Agency Producer Recruiting: Challenges And Solutions

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It’s a classic conundrum: As an agency grows in size, it becomes harder and harder for its producers to maintain adequate growth rates. Are you struggling to find qualified sales professionals? This document by Sharon Cunningham discusses recruiting producers from outside the insurance industry.

 

Poor or average agency organic growth rates of 5% to 6% usually result from poor producer recruiting efforts. As an agency grows in size, it’s difficult for a limited number of producers to generate enough revenue to achieve higher growth rates. Agencies with high annual growth (10% or more) achieve those numbers by hiring new producers each year. A productive agency will be hiring at least two new producers every year, and some larger agencies might hire more than five per year.

The average age of today’s agency principal is 58. The lack of younger producers coming into the business makes perpetuation almost impossible for many agencies, because the talent needed to perpetuate the firm simply isn’t there. This lack of new producers also makes the agency’s accounts vulnerable when clients transfer ownership or management responsibility to the next generation. The new owners of the accounts will want to buy insurance from their peers, so they might well change agencies if the agency doesn’t have the ability to transition the account to a younger producer.

OBSTACLES TO PRODUCER RECRUITMENT

During the past ten years, most agencies have implemented employment and non-solicitation agreements. These covenants make it clear that the agency owns the book of business and that producers can’t solicit their customers when they leave the agency. An agency attempting to recruit an experienced producer with a book would need to pay a high starting salary for at least two years until the salesperson validates. Strong non-solicitation agreements make it almost impossible to recruit good producers away from their current employers.

What are agencies doing to solve the shortage of sales talent? What do principals see as their top recruiting challenges? Business Management Group conducted a survey of Property/Casualty agencies to address these issues. When asked to describe their top three recruiting challenges, 57% of respondents saw a lack of qualified producers as their main problem. Designing an effective producer compensation program came in second at 19%, and developing an effective recruiting strategy ranked third at 13%.

HIRING PRODUCERS FROM OUTSIDE THE INDUSTRY

Many agencies are looking at alternatives to attract and develop high performing producers. Hiring outside the industry has become a key recruiting strategy to identify aggressive sales professionals who are capable of achieving exceptional results. Our survey found that 67% of the respondents recruited producers from outside the industry. Of those hired, 27% had financial services backgrounds, 27% were college graduates hired from college recruiting programs, and 23% possessed strong sales backgrounds.

I asked the presidents of three successful agencies what key factors contributed to their success in producer recruitment. 'We look for individuals with sales backgrounds who have achieved exceptional results. They must also have a strong work ethic and fit in with our sales culture,' said Kenneth Kirk, president of Brown and Brown (Phoenix, AZ). Three of the agency’s most recent hires came from backgrounds in sales in health care, sports management, and newspaper advertising.

'In the beginning it was difficult to identify candidates, but once we established a profile and began networking, we were able to identify these individuals,' noted Kirk. The agency’s success ratio for hiring producers from the outside has been around 50%. According to Brown, 'Success of others breeds success, and we find the new producers are referring their friends and others to the program.'

Walker Sydnor, president of Scott Insurance (Lynchburg, VA), spends most of his time networking to identify individuals who would fit well with the organization and its sales culture. Notes Sydnor, 'Our business is about talent. There aren’t any short cuts to finding quality people. We spend a lot of time on the front end making sure the candidate fits our profile and possesses the skills to be successful. Our interview process is very intensive. Producers will go through several interviews with key personnel before we go to the next step in the interviewing process that includes testing. We not only hire producers with non-insurance sales backgrounds through networking, but also actively recruit at colleges.'

'We’re always recruiting at Seitlin,' comments Stephen Jackman, president of the Seitlin Agency (Miami and Fort Lauderdale). 'Our people are our strength, and we look for the most talented individuals.' said Jackman. 'Rather than hiring retreads, we go outside the industry and then train them in P/C insurance.' Seitlin is on its third generation of hiring P/C producers from outside the industry. The agency has hired five producers with banking and accounting backgrounds who are achieving exceptional results. Says Jackman, 'We look inside and outside the industry for high energy, creative individuals who can solve problems and thrive in an entrepreneurial environment.'

KEYS TO PRODUCER DEVELOPMENT

All three presidents agree that before recruiting and developing producers from outside the industry, an agency must provide the new salespeople with exceptional levels of support, training, and mentoring. Kirk points out, 'we have above average service and support staff in account executive and customer service representative positions who work closely with the new producer to train them in our business. We’ve also developed a training program that’s structured to meet the individual’s needs and we assign each new producer a mentor.'

'One of the unique aspects of our mentoring program,' comments Jackman, 'is that we reward the mentor for their efforts and results by paying them 10% of new business revenue produced during this three-year period.' During the last five years, Seitlin has enjoyed annual growth of 16%, and grew 26% during the last year. Stephen commented, 'We establish high goals and hire producers with the expectation that the individual will produce four times their draw in new revenues during the three-year validation period.'

'Providing sales management, coaching, and monitoring results are key factors attributing to successful producer validation,' added Sydnor. Eric Koroneos, the agency’s senior vice president and sales manager, spends most of his time working with new producers to ensure that each producer has a structured training program that includes an orientation to each department and a mentor assigned to them. Koroneos also works with the producer to develop a sales and marketing plan and reviews their weekly schedule and activities. The agency has set up accountability groups for experienced producers who meet bi-monthly to review their goals and objectives, holding each other accountable for results.

Having an effective strategy for recruiting high growth producers plays a critical role in your agency’s success. Before recruiting begins, be sure to have all of these components in place:

  • A well defined job description
  • validation schedule
  • A clear and specific candidate profile
  • A sales plan
  • An attractive compensation plan
  • A training plan
  • A strategy to generate leads for likely candidates
  • Producer mentoring and coaching
  • An effective interview process that includes testing
  • Sales management and service support

If your agency is struggling to identify and recruit talented sales professionals, maybe it’s time to assess your readiness to recruit producers from outside the industry!

Sharon Cunningham is president of Cunningham Consulting, a management-consulting firm that specializes in the insurance industry. She can be reached at Cunningham Consulting25 Macintosh LaneGlastonbury, CT 06033(860) 682-3250, e-mailsharon@cunninghamconsulting.biz, or visit www.cunninghamconsulting.biz.
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