https://completemarkets.com/Article/article-post/2058/WHAT-MAKES-A-GREAT-FIRM/
What Makes A Great Firmr> ...5-6565, Fax (707) 935-6515, e-mail catherine@oakandassociates.com, or visit www.oakandassociates.com. ...
https://completemarkets.com/Article/article-post/2061/HOW-TO-BE-A-HIGH-PERFORMING-FIRM/
How To Be A High-Performing Firmr> HOW TO BE A HIGH-PERFORMING FIRM by Catherine Oak, CIC, AAI The more effectively you sell, market, and service, the more valuable your agency. The secret to peak performance is employing the right people, in the right positions, based on their talents and the needs of the firm. Every firm must perform four major functions regardless of revenue size or number of employees. These functions are sales, marketing/placement, service, and accounting/administration. Any firm that wants to achieve its growth and profitability objectives needs to manage these functions properly to operate at a high-performance level, which in turn leads to high value. Let's explore how a successful firm should manage these four key functions. MANAGING SALES New sales, which are the key to growth, are measured by new customers, not additional commissions that materialize from renewals. New customers are necessary to replace business that's lost through circumstances both within and outside of the firm's control. People die, move, or go out of business every day. This natural attrition is inherent in the book of business and, for the most part, is outside its control. The rate of attrition in any firm usually ranges from 8% - 20% annually. On the other hand, attrition can come from factors within the firm's control, such as dissatisfied customers, uncompetitive pricing, and lack of technical expertise in meeting the client's needs. Do high-performing firms use different sources than anybody else for new business? Not really. They simply go after new business more aggressively. Often, they don't even depend on the source of new business favored by most independent insurance agents/brokers: referrals. Instead of waiting for new business to knock on their doors, producers and CSRs in high-performing firms vigorously seek out prospects. Everyone working in the firm has a sales personality and is motivated to bring in new business. The producers in these firms are not being paid 'out of sight' commission splits (such as 40% or more for new and renewal business). A producer compensation plan is established that is reasonable for the services performed and affordable so a profit can be realized. Generally, a well-run firm can't afford to pay an average Commercial commission of more than 30% if it hopes to generate a 15% - 20% profit. Some firms pay more than 30% for new business to motivate producers to bring in new accounts. Top producers are carefully coached and given the tools they ...counts, it should be decided who will service the medium to large Commercial accounts and how best to organize this. There are two common options to servicing these accounts in a firm: an alphabet split or the producer/unit concept. Smaller firms generally use the alphabet split concept, especially if there are few producers and if the CSRs are equally competent. In managing an alphabet split for Personal and Commercial lines, it is essential to keep the workloads for the CSRs as evenly balanced as possible, especially if the CSRs are equally experienced. Assistants handling clerical activities should be shared among the CSRs. The producer/unit concept, (in which CSRs are assigned to service and market the accounts of certain producers), is more common in larger firms and very common in national and public brokerage firms. There can be a problem, however, with the producer/unit concept. Often, 'firms within a firm' can develop, resulting in a lack of team spirit. CSRs might be reluctant to help producers in other units if there is turnover or someone is out due to illness or vacation. Producer/units can work quite effectively if either an office manager or Commercial lines service manager is involved in the managing, training, hiring, and firing of all CSRs employed by the firm. PERSONAL LINES ACCOUNTS In Personal lines, we often see the supervisor or manager also handling the firm's VIP Personal lines accounts. The only organizational structure that works effectively in Personal lines is an alphabet split. PERFORMANCE STANDARDS What are acceptable standards of performance of CSRs in the average (versus high-performing) firm? The average commission per account in both Personal and Commercial lines greatly affects the amount of commissions a CSR can handle. In Personal lines, there isn't as wide a spread in average account size as there is in Commercial lines. In Personal lines, it is more common to judge performance based on the number of accounts as opposed to commissions handled. The employee productivity table (at the end of this article) shows the commission and number of Personal and Commercial accounts handled by a CSR employed in the average firm. The table also shows overall revenue per employee, per producer, and per CSR. Our definition of CSR includes managers, assistants, claims people, and marketing personnel, since their number varies greatly from one firm to the next. The key determinant of who is a CSR is whether that person deals directly with the firm's clients. Servicing costs in a firm can be analyzed best by looking at the CSR payroll and operating expenses relative to commission. Typically, firms have servicing costs ranging from $ .30 - $ .45 per dollar of commission. Obviously, the lower the servicing cost the better, leaving more dollars available for selling and administrative expense, as well as compensation to owners and non-owner producers. <