Productive Employees

PRODUCTIVE EMPLOYEES

The productivity of employees has a great effect on the profitability of a firm. In an insurance agency, personnel costs are in the 50 percent to 70 percent range of each revenue dollar, depending on the firm. Setting standards of performance, delegating work to the next level down whenever possible and recognizing and rewarding good efforts will all lead to achieving a well-run operation and much happier, more productive workforce.

The number of accounts and commission volume that need to be handled in order for the agency to be average or well-run should be understood by support personnel, CSRs and producers. Having standards should also alert management to the need for additional staff or realignment of workloads.

If expected levels of performance are exceeded, then above-average performance contributions to the firm should be recognized by management and rewarded to encourage employees to achieve higher levels of performance.

Two concerns of many employees are:

What are acceptable standards of performance for CSRs in the average versus the well-run firm? The average commission per account in both personal and commercial lines greatly affects the amount of commissions and accounts a CSR can handle. In personal lines, there is not as wide a spread in average account size as there is in commercial lines. Therefore, it is more common to judge performance in personal lines based on the number of accounts as opposed to commissions handled.

The employee productivity table below gives an overview as determined by the Oak & Associates database.

When determining the revenue productivity standards to use for your firm, use comparisons based on firms of similar size from the sources you have available. However, when determining what specifically a CSR should handle in your firm, the size of account comparisons are the best criterion to use.

In commercial and personal lines you need to determine your average size of account to set the guideline for productivity, as this size of account varies greatly from one firm to the next and has a great impact on productivity. For example, if the average commercial commission per account is $1,350, a CSR should be able to handle 136 accounts and $180,000 in commissions in the average firm and 189 accounts and $259,000 in commissions in the well-run firm. When the staff is properly trained, the larger the average size of account handled, the more productive they will be.

When employees know what is expected of them, they know when they have done a good job. They will also know when performance falls below management's expectations. When productivity standards are established, management will also know additional staff is needed for the workload, or when workloads need to be realigned using existing personnel.

Management should also strive to ensure that work is delegated down to the least costly qualified employee whenever possible. This is called staff stratification and can lead to increased employee productivity. Employees should make a list of clerical, but time-consuming things they could delegate to non-insurance personnel, so management can determine if hiring part-time or full-time clerical support would be cost-effective. Examples include having a CSR assistant, a sales assistant to producers, a marketing or claims assistant or data entry personnel. However, the more automated a firm is today, the less need there is for other personnel, as the computer can easily handle the repetitive tasks in a firm when computer account profiling is complete and when interface with carriers is achieved.

Many employees are concerned about the lack of recognition and reward for their efforts. Today most good employees will not stay with a firm for more than a few years when they don't see a good opportunity to grow and expand in a firm. Employees can feel dead-ended in firms that do not promote people from within, especially to management and sales-type positions. In these firms, morale is adversely affected when open positions are filled from outside the firm without looking to promote employees.

Everyone wants to be recognized, to have people admire and acknowledge them. Money is only one form of recognition. Besides expressing appreciation verbally, other rewards of importance to individuals are time off, more authority, a new title, a parking place, a private office and an employee-of-the-month award.

Morale can be negatively affected when personnel are not reprimanded for being unproductive, being continually late or absent from work, making an excessive number of personal phone calls and/or not completing tasks on time. The high performers will begin to slow down in those firms where the poor performers are allowed to get away with this lack of respect for fellow employees, clients and with the adverse effect on productivity. Nepotism is also a problem in many firms.

Perception is more important than reality. Even when management does not know what is going on or when the employees perceive that management is indifferent toward recognizing efforts or reprimanding poor performance, morale can also be affected. The perception is just as destructive as if it were reality. Lack of proper communication is the cause.

Annual performance reviews are extremely important. A standard review form should be used. The reviews should be held on anniversary date of hire, and both the employee and the reviewer should complete the form regarding past performance. The evaluation should be discussed by the two parties, and goals for the next review should be set in writing, including any additional training needed. A mid-anniversary-year performance review should also be held to discuss performance only, without any pressure on management to give a raise. Performance that is unacceptable should be documented in the personnel file, with copies given to the employee.