Ever since independent agencies were invented, their owners have wondered how to find, motivate, and keep good producers. But according to one consultant, most principals still aren't getting a good deal.
'Across the United States, more employee producers are overpaid yet underproduce,' says Jeffrey Wodicka. Wodicka is president of a consulting firm called Directions Agency Management Resources Limited of Rockville, New York, as well as principal of The Greystone Agency, also of Rockville.
THREE TYPES
Producers come in three basic types and the successful boss must know how to deal with each type, he says.
Type one are superstars-high-powered individuals who will flourish in any setting. 'They have the innate skill, drive, and motivation to rise to the surface, no matter where you put them,' Wodicka says.
Most principals would love to land a superstar, but such individuals are double-edged swords. First, they're hard to find-perhaps only 2% or 3% of producers fall into the category. Retaining them is equally difficult.
Second, they're 'prima donnas,' powerful personalities who are difficult to work with. Having a superstar in the agency is something like putting a 400-horsepower engine in your car. If you don't know how to handle it, you can get in big trouble fast.
'If you do land one, chances are he or she will want your job,' Wodicka says. 'They'll push for equity. They'll stir up the clerical staff pretty well. But they'll make a lot of money for you, if you know how to deal with them.'
Most of the time, principals work with the second major type: average producers. These account for the bulk of all salespeople. Average producers can be terrific or complete failures. Their success or failure depends upon whether the principal has a strategic plan that gives overall directions and whether he or she knows how to motivate and nurture them.
The third, newly emerging type of producer is the part-timer, according to Wodicka. Using part-timers is a promising way to add sales without adding much cost. CSRs, for instance, can make some part-time sales.
And some people only want to work a few hours a week. These part-timers may be willing to work on a straight-commission basis, he notes.
WHAT MOTIVATES PRODUCERS?
'The first misconception in motivation is that to motivate a producer you give him or her a big salary. Or that you give away the ship in terms of benefits and perks,' Wodicka points out. Inadequate salaries and benefits are de-motivating, he adds, but excessive compensation does not motivate producers.
Principals themselves are often superstars. Selling is so easy for them that they don't understand that mere mortals need guidance and encouragement.
Someone in the agency-a principal or sales manager-must 'monitor, train, coach, evaluate, and help,' Wodicka states. That applies even for sole practitioners. If a sole practitioner agency is going to hire a producer, that sole practitioner has to wear a new hat-that of the sales manager.
The sales manager 'has to be willing to ride with the producer, do pre-call strategy meetings and post-call meetings-what went wrong, what went right. Spend the time to develop that individual. It's more than spending the dollar to send them to the Hartford or Aetna production schools. It means that the principal or senior salesperson in an agency has to become a role model.'
When an agency is in trouble, more often than not, failure to manage producers properly is the cause, Wodicka contends. 'Some of the more successful agencies become successful from the same production people that others deemed to be failures,' Wodicka contends.
In a poorly managed agency, Jane Doe may be a failure. But given the right motivation, she could be a superstar or a well-above-average performer. Producer management is important because producer compensation is the agency's single largest budget item, Wodicka points out.
In addition to motivation, Wodicka says two other factors make a successful producer: talent and knowledge. Talent isn't always obvious. Wodicka recommends subjecting candidates to a psychological test. 'You need to find whether the candidate has the ability to sell-not whether they're a good golfer,' Wodicka claims.
A top-notch salesperson needs to have a bit of 'the killer instinct.' A nice, genial fellow might make a poor salesperson because he doesn't have the drive to close the sale.
In particular, parents bringing their children into the business should test their offspring. Mom and Dad, of course, tend to view their progeny through rose-colored glasses. The test might reveal that Junior has no aptitude for sales but would make a good manager.
Naturally, experience influences selection criteria. A principal replacing a senior salesperson needs to find someone with similar credentials. But in Personal Lines sales, Wodicka prefers to hire a person who is 'absolutely green' and then train him or her.
COMPENSATION
Principals often ask Wodicka, 'How much should I pay my producers?'
The answer, he contends, is, 'How much can you afford to pay?'
Wodicka adds: 'Too many principals are paying far too much.' The owner must examine the income stream and determine how much of it is needed to support operations and overhead. The principal must then determine 'what's literally left to give the producer so the principal makes money on the producer,' he says.
Getting value for your money is key in any business. As Wodicka points out, any agency owner who doesn't get value from his or her producers is heading for big trouble; the principal who carefully selects and nurtures producers is bound for success.