Is Your Support Staff Happy?

Many producers, whether they're involved in agency management or not, depend on CSRs to help maintain their current book and deal with potential new customers as they make initial contact. So it's important to examine all the facets of this question:

'How can I set up a bonus program that compensates my Commercial Lines CSRs fairly?'

CSRs have evolved from primarily clerical employees following producers' directions to today's highly skilled and educated insurance professionals shouldering a wide variety of account responsibilities. Despite correspondingly higher levels of base compensation, the problem of how to provide incentives and bonuses to Commercial Lines CSRs still persists.  DO YOUR CSRs REQUIRE A BONUS?

In considering the type of bonus program an agency will provide to its Commercial Lines CSRs, management must first address whether such a program is even needed. For at least half the agencies in this country, virtually any Commercial Lines bonus program for CSRs will have no measurable impact on agency performance.

Any bonus program your agency implements should serve to improve agency performance in revenue growth, productivity, profitability, and/or ease of operations.

If improved performance is not achieved, no bonus should be paid. The concept could not be more clear. No CSR deserves a timely bonus for showing up for work regularly, performing satisfactorily, and creating no negative waves in the agency. The agency, or in this case the Commercial Lines department, must move forward and improve over the last period for employees to warrant a bonus.

The key questions are: (1) Will an incentive-based bonus program truly increase growth, profitability, and the ease of doing business in your Commercial Lines department? and (2) Will the CSR staff perform at the same level of quality and productivity without the bonus program?

You might not think the second question needs asking; after all, who wouldn't like to have additional compensation? But the answer may surprise you: The prospect of additional income fails to entice many (if not most) CSRs to higher levels of performance. I believe that the average CSR is task-oriented and likes the security of a regular salary. Most are used to processing such in-box items as client telephone calls, carrier calls, producer instructions, mail requests, and suspense lists to the out-box. They want a clear job description and set systems and procedures to follow.  THE CHRISTMAS BONUS PROGRAM

Part of the problem with paying one or two weeks' salary for the annual Christmas bonus is that it is tied to the performance of neither the agency nor the employee, thus simply becoming a regular part of compensation. It is not incentive-based; it is regularly expected. In fact, the only reaction a Christmas bonus is likely to elicit from an employee is resentment if it is not paid for some reason. The benefits of goodwill, loyalty, and a sense of reward are not achieved when any bonus is expected instead of tied to individual, department, or agency performance.  BONUS PROGRAM GOALS

If management elects to implement a Commercial Lines CSR bonus program, it should encompass a number of goals:

• Promote department growth
• Promote department profit
• Promote teamwork in the department
• Reward individual performance

Bonus plans must not depend entirely on individual performance because the agency must be profitable before it can afford to pay the bonuses. Teamwork must be promoted to prevent selfish behavior and to ensure that the agency will continue to simplify operations. RECOMMENDED BONUS PROGRAM

The following program is offered as a way to meet most agencies' goals:Part 1. Establish a gross commission goal for the Commercial Lines department that is realistic and achievable. For example, in 1991, a realistic total commission goal for a Commercial Lines department might be 110% of 1990 gross commission levels. Setting a total commission target helps to retain existing business and capture new accounts. If the commission target is exceeded, a bonus of up to 7.5% of compensation will be paid to the CSRs.  Part 2. The latest year's level of employee productivity for the department should be calculated (total Commercial Lines commissions divided by all Commercial Lines personnel, excluding producers). A target level of employee productivity should then be set approximately 5% to 10% higher. If the department reaches its target, a bonus equal up to 7.5% of compensation will be paid to the CSRs.  Part 3. Each individual employee should be reviewed at least annually with a standardized employee evaluation form. The form should include 10 to 15 areas of performance (such as work load, timeliness, accuracy, knowledge, etc.) scored on a one-to-five scale (one being low, five being high). The average score of all measures received by the employee will determine the amount of bonus for each of the categories noted in Parts 1 and 2. Table 1 serves as a basis for compensation.

Thus if the department hits both the total commission target and the productivity target, and the CSR ranks very high on individual performance, he or she should receive a total 15% bonus. If individual performance is average (a ranking of 3.0 to 3.9), the CSR will receive a 5% to 8% bonus only if the agency reaches both of its department goals. Any CSR performing at a less-than-average level would receive no bonus regardless of agency performance. It is not necessary for both agency targets to be hit for a bonus to be paid. Either target can be reached without the other, and the bonus paid on that target only.CONCLUSION

No Commercial Lines bonus program your agency selects (if any) should be based solely on individual performance. Promote teamwork by establishing department goals. Individual and team appraisals will ultimately provide the best results for your agency. Use the enclosed form to create your own CSR bonus plan.