Regimented Producer Hiring and Retention Programs
For the Record, a BISM Online contribution from MarshBerry

Patrick T. Linnert is Executive Vice President at Marsh, Berry & Co., Inc., a Willoughby, Ohio based management consulting and investment banking firm for public and private insurance distributors.






Website: www.MarshBerry.com

Hiring and retaining producers who continually drive new business production remains a hallmark of high-growth agents and brokers. As annual leakage rates now exceed 15% of prior year's commissions and fees and will continue to climb in the short term, high-growth organizations focus on writing enough new business not only to offset the revenue leakage, but to far surpass it. This means consistently writing new business well in excess of 20% of prior year's commissions and fees. This also means consistently and effectively hiring and retaining top sales talent to achieve such results.

A recent MarshBerry study found two common traits among high-growth agencies in terms of how they hire and retain producers. First, high-growth agencies hire new producers at a rate of over 2.34 to 1. The second trait of high-growth agencies is the ability to quickly cut the cord on unsuccessful hires. By hiring a greater number of producers, while at the same time culling the herd, the net result is that high-growth agencies have more talent and better talent than the masses. They also maintain higher returns on investment compared to alternative growth strategies (such as acquisitions), which in turn drives organizational revenues, earnings, value, perpetuation and ultimately, long term viability.

The above chart indicates that in any given three year period, the average agency will hire 19.3% of its total production force compared to 45.2% for high-growth agencies. At the same time, the new producer hires still employed with the agency after three years represent 15.5% of the total production force for average agencies versus 31.0% for the high-growth agencies. The simple way to look at the numbers is to assume each agency has 100 producers. The average agency would have hired 19 producers over the last three years and 15 would still remain. In the high-growth agency, the entity would have hired 45 producers in the last three years and 31 would still remain. Given the rate of hiring and attrition, high-growth agents and brokers will end up with twice as many producers as the average agency, and more importantly, they will end up with sales talent of a higher quality.