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Merge Or Acquire With Caution
Six reasons why mergers and acquisitions fail. Few business transactions pack the high-stakes potential of a merger or acquisition. Done well, the deal can help an agency attain new levels of prosperity. Done poorly, it can be crippling. Over the years we've helped scores of agents deal with the impact of mergers and acquisitions, and in the process we've learned a lot about what works and what doesn't. Unfortunately, too many agents call us after the deal is done and it isn't working out. That's a shame, because many difficulties might have been prevented with a little planning and discipline. In fact, studies of real-world mergers and acquisitions consistently report that the vast majority fail to achieve their stated goals in the first five years of the combined operation. We find that some combination of the following six pitfalls usually leads to post-transaction difficulties for agencies and their owners: PITFALL NO. 1: BUYING AN AGENCY THAT DOESN'T FIT Know your objectives for combining two organizations. Is it a merger, an acquisition of an entire organization, or a purchase of a book of business? Everything about the target organization-staff, location, markets, systems, book of business, philosophy-must be evaluated to see how it will mesh with your existing business to create a new, stronger organization than either would be separately. That requires knowing your own agency well. Ask yourself: What are my business reasons for exploring a merger or an acquisition? Some potential answers are: Survival Financial stability Growth Competitive strength Geographic reach Perpetuation Improved leverage with carriers To be a consolidator Then learn everything you can about the target organization. An agent without a game plan or clear objectives is vulnerable to buying for all the wrong reasons-because it's available, because it sounds like a good deal, because friends think it's a good deal, because everybody else is doing it. A merger or acquisition can be a highly emotional decision. That's understandable, but don't let it lead you into a bad situation. PITFALL NO. 2: TAKING THE SELLER'S STATED POSITION AT FACE VALUE Let's say you come across an acquisition opportunity and the owner says, 'I'm selling because I'm tired of being in the business.' That's plausible-but what if the seller isn't divulging all the facts? What if the agency is on the verge of losing an important market? What if key clients are vulnerable or moving their business? What if a top producer is threatening to walk? The sooner you understand the seller's underlying reasons and motivation, the less time, energy, and possibly money you'll waste on a flimsy deal. Also, you should learn the seller's motives before you become emotionally tied to the purchase. At some point every buyer gets emotionally invested in the deal. That's not all bad-it's difficult to muster the energy to make a merger or acquisition work without a certain amount of enthusiasm. A smart businessperson knows his or her flinch point. If it becomes evident that something's not right, you must be prepared to pull the plug on the deal. This can be difficult-once lawyers and accountants are involved, an atmosphere of inevitability settles in and both sides begin to feel committed. Remember, though-no deal is done until you write the check. PITFALL NO. 3: LACK OF VALUE CREATION FOR BOTH BUYER AND SELLER Most deals in which one party 'wins' and the other 'loses' aren't very good. The objective should be to create a win for both parties. In a merger, both sides will need to work closely in the future-any kind of ill will could hinder success. For example, many times we've seen the seller dictate price and terms that cause the next generation of owners to virtually starve to death. By the same token, sometimes the buyer drives such a hard bargain the seller has to dip into retirement funds to pay taxes on the transaction. It's important in an insurance agency acquisition to remember that you're often buying a mostly intangible asset-a book of business and client relationships. You could pay a high price if the seller feels mistreated and retaliates or bad-mouths you in the community. Public opinion is a highly valued commodity for an agent. You don't want existing clients to develop the perception that you were less than honorable with their longtime insurance advisor. This doesn't mean you shouldn't protect yourself. You don't want to pay more than is appropriate or settle for unfavorable terms. But if you have a seller over a barrel, it's in your best interest to leave him or her some dignity and a reason to feel good about selling. Suppose you find an agency that needs to sell because it's being cancelled by a key carrier. You can maximize the deal by paying a bottom-dollar price, closing the office, and firing the entire staff. You might come out miles ahead in the long run, though, if you can afford to keep the good employees or structure the payments around a management contract so the seller can stay active for awhile as a producer. As a prudent businessperson, you want to cut the best deal possible. That's smart. But keep in mind that you're buying a book of business, which is a set of clients. If they don't renew, or if they follow key employees down the street, you may have purchased nothing. PITFALL NO. 4: POOR OR INCOMPLETE DUE DILIGENCE Due diligence, simply put, is getting all the information you can about what you're buying. When it comes to gathering (or disseminating) sensitive proprietary information, there's a formal and disciplined process that should be followed to protect both parties. First, a confidentiality agreement with injunctive relief and liquidated damages clauses is a must. This helps assure that the buyer won't use the information the seller provides to gain a competitive advantage. The liquidated damages clause gives the agreement teeth by specifying monetary damages at a reasonably punitive level if the buyer breaks the confidentiality agreement. A confidentiality agreement is mainly for the seller's protection. It encourages the full good-faith disclosure by the seller that's necessary for the buyer to make decisions. In a merger, a two-way confidentiality agreement provides similar benefits. A letter of intent also should be signed early on. This protects the seller from dealing with a less-than-serious buyer and protects the buyer by taking the agency off the market during negotiations. Once the due-diligence process starts in earnest, the buyer is looking for as much information as possible about the agency's legal, financial, contractual, management, employment, and operational situation. PITFALL NO. 5: PAYING TOO MUCH Buyers sometimes pay too much because the transaction is structured badly. Understanding the impact on the seller's taxes may provide the incentive to structure terms to both parties' advantage. For example, for a seller who wants income for 10 years, receiving annual checks for one-tenth of the purchase price could have costly implications. Will this give the seller enough to pay the tax bill when it's due? If not, will the buyer have to pay more for? Can the price be reduced by taking the tax consequences into consideration? Buyers also pay too much when they don't factor in additional costs. Suppose an agent finds a great deal on a $150,000 book of business and agrees to make three annual payments of $50,000. Now suppose the agent also keeps a producer and agrees to pay a salary based on renewals. Even if the producer writes a ton of new business, the buyer probably overpaid. Work with your financial advisors to structure such a transaction to keep the ultimate price in line and still satisfy the seller. Another reason some buyers pay too much is poor valuation methods. We see too many agents overpay because they use a simple multiples-of-commission formula instead of insisting on an independent, third-party valuation using standard financial methods. Many times agents pay too much because of poor due diligence and don't get the expected value. You may buy a book of business because it contains a lot of underdeveloped accounts you plan to leverage. But maybe there's a good reason those accounts are languishing-and if they can't be maximized, the buyer probably overpaid for the book. PITFALL NO. 6: POOR INTEGRATION Agents by nature enjoy playing the game more than polishing the trophy. This instinct serves them well in sales, but it can be detrimental when it comes to buying or merging with another agency. Whether it's simply a book of business or an entire agency staff, integrating a newly acquired entity with an existing one takes effective management. Differences in such things as organizational cultures, operations, procedures, and computer systems can lead to friction and possible meltdowns. Poor integration is one of the leading causes of failed mergers. To avoid difficulties, analyze potential problems before making a down payment on an agency and be sure they can be overcome. Then have a plan for making it happen. Unrealistic expectations can lead to costly mistakes, so be as clear-headed as possible. Afterwards, stay on top of the details and take good care of new and old employees alike. The last thing you can afford is to lose key employees just when you need them most. Mergers and acquisitions are an integral part of business today. Surprises always pop up. Smart business people anticipate or avoid the pitfalls and are more likely to pull off a successful acquisition or merger. A BUYER'S GUIDE TO SUCCESS Know what you want out of the deal. Keep your emotions under control. Learn the seller's motive. Gather all the information possible. Get a third-party valuation. Consult an attorney. Consult a tax accountant. Strive for a win-win deal. Look for potential integration problems. Address staff concerns up front. Don't be afraid to pull out.

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Producer Relations
PRODUCER RELATIONS by Carol Hammes Despite tough market conditions and economic recessions, some insurance agencies are thriving. While the average agency has grown at an annual rate of 3% over the past several years, these super agencies are continuing to grow at compound rates in excess of 10% with profit margins at levels that most agents only dream about. In our consulting work and in the research for this newsletter, we are constantly on the lookout for those qualities that are common to the better agencies so that we can pass the information along. Over the last several years it has become increasingly evident to us that one of the keys to operating a successful agency in today's marketplace is to make a clean break with the past. You literally have to start over from scratch, rethinking every aspect of the organization and re-tuning it to run under a new and sometimes very different set of rules. Take the concept of loyalty, for instance. Once upon a time (not so very long ago) it actually meant something to have had a long-term contract with an insurance company, insureds stuck with the agency despite price variations, and employees put more value on security and longevity of employment than they did titles and advancement opportunities. Sales and management techniques that helped you establish and maintain relationships 10 or 20 years ago are of little use today. The agencies that are doing well are lead by people who have been able to change their attitudes and their way of doing things. No longer do they rely upon loyalty to carry them through. They actively pursue and nurture those relationships that they have identified to be the most beneficial to their agency's future. One of the most critical and yet tenuous relationships is with the salespeople. Successful agency managers spend more time with producer relations than they ever did before. We suggest developing new ideas and strategies for beginning a relationship with producers. These changes can also benefit your relationship with existing producers. Pretend as though they are new to the agency. Evaluate their technical, sales, organizational, and time management skills and develop a training program to fill in the gaps. The evaluation is actually a lot easier to do with existing employees than it is with new hires because you have been able to observe their work habits and knowledge first hand. When setting goals and detailing the action plan, however, your personal experience with the person may be a hindrance. You may be tempted to gear the objective to what they have been able to accomplish in the past. Forget about what has (or has not) happened and focus the goal setting on what you would expect a new employee with the same level of education and experience to accomplish. This process will provide both the agency and the producer with the opportunity to make a fresh start. The agency's lackadaisical approach to sales management may have been a major cause of the producer's failure to produce as well as you both had hoped. By providing the direction and guidance now, you may be able to salvage this person's potential and turn him or her into a more valuable member of the team. At the very least, you will be setting up a program that will allow you to fairly and legally rid the agency of costly dead wood. An integral part of the new relationship with the producers will be the agency's specific definition of what it wants producers to sell since it makes sense to have them concentrate on accounts that they have a good chance of attracting and retaining. This means that you have to review the current appetites of the major carriers and decide whether the producer should be a generalist or whether he or she should specialize in a certain type or size of account or in a particular line of business. It is important to consider the producer's own experience and desires, but the final decision should be driven by the availability of competitive products and services from major markets and the agency's overall business plan. Agency management also has to decide what each individual producer is expected to sell to the identified accounts. Options include: new coverages to new account; new coverages to existing accounts originated by the producer; new coverages to accounts assigned to the producer; renewal coverages to accounts originated by the producer; renewal coverages to accounts assigned to him/her; all of the above. Another key element of the new relationship will be to clearly define the producer's role in the sales and servicing of these targeted accounts vis a vis the agency support staff. Prior to the time that agencies implemented sophisticated computer systems and hired expensive technical staffs, producers were responsible for all aspects of the sales and service effort. In most agencies this is no longer the case. But the change in duties may not have been clearly communicated to everyone concerned. This confusion results in personnel problems between the producers and the support people. It is also at the heart of the never-ending battle over producer compensation. Salespeople who have been around for a number of years remember when they were paid 45% or even 50% on new and renewal personal and commercial lines accounts. They therefore feel that they are being cheated if the agency reduces those percentages or stops paying for renewals on personal lines or the smaller commercial accounts. In 'starting over' with all of the producers, agency owners can spell out in detail the level of support that is being provided by the agency and how that back-up gives the producer the opportunity to relinquish non-productive tasks so that he or she can truly have more time to sell. Does the agency provide personnel and/or computers that handle all (or some) of the marketing and placement, loss control and risk management activities, telemarketing/direct mail leads or appointments, completion of applications and checklists, calculating of new or renewal quotes, preparation of proposals and correspondence, tracking of sales activity, etc.? What exactly is the producer's role in prospecting, selling, and servicing accounts in your agency? Communicate these duties verbally and through the use of written job descriptions for the producers as well as for the support and service positions. Compensation and Motivation The compensation plan is a critical part of the agency's relationship with its salespeople. No matter how well the role is defined, the producer has to believe that the level of compensation is fair for what he or she is being asked to do. What you pay must be based upon what the agency is expecting from the salesperson and what services and other support the agency is providing to assist him or her in performing the job that has been defined. This is why the compensation will differ from one agency to the next and in many cases from one producer to the next within the same agency. In situations where the agency provides a high level of support, the producer's percentage will have to be 10 to 15 points less than it is in an agency where the salespeople handle everything. Likewise, in agencies where there is little or no 'house' business to cover basic overhead, the percentage that goes to the producers will have to be lower. To determine what is fair compensation to the sales force in your agency, subtract your targeted profit margin and the cost of operations from agency revenues. What's left over will be the amount that you can afford to pay to the producers. Agencies that provide the 'standard' level of support, have about 20% of their revenues from house business, and those that want a 15% profit margin will find that the overall percentage that they can pay to producers will be in a range from 27% to 33% of commissions. The level of employee benefits and travel/entertainment/auto expenses provided will dictate whether you are at the high or low end of this range. Remember, there are always valid exceptions to every guideline. Most of the more effective producer compensation plans that we have seen contain three distinct elements: a basic living allowance in the form of a salary or draw; incentive pay based upon some formula related to performance; and a piece of the future such as 401(k) contributions, profit sharing, ESOP, vesting, partnership, or ownership of business. If the primary thrust of the job is to service existing business, the incentive portion may simply be the opportunity for a raise in the salary. If the producer is strictly sales-oriented, the incentive portion may make up virtually all of the compensation. If the agency wants to emphasize new sales, the incentive should be weighted in that direction. When you have determined what you can afford and how you want to pay the sales people, it is very important to show them exactly how the plan will work if they meet the goals that have been established. Anything that you can do to eliminate the potential for misunderstanding will definitely improve the results that you get as well as the overall working relationship with producers. An effective compensation plan allows the producer a draw against the formula of 40% on new commercial commissions and 25% on renewal. We recommend that the draw be based upon 90% of what the formula produced the prior year to avoid having the producer 'owe' the agency some of the draw if several large accounts are lost during the year. The balance that the formula produces during the current year would then be paid as a bonus twice a year. Initially, the draw should be based upon what the formula would pay after the second year of production when you expect the producer to validate. More experienced producers that might have $175,000 in commissions at the end of year two could therefore be paid a draw of $50,000 whereas a person new to the industry might be only paid a draw of $20,000 assuming much lower production goals. One option is to set the initial compensation draw at $25,000. Note that the producer must 'make up' the production deficit before receiving the full formula commission percentage. Our formula shows compensation of $33,925 due the producer in year two (based upon 90% renewal retention rate: $40,500 x 25% = $10,125; $59,500 x 40% = $23,800; $10,125 + $23,800 = $33,925) but the producer had to cover the $7,000 deficit from year one so the amount he or she received out of the basic commission formula was only $1,925. The compensation plan we propose provides for an extra bonus amount that is based upon the producer exceeding the expected production goals. This agency will pay the producer 50% of all commissions received in excess of the goal. In the second year this producer had a goal of $95,000 and actually brought $100,000 of commissions into the agency. A bonus of $2,2500 (50% of the $5,000 excess) was paid at the end of the year. In the third year, the goal was exceeded by $10,000 and the bonus was $5,000. This extra incentive gives them a reason to push a little harder and still provides the agency with the basic income necessary to cover expenses. To address the future needs of the producer you should include a deferred compensation program that allows him or her to vest in the value of the accounts that have been produced. In this particular program the producer will accrue value beginning with the third year of employment. The vesting might be 10% a year up to a maximum of 50%. The value of the deferred compensation is the vested portion of 'one times' the annual commissions. This deferred compensation will be payable to the producer over three years after termination of employment as long as he or she honors the agency's non-piracy restrictions. At the agency's option, the vested value may also be converted to agency stock at some point in the future. There are many variations of this basic type of producer compensation plan. The basic percentage can be adjusted to accommodate different business plans. Some examples include: 45/20 in agencies where new business is being emphasized and where the support staff handles more of the renewal activities 45/15/5/0 for small commercial accounts with little growth potential 50/0 for personal lines accounts in agencies with professional CSRs handling servicing 30/30 on larger commercial accounts where a higher level of producer involvement is necessary for servicing and renewal sales 35/35 on jumbo accounts The incentive bonus can be based upon a percentage of the excess over the goal as we have done in this action plan or it can be an increase in the base percentage if the book exceeds a certain size. For example, in year two instead of paying 50% of the excess $5,000 in produced commissions over the goal, the base percentage for new production could be increased to 45% from 40%. By exceeding the $95,000 goal, the producer would have the 45% factor applied against the $59,000 in new commissions rather than 40%. This revised formula would result in additional commissions paid to the producer of $2,975 instead of the $2,500 bonus. Some agencies set up a number of different commission rates for different sized books of business, but you have to make sure that the computer system can handle this effectively or the administrative costs become prohibitive. Another way of rewarding producers when they hit certain production levels is to give them a new title, an increase in the car allowance or expense budget, a larger office, a dedicated CSR, etc. Sometime these types of recognition will provide more incentive than simply increasing the bonus or commission percentage. When developing a producer relationship you need to remember that money is not the only motivator and that each person has his or her own needs. The more you do to meet them, the more successful the relationship will be. The total compensation and motivational program must be individualized for each producer but it is also important to tie the fortunes of the salespeople to each other and to the success of the agency. This is where the sales contests come into play. Have a number of different programs going at once, some that are monthly, some quarterly, and at least one that is an annual contest. Rewards can range from a traveling trophy, a weekend in a nearby city, the right to go on an insurance company bonus trip, a 4 or 7 day cruise or ski trip, a monetary bonus. Criteria for 'winning' can be the producer (or team) with: the largest percentage of growth; the highest commission dollar increase; the highest number of new accounts written; the best hit ratio of written/quoted; or any other measurable item related to sales activities. There are four basic rules to follow if you want to conduct a successful promotional campaign. The rewards have to be meaningful, the goals must be attainable, the administration of the rules must be fair, and the participants must be kept informed of their progress vis a vis the progress of the other producers. More often than not, one of these items has been overlooked and the contest fails to provide the motivation that you had hoped for. This article was reprinted with permission from Carol Hammes, editor of the Middleton Letter.

Motivation: Module Iii-E
INTRODUCTION Motivation is tied closely to compensation, but the two are very different. Compensation is simply one form of motivation. There are many forms, all of which should accomplish one thing: encourage producers to sell and make them feel good about what they're doing and where they're doing it. A good motivational environment will help both Life and P/C producers. You should have a motivational atmosphere for your CSRs, as well. You should maintain a high recognition level in which all agency members can participate. Every producer wants to succeed. Your job, then, is to make sure each does succeed, through motivation and recognition. By providing continuous recognition programs that inspire and motivate agency employees, you will create a more successful agency environment. Your own attitude is the most important part of motivating staff. You must promote enthusiasm and belief for others to be enthusiastic and believe. ELEMENTS OF MOTIVATION To begin your motivational campaign, you need several basic elements: 1. You must be available to producers. Both new and experienced producers should be able to come to you for any reason-business and personal. All producers should feel that you are genuinely interested in them as individuals. Whenever one has a complaint, misunderstanding, or any problem, he or she should feel comfortable coming to you and talking about it. By maintaining an open-door policy, producers will feel that you are approachable, and you can build and maintain close relationships with your producers. You should also schedule regular personal conferences with your producers. Use the time to go over their goals, concerns, progress, and the things they want to accomplish. You can combine this with your weekly sales review, but it would be better to make this a separate, more informal meeting. This is the single most important part of good agency motivation. Your personal interest in each producer provides inspiration, motivation, and a morale boost-and all it takes is time and caring. 2. Regular sales meetings give you the opportunity to recognize producers. By gathering all the producers together, you are providing a forum for personal feedback and recognition of the high achievers from the past week or month. The recognized producers get both immediate feedback from you and the recognition of their peers. MOTIVATIONAL EVENTS In addition to the above, there are a number of events and activities that can motivate your people. The following suggestions will help you build and maintain team spirit in your agency. Annual Meeting-At the beginning of each year, hold an all-agency meeting. Use this to review the agency's performance of the past year and recognize past top performers. Include other agency staff, as well as producers, in this recognition. For example, your receptionist may have helped other staff in addition to regular duties. Or a CSR may have been exceptionally motivational to other staff members. You can use charts and graphs to show how the agency performed over the past year. Build agency pride and team spirit. You may invite an outside guest with experience in key agency areas who can reinforce your agency's results and plans. The objective of this meeting is to inform, instruct, and inspire. Inform: Explain to staff the outlook for your agency in the new year, along with any new programs you may have in mind. Share your one-year and five-year plans here, as well as any upcoming seminars, meetings, or conventions you may wish staff to attend. Explain to staff the outlook for your agency in the new year, along with any new programs you may have in mind. Share your one-year and five-year plans here, as well as any upcoming seminars, meetings, or conventions you may wish staff to attend. Instruct: Share with them a sales procedure that will benefit them, or invite an outside speaker. Share something with them that will make their job easier or more effective. Share with them a sales procedure that will benefit them, or invite an outside speaker. Share something with them that will make their job easier or more effective. Inspire: Paint a picture of what the agency can become. Outline its potential and the benefits to producers and staff. Explain the ways you are going to recognize and reward top performers throughout the year. Then, recognize each staff member for a particular accomplishment. Paint a picture of what the agency can become. Outline its potential and the benefits to producers and staff. Explain the ways you are going to recognize and reward top performers throughout the year. Then, recognize each staff member for a particular accomplishment. Everyone must be positively recognized. Consider concluding the meeting with a lunch or dinner, and have the top agent of the year and top agency staff member of the year speak. Make sure you end the meeting on a high note. Annual Black-Tie Dinner-Another motivational event is a formal dinner held every year, either at year-end or in January. You can invite all agency members and their spouses and present awards to all your production leaders for the year, including special recognition for your top associates. You may include the spouses by presenting them with special mementos of the evening. Make sure the memento is nongender-specific. This should be a big event, so plan it carefully to reflect the occasion. Also, you may invite area and industry leaders to provide added recognition to your agency members. Sports Outing-Why not organize a softball team and compete with other local businesses? Or, have a combination family picnic and games. Educational Conference-A yearly educational conference, held at a prestigious location, is another great motivating event. You can require producers and other agency members to meet certain qualifications in order to attend-remember to include spouses. Holiday Party-You can hold a holiday party for the entire staff and make it an "Open House." Again, make sure top producers are recognized. Have important clients, professionals with whom you work, centers of influence, and other community leaders attend and use this occasion to display your agency and staff. -Another motivational event is a formal dinner held every year, either at year-end or in January. You can invite all agency members and their spouses and present awards to all your production leaders for the year, including special recognition for your top associates. You may include the spouses by presenting them with special mementos of the evening. Make sure the memento is nongender-specific. This should be a big event, so plan it carefully to reflect the occasion. Also, you may invite area and industry leaders to provide added recognition to your agency members. -Why not organize a softball team and compete with other local businesses? Or, have a combination family picnic and games. -A yearly educational conference, held at a prestigious location, is another great motivating event. You can require producers and other agency members to meet certain qualifications in order to attend-remember to include spouses. -You can hold a holiday party for the entire staff and make it an "Open House." Again, make sure top producers are recognized. Have important clients, professionals with whom you work, centers of influence, and other community leaders attend and use this occasion to display your agency and staff. MOTIVATIONAL GROUPS In addition to events, membership in certain groups should be created as motivational tools. While some groups can have other purposes, membership should be primarily motivational. The following special groups can be established in your agency: Senior Sales Consultants-Select a few experienced producers from your agency and form a group of senior sales consultants. These producers should have specialties in certain markets, such as Group insurance, P/C Lines, pension plans, and so on. You can encourage their specialization by arranging for them to write articles for national publications. Help them organize a presentation that can be given to industry and community groups, as well as in your agency meetings. Also, have other agency members work with these consultants whenever they have prospects in one of their key areas. This group fulfills a two-fold purpose: It recognizes the individuals and it provides them an opportunity to continue their involvement in the area. Agency Advisory Board-An advisory board of producers who have been in your agency for a specific period can be created. You can hold lunches for all board members, and honor each new member upon joining this group on his or her specific qualifying anniversary. You may want to honor producers on each subsequent fifth year on the board, as well. Quarterly Round Table-Inspire and motivate agency members by forming a quarterly round table of leaders. You can set a standard of production that must be met in order to qualify for the round table. In addition to providing recognition, these special groups help upgrade your sales staff and improve the quality of business produced in your agency. -Select a few experienced producers from your agency and form a group of senior sales consultants. These producers should have specialties in certain markets, such as Group insurance, P/C Lines, pension plans, and so on. You can encourage their specialization by arranging for them to write articles for national publications. Help them organize a presentation that can be given to industry and community groups, as well as in your agency meetings. Also, have other agency members work with these consultants whenever they have prospects in one of their key areas. This group fulfills a two-fold purpose: It recognizes the individuals and it provides them an opportunity to continue their involvement in the area. -An advisory board of producers who have been in your agency for a specific period can be created. You can hold lunches for all board members, and honor each new member upon joining this group on his or her specific qualifying anniversary. You may want to honor producers on each subsequent fifth year on the board, as well. -Inspire and motivate agency members by forming a quarterly round table of leaders. You can set a standard of production that must be met in order to qualify for the round table. In addition to providing recognition, these special groups help upgrade your sales staff and improve the quality of business produced in your agency. OTHER FORMS OF RECOGNITION In addition to meetings and groups, there are a number of other ways to provide recognition to agency members: Wall of Fame-Those producers who have met and passed set production goals should have their framed portraits displayed on an agency wall. The producer could be presented with a plaque with his or her name and the agency insignia. Announcement letters can be mailed to 100 of the producer's select clients informing them of the selection and honor. To make it on the "Wall of Fame," a producer should have: met specific production goals, completed specific educational courses, met a specific percentage increase over previous year's production, and been recognized as a top performer an established period of times consecutively. Agent-of-the-Month Award-You can assign points based on production or base the award on the producer's premium volume as a qualification for the Agent-of-the-Month award. See the "Life Production" graph at the end of this section. In order to qualify, the producer must meet a minimum of, for example, $5,000 of annualized first-year commissions during the particular month. Send a press release and a photograph of the agent to local newspapers. Make copies of the newspaper article and send them to the producer's top 50 or 100 clients. Agency Dedicator Program-This program provides recognition each month to those producers who, during the month, produce $5,000 in annualized first-year commissions. You can present an engraved trophy to each agent who qualified as a "dedicator"eight times or more in one year. New Producer Club-Organize a special club for trainee producers. If the trainee pays for 12 cases or more in a month, the producer and spouse will be your guests for a gourmet dinner. This also helps the new producer's spouse get better acquainted and feel a part of the agency. Lead-Day Participants-You can choose to assign qualified producers a "lead day." This means you give the recognized agent all of the phone and paper leads received on that specific day. This provides both recognition and the opportunity to develop more business. To qualify, the producer should be a member of the National Association of Life Under-writers and a Million Dollar Round Table (MDRT) performer or be on track for MDRT qualification, as well as be a top recognized agency producer. Monthly Publication-An in-house publication can be put together and distributed at the beginning of each month. In it, recognize the top agency performers from the past month. Depending on the size of your agency, you can include photographs of agency members. Also, you may include sales ideas, general information items, and other articles contributing to self-improvement and education. Bulletins-On an as-needed basis, you can distribute single-page bulletins that are colorcoded as to purpose. For example, white could mean general information; yellow, recognition; green, production; and blue, motivational. Give these to your sales force throughout each month. Personal Letters and Cards-Mail anniversary and birthday cards to all agency employees and their families. For the personal touch, include a hand written note. Special Announcements-When appropriate, send out "flash" notices announcing special personal or business happenings in your agency employees' lives. Births, marriages, promotions, educational achievements, and honors should all be recognized. Contest Winners-Hold sales contests throughout the year. In addition to other recognition, reward each winner with some unusual keepsake. -Those producers who have met and passed set production goals should have their framed portraits displayed on an agency wall. The producer could be presented with a plaque with his or her name and the agency insignia. Announcement letters can be mailed to 100 of the producer's select clients informing them of the selection and honor. To make it on the "Wall of Fame," a producer should have: met specific production goals, completed specific educational courses, met a specific percentage increase over previous year's production, and been recognized as a top performer an established period of times consecutively. -You can assign points based on production or base the award on the producer's premium volume as a qualification for the Agent-of-the-Month award. See the "Life Production" graph at the end of this section. In order to qualify, the producer must meet a minimum of, for example, $5,000 of annualized first-year commissions during the particular month. Send a press release and a photograph of the agent to local newspapers. Make copies of the newspaper article and send them to the producer's top 50 or 100 clients. -This program provides recognition each month to those producers who, during the month, produce $5,000 in annualized first-year commissions. You can present an engraved trophy to each agent who qualified as a "dedicator" eight times or more in one year. -Organize a special club for trainee producers. If the trainee pays for 12 cases or more in a month, the producer and spouse will be your guests for a gourmet dinner. This also helps the new producer's spouse get better acquainted and feel a part of the agency. -You can choose to assign qualified producers a "lead day." This means you give the recognized agent all of the phone and paper leads received on that specific day. This provides both recognition and the opportunity to develop more business. To qualify, the producer should be a member of the National Association of Life Under-writers and a Million Dollar Round Table (MDRT) performer or be on track for MDRT qualification, as well as be a top recognized agency producer. -An in-house publication can be put together and distributed at the beginning of each month. In it, recognize the top agency performers from the past month. Depending on the size of your agency, you can include photographs of agency members. Also, you may include sales ideas, general information items, and other articles contributing to self-improvement and education. -On an as-needed basis, you can distribute single-page bulletins that are colorcoded as to purpose. For example, white could mean general information; yellow, recognition; green, production; and blue, motivational. Give these to your sales force throughout each month. -Mail anniversary and birthday cards to all agency employees and their families. For the personal touch, include a hand written note. -When appropriate, send out "flash" notices announcing special personal or business happenings in your agency employees' lives. Births, marriages, promotions, educational achievements, and honors should all be recognized. -Hold sales contests throughout the year. In addition to other recognition, reward each winner with some unusual keepsake. CONCLUSION Motivation is inspiration, recognition, pride, morale, team spirit-all the intangibles that help make people want to keep doing the best job they can. The presence of an established motivational program in your agency can make the difference between low production, high staff turnover, and failure and record volume, high agency loyalty, and success.