| DEVELOPING A PERSONNEL PLAN by Carol Hammes Many insurance agency managers will be in a position to hire at least one new employee during the next year. For firms located in certain marketing areas, there's a large pool of people with insurance experience from which to draw because company layoffs and agency belt-tightening have put a lot of people on the street during the last several years. In other parts of the country, however, an ad in the newspaper might bring in only one or two candidates. Either situation presents a challenge to the person in the agency responsible for developing a staff of dedicated team players. Even if there is an ample group of available prospects from which to choose it is still remarkably easy to hire the wrong person. Making a poor hiring decision can be a very expensive mistake. Depending upon the starting salary level and the length of time that it takes to rectify the situation, the cost to the agency in direct expenses and lost opportunities can run from $5,000 to $100,000 in direct compensation, and even more if there was also a hefty fee paid to a recruiter. And there's no way of accurately measuring the financial or public relations impact that this person might have had on the levels of productivity of the other employees or on the image of the agency with its customers and companies. Although the owners of smaller firms will feel the pinch the most since the money has to come directly from their own pockets, selecting the wrong person can be a tough pill for any sized agency to swallow. It pays to be thoroughly prepared as well as overly cautious in the hiring process. An empty desk is preferable to one with frequent turnover. Hiring decisions in most independent agencies are usually made in response to a crisis. Someone quits unexpectedly and/or the backlog gets so bad that a mass mutiny or an E&O suit become real concerns. While it's often difficult to anticipate when a new employee will be needed, it's possible to develop a plan for dealing with vacancies in a far more disciplined manner than simply grabbing the first warm body that knows something about insurance. The initial step in developing a personnel plan is to review the current job assignments to identify any functional areas that are not well covered or that might lend themselves to more (or less) specialization in the future. Perhaps a division of clerical and technical duties may make sense when incumbents leave and/or as the agency grows. As time passes the functions handled by a certain job position tend to evolve as a result of the skills and desires of the long-term employee who is filling this role. The resulting distribution workload might not necessarily be the best way for the organization to be set up at this point in the agency's development, particularly if transactional filing and other automated support are being utilized effectively. Ask yourself these questions about each job in the office: if the incumbent were to suddenly die tomorrow would we look for someone to handle the exact same job? Or would there be a better way to divide up the functions by creating a new type of position? Or would we even need a replacement at all? The second step in developing the personnel plan is to prepare a set of written job descriptions that delineate the agency's organizational structure.. Then relate what you have now to what you would like to have and draw up revised or additional job descriptions to be used over the next several years. Before you ever get to the point of going out to look for new employees you need to know exactly what type of job positions will be available. And you need to have those positions described in written descriptions for candidates that you're considering If ayouragency doesn't currently have such written documentation of job functions, enlist the support of employees and have them write one for themselves. The managers/supervisors of the various positions should also prepare one. Then, have a meeting to compare, contrast, and finalize the documents. The final written descriptions should contain: - Formal title
- General purpose of the job in the agency
- Organizational and reporting relationships
- A list of 6 to 12 major functions and responsibilities
- Specific experience and educational qualifications
Once the job descriptions have been written and the reporting relationships established, draw up both a present and proposed organizational chart to illustrate the relationships between the existing and future job positions. Is this what you had in mind? Often what seems to make sense at first is clearly unworkable when the details are outlined on a chart. Have you designated the right managers for each position? Are there too many people (more than six) reporting to any one manager? Are the reporting and working relationships clear? Don't be afraid to go back to the job descriptions and rework them either by reassigning functions or supervisors. If it doesn't make sense to you and the other managers, it will definitely be incomprehensible to the employees. Take a look at the proposed organizational chart and try to anticipate the circumstances that would have to occur before one or more of the jobs would need to be filled. Consider the following examples: 'If commercial commissions reach $300,000, we will look for an Assistant CSR'; 'If the Claims Manager quits, we'll put the claims function back in the CSR position'; 'Once we have been on transactional filing for a year, we'll evaluate the feasibility of eliminating a Personal Lines CSR position and replacing it with a Clerical Assistant'; 'In preparation for hiring a new Producer next year, we will convert a CSR position to Part-time Sales Coordinator/CSR six months from now.' The third step in developing the personnel plan is to determine appropriate job classifications and salary ranges. Before assigning actual dollar values to the salary ranges, set up a job classification system that establishes the relative importance of each position to the overall management and servicing functions of the agency. Many agency owners have been reluctant to set up job classifications. They prefer to have all of the service and support people on an equal level, with salaries varying only by the length of time that the person has worked in the agency. This approach makes salary administration easy and might work well when there are only two or three persons in the agency. Over time, however, this unrealistic 'equal' treatment of the staff will eventually create serious morale problems and employee turnover. The ambitious employees who are performing at above average levels and who have taken on more responsibility as the firm has grown will begin to expect (and deserve) compensation that is commensurate with those responsibilities and their own individual performance levels. Specific classifications recognize that each job position has a different level of influence on agency income and expense levels, decision-making, and problem solving. They also reflect the nature of relationships that the person in the position has with top management personnel clients, and insurance company personnel. The worksheet at the top of the next page will help you assign job classifications for all of the agency positions. Fill out a separate rating sheet for each current and proposed job position and then list them in descending order to compare them. In most agencies, the Mail/File Clerk position will have the lowest classification number (9-11) and the President will have the highest (55-60). How the positions in between the top and the bottom relate to each other will vary depending upon the individual agency's definition of the technical and support positions. In fact, the perception of the relative importance of a job position might vary between the managers and supervisors within an agency. This is why it's important for every member of the management team to perform his or her own rating calculations and then for everyone to compare their results, discuss them, and to jointly decide upon the appropriate classifications and the assignment of salary ranges. Some firms will have a different classification number for each job description. In others, several positions will be classified at the same level. Rather than assigning specific salaries for each job position, you should assign the salary ranges to the classification numbers. Jobs that have the same level of responsibilities, even if they are in different departments, should have the same compensation levels. The salary ranges should be narrow for the lower classification numbers (generally a $2,000 spread between the low and high point) and broader for the top management positions (with sometimes as much as $10,000 between the top and bottom of the range). Ranges should be established based upon a coming twelve-month period and then reviewed every year. Some agencies automatically increase the salaries every year by an inflationary percentage but some do not, particularly if they also have an incentive bonus program for the employees. JOB CLASSIFICATION WORKSHEET Consider the specific management, administrative, and professional responsibilities of the position. Assign points from 1 (least level of responsibility) to 10 (highest level of responsibility) for each factor: _____ Level of effect that the job position can have on agency income or expense _____ Level of decision-making responsibility for initiating and implementing policies & procedures _____ Level of complexity in analysis and technical expertise required in the position _____ Degree of innovation required/allowed in the position Consider the nature or the objective of the relationships with other persons to fulfill the function of this position. Assign points from 1 (lowest level of contact) to 5 (highest level of contact): _____ Nature of relationships and requirements of diplomacy and persuasiveness _____ Frequency and level of contacts inside and outside the agency Consider the level of education required and assign points from 1 to 5 for high school, high school plus some college or technical school, college degree, post-graduate work, graduate degree/professional designation: _____ Education Consider the level of experience required and assign points from 1 (no prior experience) to 5 (more than 10 years' experience): _____ Experience Consider the management/supervisory responsibilities of the position and assign points from 1 (no management responsibility) to 5 (manages broad range of departments or entire agency): _____ Management _____ Total Points for this job position Many factors will go into determining the appropriate ranges: historical agency experience; what other competing agencies in your area are paying for comparable positions; salary survey information such as that published by the Chamber of Commerce; and the type of employee benefits and bonus opportunities the agency provides in addition to salary and how they compare to what other agencies are providing. Finally, it is also important to consider what your agency can afford to pay! By having predetermined job classifications and salary ranges in place, you'll be in a far better position to deal effectively and fairly with economic considerations in the selection process. Never hire someone at a higher salary to handle the same position as an existing employee.. If it's necessary to pay more to 'get' the person, you need to reevaluate your situation. Either the salary range is incorrect, the prospective employee is overqualified for that specific position and should be considered for a higher level position, the existing employee is underpaid, or something else is wrong with the system. When set up properly a salary administration plan will pay new employees a salary that's in the bottom one-fourth of the range during the probationary period. Raises can be given every three or six months but only after the person has proven to be the typle of employee that you had anticipated. After the first year of employment, an average performer in the position should be in the middle of the range and above-average performers will be above the middle-but never over the top. Each job has a certain economic value to the agency. Prospective and existing employees should be expected to understand that business reality. Once you have determined the specific qualifications and salary ranges for each of the job positions, the next step in developing a personnel plan is to define the 'ideal' type of employee for your agency. What general personality traits, skills, age, and experience levels have worked out well in the past? Compare personality test results of the people who have been successful with those that have failed to measure up to your expectations. The longer the agency has been in existence, the more historical data you will have, but your firm will have had both positive and negative experiences to use as reference points in relationship to each other. Every one of the roughly 30,000 independent agencies in this country is unique. The identification of the perfect employee will vary from agency to agency and depends on the personalities and management philosophies of the owners as well as the type of accounts serviced and the demographics of the marketing area. Acknowledging the positive and negative characteristics that make up your particular style will help you be more successful in selecting the right type of employees. For example, if there's one owner who rules with an iron hand and makes all of the decisions himself, hiring an ambitious self-starter is asking for trouble. Or maybe younger employees have not acclimated well to the existing work ethic. If the agency is small and located far from educational facilities, you may have found that you cannot provide the necessary training so prior insurance experience will be critical. And if the agency is situated in a Hispanic neighborhood, fluency in both Spanish and English is an important criterion. The fifth step in putting together your personnel plan is to identify and cultivate sources for prospective employees. Even if you're not currently planning on hiring a new employee you'll need to do so sooner or later. If you have a list of prospects from which to draw when the occasion arises much of the crisis element can be eliminated. Do what you can on an ongoing basis to get the word out about your agency and what a great place it is to work. Have the local paper print news items about employees winning awards. Run ads that feature your employees. Sponsor a softball team. Encourage participation in community activities and industry organizations so that existing employees network with similar types of people. Remember that these passive (as well as the more active) recruitment efforts should be targeted toward the places where your 'ideal' type of employee might be found. Have a list of companies and people to contact when you need to fill certain positions. Target insurance company personnel who might be adaptable to the agency environment. Keep the definition of your ideal employee in mind when you come in contact with teachers, coaches, bank tellers, salesclerks and other non-insurance professionals. If you have had success with recruiters in the past, stay in touch with them. The final exercise in developing the personnel plan is to put together an employment information package for candidates to provide them with information on the agency, its companies, its clients, and its existing employees. This package should include all sales brochures, resumes of key people, history of the agency and published management philosophy or mission statement, list of major insurance companies, list of major accounts, general information on employee benefits and agency rules and procedures regarding hours, vacations, etc. Insurance agency employees today are much more concerned about working environment, agency reputation, available markets and coworkers than they used to be. Give them the basics on your situation so that they can evaluate you while you are evaluating them. Remember, the resulting employment situation should be a partnership where both sides see advantages to working together. The more you know about each other in advance, the better the prognosis for the success of the relationship. PERSONNEL PLAN SUMMARY 1. Review the current job assignments and distribution of functions. 2. Prepare a revised set of job descriptions and a proposed organizational chart. 3. Determine appropriate job classifications and salary ranges for the positions. 4. Define the 'ideal' employee for your agency. 5. Identify and cultivate sources for finding prospective 'ideal' employees. 6. Put together an employment information package to be given to job candidates. Note that all six of the steps that we have suggested for the development of the personnel plan can and should be put together well in advance of the decision to hire a new employee. Do this groundwork initially as part of your year-end planning activities in 1994 and update the plan annually as the agency grows and as employee performance standards and salary levels are reviewed and revised. The late Carol Hammes, principal of the Middleton Group, was one of the Independent Agency System’s most widely respected management consultants. She will be sorely missed. Reproduced, with permission, from The Middleton Letter. |