How To Evaluate And Pay Csrs

HOW TO EVALUATE AND PAY CSRs

The value of a great customer service representative (CSR) can't be underestimated-just ask any agency owner who just lost one. In the typical agency, the CSR is the foundation of good service, and thus of the agency's reputation. The questions for most agency owners is how to grade CSR performance and determine fair compensation.

Finding a good CSR today is a difficult task, especially with the current low unemployment rates. This scarcity of potential employees has had a profound impact on agency performance and profitability.

CSRs account for roughly half of an agency's employees. Keeping in mind that payroll is the largest expense in any agency, the productivity of CSRs directly affects the agency's profitability. Hiring and retaining good CSRs (part of which requires fair compensation) is a key to increasing profits and agency value. FUNDAMENTALS

The role of the CSR boils down to collecting, processing, and distributing information. Collection may be the most important. The CSR needs to know what information to gather and how to ask for it. The CSR must also be a 'people person.' Good social skills and the ability to act as a go-between for the different parties-clients, producers, underwriters, and agency owners-are essential.

The typical CSR spends about half the time talking to clients or carrier personnel, gathering and distributing information, and solving problems. The rest of the time is spent on paperwork and computer input. PERFORMANCE

The first step to evaluating job performance is to write a job description spelling out the CSR's tasks and responsibilities and making sure both parties agree to it. It's important to include predetermined performance standards. CSRs should know what size book management expects them to handle. Management, on the other hand, needs to offer proper training and support to allow CSRs to reach the expected productivity level.

You can objectively measure job performance in several ways. Many automation systems allow CSRs to track transactions. These automated reports reflect the information recorded on the agency database as the CSRs move through their daily work. This allows management to review each CSR's volume of work.

But these numbers may be misleading. For example, a CSR may need to spend hours or even a whole day to complete one transaction that saves an account. Therefore, for a proper evaluation of the average workload, the reports must span weeks or even months. You must also decide whether the report reflects two transactions or one if a CSR makes a mistake and must perform work to correct it.

Another issue is finding good benchmarks for performance. How does one know the appropriate number of transactions a CSR should perform to complete a task? Required transactions will vary, based on the book of business. Some types of business-for example, contractors-are more labor intensive than others.

Another method of judging your CSRs' performance is to compare the number of accounts and commission dollars handled by each one-but it's important to compare apples to apples. Break down the CSRs' book by line of business (Personal, Commercial, Life, and Health). Then determine the average size of account in each line (commission dollars divided by number of accounts). Finally, compare performance to a benchmark. Oak & Associates recently performed a compensation and productivity survey of California agencies and brokers. You can contact Oak & Associates for a copy of the full report. This method provides a clear indication about a CSR's profitability.

Management needs to use the performance numbers in their proper context. Even if CSRs in an agency are measured individually against each other, a problem may occur if each CSR handles a unique books of business. Even a good CSR may be stuck with a troublesome book of business and appear to be unproductive. For example, a book with a large number of contractors could require more labor then a book that's mostly retail.

Performance should also be based on subjective measurements as well. Once a year, key clients handled by each CSR should be surveyed to see what they think of the service they're receiving. Underwriters of the important markets should also be asked for input on each CSR's performance.

Performance rating should combine subjective and objective criteria. A CSR's value to the agency may be partially hidden if performance is graded on only one type of input. COMPENSATION

What is fair compensation? The first criterion is to make sure the compensation is affordable. Hiring the world's best CSR is a bad idea if the cost will sink the company. Compensation needs to be in line with job duties and responsibilities.

Do a quick reality check. Take the commission dollars to be handled by a CSR and subtract compensation costs (include taxes and benefits) to determine what the spread is for that specific position. Then determine whether the remaining dollars are enough to cover producer compensation and overhead, and provide a fair return to the owners. This analysis will have to rely on a 'gut feel' rating; there are no reliable benchmarks on what the spread should be, since there are too many variables from agency to agency.

The bottom line for this process is to see if there's a fair return to owners after expenses are taken out. A low return or loss will require an adjustment to compensation (CSR or producers) or some other way of lowering overhead costs. If adjustments are not feasible, management should think about rehabilitating or getting rid of specific books of business.

Analyzing affordable compensation is important-but what an owner feels is appropriate might not be the same as what they'll need to pay. The economy has a tremendous impact on prevailing wages.

Our recent survey of California agencies shows that the average salary for a newly hired experienced Personal Lines CSR is now $23,579 for rural agencies and $33,000 for urban and suburban agencies. Experienced Commercial Lines CSRs are now receiving an average of $29,075 and $42,000, respectively. Salaries have clearly gone up in recent years, but there's been no corresponding increase in the commission dollars handled. Major reasons for the stagnant size of a CSR's book of business are the continued soft market and lower commissions paid by the carriers.

It also seems that automation has actually increased the CSR's workload because everyone expects more information and service. Carriers, too, expect agencies to do more of the carriers' work without getting paid for it. CONCLUSION

Hiring and keeping a good CSR requires management to practice science and art: Review the numbers to make sure all the statistics are in line, but take the subjective side into account.

It's often better to hire well-qualified CSRs and pay them more rather than just filling the position with low-paid, not-so-qualified people. By handling more work with less supervision, highly productive CSRs may save expenses in the long run.

For the typical agency, the quality of the CSR determines the quality of the service and the overall reputation of the agency. The path to becoming a top-performing agency is not easy, but the right CSRs are necessary for the journey.