drbillywilliams
New Member
I posted this on another forum, but I think it will open some interesting conversations on this forum as well.
As an investor and agency mentor to IA and captive agencies, I see 100's of comp plans a year. Here is what I would offer to this conversation:
1. The more complex the pay plan, the less likely it is to produce any of the desired results such as increased items, premiums, x-sells, and EFS referrals. If the plan is too complicated for the staff to understand, then how is it expected to motivate them?
2. Pay your staff a % of the way you get paid. If you have to hit a certain item count each month to stay on goal, they should have to hit a certain item count each month to keep you on goal.
3. Keep their hourly pay average and the bonus pay above average. Bonus goals should be obtainable though or what is the point in having them? If you set your minimum item count properly, you will still be profitable.
4. Pay out bonuses according to your anticipated cashflow. Don't promise a weekly bonus if you can't pay a weekly bonus, pay it monthly, quarterly, or even annually if you have to. If you happen to get a big paycheck and can pay bonuses earlier than you promised them, this makes you look like a saint, but if you promise to pay a weekly bonus and can't do it, you look like a liar and a cheat.
5. The bigger the agency the better the base pay and bonus structure will be. Small agencies be careful when trying to copy the comp plans of the big boys, it will drive you out of business. Remember their renewal pot of money is much bigger than yours, which means their cashflow is much better.
6. If you have a CSR that is not a producer, but is driving sales, x-sells, and referrals to the LSPs, have the LSPs "tip" them when they get their bonus, just like a server would a hostess in a restaurant. DO NOT try to regulate this process by paying the CSR out of your (agency) money. They helped the LSP make a bonus and the LSP should be more than willing to say thank you. trust me if you have a stingy LSP that refuses to tip the CSR, the CSR will stop referring business to them and instead send it to a LSP that is tipping.
Here is a simple comp plan that I put in place when I start initially mentoring captive agencies that don't have a plan in place. As I said earlier, there are 100's of comp plans but I didn't want to leave without offering the readers something they could sink their teeth into.
It is based on what the agency's production goals are. Divide the production goals evenly among your LSPs. so adjust your item count as necessary. In example if you need 50 items each month to stay on pace and you have two LSPs, each one should have a goal of 25. (Don't get greedy and make it 30, so you can get more sales. You get a bonus when you go above average, and your staff should also!) You will build your agency wealth on renewals.
Count small policies such a renters or condo as a ½ policy. This cleans up the issue of having a LSP getting a big bonus for writing a bunch of small policies. Count brokered policies as 1 policy! If you are operating effectively you should x-sell, up-sell, discuss financial services, and get referrals from brokered customers. Why penalize the LSP for providing what the customer wanted?
Below is an excerpt from the employee handbook we give to our members. The actual production requirement amounts will be determined by the agency principal prior to the staff signing the employee agreement. Agree to use items or policies for production requirements (not both) as needed by your agency
This is just for P & C. We have a different structure for commercial, and financial services.
The minimum requirement is the preceding number - i.e. 16+ means a minimum requirement of 15)
The Agencies within the Williams Family Agency Investment Group provide basic compensation, bonuses, commissions, and special incentives that are among the best in the business. In order to simplify the process, the agency basic compensation is linked with education completion and bonuses and commissions are linked to production. Listed below is the EDUCATION REQUIREMENT AND BASIC COMPENSATION:
EDUCATION COMPENSATION
NON-LICENSED $10.00 PER HOUR+
P & C LICENSED $14.00 PER HOUR+
P & C /LIFE-W/BINDING AUTHORITY $16.00 PER HOUR (Hourly pay can be more if approved by the agency principal)
All information will be taken from the verified monthly production report. It is extremely important that the sub-producer code be correctly used on all new business applications for accurate tracking of production. Any items or policies that are not coded with a sub-producer code will not count toward bonus level production totals
16+ production items/policies in a production month = $25.00 per issued policy
21+ production items/policies in a production month = $35.00 per issued policy
26+ production items/policies in a production month = 40.00 per issued policy
31+ production items/policies in a production month = $45.00 per issued policy
After 36+ bonus eligible items/policies are written and issued the producer will receive $50.00 per new policy written for the remainder of the bonus eligible month (Policy, not Items!)
Two each low premium items (Example = Renters and Motor Club) count as one item/policy (2 low premium policies = 1 Item/Policy for bonus purposes)
As an investor and agency mentor to IA and captive agencies, I see 100's of comp plans a year. Here is what I would offer to this conversation:
1. The more complex the pay plan, the less likely it is to produce any of the desired results such as increased items, premiums, x-sells, and EFS referrals. If the plan is too complicated for the staff to understand, then how is it expected to motivate them?
2. Pay your staff a % of the way you get paid. If you have to hit a certain item count each month to stay on goal, they should have to hit a certain item count each month to keep you on goal.
3. Keep their hourly pay average and the bonus pay above average. Bonus goals should be obtainable though or what is the point in having them? If you set your minimum item count properly, you will still be profitable.
4. Pay out bonuses according to your anticipated cashflow. Don't promise a weekly bonus if you can't pay a weekly bonus, pay it monthly, quarterly, or even annually if you have to. If you happen to get a big paycheck and can pay bonuses earlier than you promised them, this makes you look like a saint, but if you promise to pay a weekly bonus and can't do it, you look like a liar and a cheat.
5. The bigger the agency the better the base pay and bonus structure will be. Small agencies be careful when trying to copy the comp plans of the big boys, it will drive you out of business. Remember their renewal pot of money is much bigger than yours, which means their cashflow is much better.
6. If you have a CSR that is not a producer, but is driving sales, x-sells, and referrals to the LSPs, have the LSPs "tip" them when they get their bonus, just like a server would a hostess in a restaurant. DO NOT try to regulate this process by paying the CSR out of your (agency) money. They helped the LSP make a bonus and the LSP should be more than willing to say thank you. trust me if you have a stingy LSP that refuses to tip the CSR, the CSR will stop referring business to them and instead send it to a LSP that is tipping.
Here is a simple comp plan that I put in place when I start initially mentoring captive agencies that don't have a plan in place. As I said earlier, there are 100's of comp plans but I didn't want to leave without offering the readers something they could sink their teeth into.
It is based on what the agency's production goals are. Divide the production goals evenly among your LSPs. so adjust your item count as necessary. In example if you need 50 items each month to stay on pace and you have two LSPs, each one should have a goal of 25. (Don't get greedy and make it 30, so you can get more sales. You get a bonus when you go above average, and your staff should also!) You will build your agency wealth on renewals.
Count small policies such a renters or condo as a ½ policy. This cleans up the issue of having a LSP getting a big bonus for writing a bunch of small policies. Count brokered policies as 1 policy! If you are operating effectively you should x-sell, up-sell, discuss financial services, and get referrals from brokered customers. Why penalize the LSP for providing what the customer wanted?
Below is an excerpt from the employee handbook we give to our members. The actual production requirement amounts will be determined by the agency principal prior to the staff signing the employee agreement. Agree to use items or policies for production requirements (not both) as needed by your agency
This is just for P & C. We have a different structure for commercial, and financial services.
The minimum requirement is the preceding number - i.e. 16+ means a minimum requirement of 15)
The Agencies within the Williams Family Agency Investment Group provide basic compensation, bonuses, commissions, and special incentives that are among the best in the business. In order to simplify the process, the agency basic compensation is linked with education completion and bonuses and commissions are linked to production. Listed below is the EDUCATION REQUIREMENT AND BASIC COMPENSATION:
EDUCATION COMPENSATION
NON-LICENSED $10.00 PER HOUR+
P & C LICENSED $14.00 PER HOUR+
P & C /LIFE-W/BINDING AUTHORITY $16.00 PER HOUR (Hourly pay can be more if approved by the agency principal)
All information will be taken from the verified monthly production report. It is extremely important that the sub-producer code be correctly used on all new business applications for accurate tracking of production. Any items or policies that are not coded with a sub-producer code will not count toward bonus level production totals
16+ production items/policies in a production month = $25.00 per issued policy
21+ production items/policies in a production month = $35.00 per issued policy
26+ production items/policies in a production month = 40.00 per issued policy
31+ production items/policies in a production month = $45.00 per issued policy
After 36+ bonus eligible items/policies are written and issued the producer will receive $50.00 per new policy written for the remainder of the bonus eligible month (Policy, not Items!)
Two each low premium items (Example = Renters and Motor Club) count as one item/policy (2 low premium policies = 1 Item/Policy for bonus purposes)
