NEW PRODUCER RECRUITING: A GROWING CONCERN FOR AGENCIES by Suzy Hammett

Looking for effective ways to grow your agency? Then make sure you’re growing your recruiting program for new producers. By limiting your efforts to hire new producers, you might be limiting your opportunities for profitable growth. Suzy Hammett shows how enhanced recruiting programs can provide a profitable solution.

As an agency expands, its difficult for a restricted number of producers to generate enough revenue to achieve higher growth rates. High-growth agencies (which consistently grow 10% or more) achieve those numbers by hiring new producers every year. In fact, many very productive agencies hire at least two new producers each year. Some larger agencies hire more than five per year.

But when it comes to recruiting, other agencies might find that time isn’t on their side. The average age of today’s agency principal is 58. As a result, the lack of younger producers coming into a business can make perpetuation almost impossible, since the talent needed to continue the firm simply isn’t there. This lack of new producers also creates vulnerability for an agency’s accounts when its customers transfer ownership or management responsibility to the next generation. The new owners of these accounts might prefer to buy insurance from their own peers so they might move the business if an agency can’t shift their accounts to a younger producer.

OBSTACLES TO RECRUITING PRODUCERS

During the past 10 years, most agencies have implemented employment agreements and non-solicitation agreements. These make it clear that agencies own the book of business and that producers cant solicit customers when they leave the agency. Thus, an agency that tried to recruit an experienced producer with a book would need to pay a high starting salary for at least two years until the producer validates. Strong non-solicitation agreements make it almost impossible to recruit good producers away from their current employers.

What are agencies doing to solve the shortage of sales talent and what do principals see as their top recruiting challenges? Business Management Group conducted a survey of Property and Casualty agencies to address these issues. When asked what their top three recruiting challenges were, 57% of the agencies and brokerage firms surveyed reported identifying qualified producers as their top challenge. Designing an effective producer compensation program came in second at 19%, and developing an effective recruiting strategy ranked third at 13%.

HIRING PRODUCERS FROM OUTSIDE THE INDUSTRY

Many agencies are looking at alternative ways to attract and develop high-performing producers. Hiring outside the industry has become a key recruiting strategy to identify aggressive sales professionals who are capable of achieving exceptional results. Survey results indicated that 67% of the respondents hired producers from outside the industry. Of those hired, 27% had financial services backgrounds, 27% were college graduates hired from college recruiting programs, and 23% possessed strong sales backgrounds.

When I spoke with three agencies that have been successful in recruiting producers from outside the industry, I asked each agency president what key factors contributed to their success. "We look for individuals with sales backgrounds who have achieved exceptional results," says Ken Kirk, president of Brown and Brown of Arizona (Phoenix, AZ). "They must also have a strong work ethic and fit in with our sales culture." Three of Brown and Browns most recent hires came from sales backgrounds in the medical field, sports management, and newspaper advertising.

"In the beginning, it was difficult to identify candidates but once we established a profile and began networking, we were able to identify these individuals," Kirk adds. The agency’s success ratio for hiring producers from the outside has been around 50%. "Success of others breeds success, and we find the new producers are referring their friends and other people to the program," he says.

Walker Sydnor, president of Scott Insurance (Lynchburg, VA), spends most of his time networking to identify individuals who are a good fit with the organization and its sales culture. "Our business is about talent," Sydnor says. "There are no short cuts to finding quality people. We spend a lot of time on the front end making sure the candidate fits our profile and possesses the skills to be successful. Our interview process is very intensive. Producers will go through several interviews with key personnel before we go to the next step in the process which includes testing. We not only hire producers with non-insurance sales backgrounds through networking, but also actively recruit at colleges."

Stephen Jackman, president of Seitlin (Miami and Fort Lauderdale, FL), says, "Were always recruiting. Our people are our strength, and we look for the most talented individuals. We often go outside the industry for new hires and then train these people in Property and Casualty insurance." Seitlin is on its third generation of hiring Property and Casualty producers from outside the industry, and has hired five producers with banking and accounting backgrounds who are achieving exceptional results. "We look inside and outside the industry for high energy, creative individuals who can solve problems and thrive in an entrepreneurial environment," says Jackman.

KEYS TO DEVELOPING PRODUCERS

All three agency presidents agree that before a firm is ready to recruit and develop producers from outside the industry, it must be set up to provide new producers with exceptional levels of support, training, and mentoring. "We have above-average service and support staff in Account Executive and Customer Service Representative positions who work closely with the new producer to train them in our business," Kirk says. "We’ve also developed a training program structured to meet the individuals needs and we assign a mentor for each new producer."

One of the unique aspects of Seitlin’s program is that it rewards mentors by paying them 10% of new business revenue produced during a new producers three-year validation period. During the past five years, Seitlin has grown 16% on an annual basis, and grew 26% during the past year. "We establish high goals and hire producers with the expectation that the individual will produce four times their draw in revenues during the validation period," Jackman says.

"Providing sales management, coaching, and monitoring results are key factors to successful producer validation," adds Sydnor. To demonstrate this, Sydnor says that Erik Koroneos, senior vice president and sales manager for Scott Insurance, spends most of his time working with new producers to ensure that each has a structured training program including an orientation to each department and an assigned mentor. Koroneos works with producers to develop sales and marketing plans and reviews weekly schedules and activities. In addition, the agency established accountability groups for experienced producers.

These three organizations have been very successful in developing producers, achieving high growth rates, and developing effective recruiting strategies. However, before recruiting begins these components should be in place:

  • A well-defined job description 
  • A validation schedule 
  • A clear and specific candidate profile 
  • A sales plan 
  • An attractive compensation plan 
  • A training plan 
  • A strategy to generate leads for likely candidates 
  • Producer mentoring and coaching 
  • A process to effectively interview candidates (including testing) 
  • Sales management 

Before beginning a recruiting strategy, agencies should assess their readiness to bring on new producers and whether they have the resources to support these individuals by answering these questions:

  1. Does management have the ability to screen and identify good candidates? 
  2. Does the agency have the resources to manage and coach a new producer? 
  3. Is the compensation plan designed to attract and retain top performers? 
  4. Does the agency have knowledgeable service staff to support the producer? 

If your agency is struggling to identify and recruit talented sales professionals, it might be time to assess your organizations readiness to recruit producers from outside the industry.

Suzy Hammett, SPHR, a vice president of the Business Management Group consulting firm, is based in Atlanta. She specializes in producer/owner compensation and incentive plan design, employee and customer satisfaction surveys, and management recruiting. She also helps agencies find ways to become more profitable and productive. Hammett can be reached at (800) 772-0208 or (770) 436-7711, or e-mail s

 

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