annual survey of local wages, including clerical compensation. This kind of information can be most useful as a basis for establishing your own wage schedule.
Retention of qualified employees. Replacement of agency employees occurs as a matter of course through attrition and other routine causes. If some of your replacements have been exceeding 15% of your total employees, your compensation structure may not be holding your qualified employees. Job turnover has a very high cost, because it nearly always involves extensive training of new employees, with a consequent lowering of agency productivity for the training period.
Some turnover, in fact too much, is caused by the failure of agencies to make new hires, or for that matter all agency staff employees, a part of the agency team. This is not the place to discuss agency team building, bit if you are not doing all of those things, many of them non-cost based, to weld your agency persons into a team, then any compensation scheme will not work well, nor will it substitute for the team building effort.
Maximization of productivity. If you or your compensation structure demonstrates insensitivity to the quality of your employees' work, eventually your agency's performance will deteriorate. Agency employees who give more of themselves than is expected and who take pride in doing a job well, soon become disheartened when not compensated for their extra efforts. They realize that extra work makes no difference, and mediocre performance becomes the norm.
Have you considered or attempted to install productivity increase incentives? For example, do you pay for employee-provided leads which culminate in sales? Do you permit your licensed inside employees who sell by telephone to participate in the commission earnings gained on their sales? Do you urge your inside staff to constantly think insurance and of insurance sales opportunities and reward them for significant ideas and sales? Does your agency have a profit-sharing plan for all employees? The point is obvious. If you want productivity, you must provide the incentive to make it occur.
Real income response. In these inflation-fueled times, it is difficult to maintain and increase employees' real income. Yet, if an agency should fail to keep employees somewhat abreast of the increases in the cost of living, the agency may find that other agencies and other businesses may appear more attractive. A good rule of thumb is to attempt to increase employees' annual wages by at least 50% of the change in inflation, plus any merit increases warranted. Obviously, 100% of the inflation change is ideal, but that is not always feasible.
Perhaps as inflation moderates, it will become less of an issue in wage settings. This, of course, will not mean your agency staff total annual increases will be any less. Unless in the past you consistently have divided wage increases into separate increments and advised employees that one pertained to inflation and the other to merit, it is highly likely the agency's employees have viewed their annual increases as a lump, and they will not appreciate a decline in annual percentage increases because inflation has abated.
Rewarding ability increases. Every agency employee, hopefully, will increase their ability as their tenure continues with the agency. The agency compensation structure should reward that growth within each position and should provide for the opportunity to be promoted at increased compensation.
It is especially important that the successful completion of insurance training courses, sponsored and paid for by the agency or not, be recognized. Sometimes this can be done with a small wage increment. More often, congratulations by the agency principal(s) and a notation in the employee's record will suffice. At the annual wage review, the completion of training not previously compensated should be a part of the increase package and should be communicated to the employee.
The major problem with most agency staff compensation plans is one of neglect. It is a facet of agency operations that is thought about, perhaps annually, and not very intensively. This personnel function of an agency is most important, for a good inside work force can make an agency even more successful. A mediocre, discontented staff can ruin all other agency efforts. The compensation of agency staff should be considered as important as the compensation of agency procedures.