Monday, March 29, 2010
Tuesday, March 23, 2010
The article below is from National Underwriter online and is good food for thought for all agency owners.
Recruiting Young Producers Can Pay Big Dividends, Study Finds
In the summer and fall of 2009, Reagan Consulting—in conjunction with The Council of Insurance Agents and Brokers, UNUM, Chubb and Hanover—conducted “The Young Producer Study” to test the validity of these assumptions. (You can access the entire Young Producer Study at www.reaganconsulting.com.)
The study was designed to determine if there was an opportunity to hire more young production talent and document the best practices in hiring young producers.
Young producers were defined as producers hired when they were under the age of 30, hired in the last 10 years, and selling commercial property and casualty insurance or employee benefits.
The first part of the study was an assessment of the industry as a whole to determine the baseline level of hiring for these young producers. The survey included 206 agents and brokers (firms) throughout the country, with the data used as a proxy for the industry as a whole.
Based on the survey results, the success of young producers (48.6 percent) was approaching the success rate of all producers in the industry (53.0 percent), with the success of 23.4 percent of the young producers still unclear.
This data confirmed our belief that some firms were having success attracting, hiring and retaining young producers, and that there is an opportunity to learn from the best practices they were employing.
The next step was a deeper investigation of the firms and producers identified in the baseline study that were experiencing success. Fifty-four firms agreed to complete a detailed survey on their hiring and development practices for young producers. The firms also agreed to identify one or two young producers they considered successful.
A total of 91 successful young producers were indentified, completing a detailed survey about their educational background, a personality and behavioral assessment, and an interview. The firms also provided data on each successful young producer’s production history.
During this process we met and interviewed an extremely talented group of successful young producers and developed a deep understanding of the best practices employed by the successful firms in regards to attracting, hiring, developing and retaining young producers. There were three primary takeaways from our look at successful young producers:
• College Recruiting Works.
The 91 successful young producers that participated in the study were recruited from various sources, including other industries, other firms, college, insurance companies and in-firm transfers.
College, however, was easily the most popular source for successful young production talent. This certainly makes sense given that colleges and universities are concentrated sources of talented individuals, but it also contradicts conventional industry wisdom regarding college hiring.
Further, the success of producers hired directly from college was similar to that of those hired via other sources with regard to production numbers and time to validate.
• Well-Rounded Individuals Often Perform Best.
There wasn’t one characteristic of the successful young producers that stands out. Rather, what was apparent after analyzing the backgrounds of these individuals was their capacity to be involved in many activities and leadership roles while maintaining strong academic credentials.
However, interestingly, in terms of months until validation (when the commissions a producer generates at least equals their personal compensation, so they are in effect paying for themselves), a grade point average over 3.5 did not indicate greater success than that of those with a lower GPA, and within the group the producers with the highest GPA validated slowest.
Also, neither prior sales experience nor a specialty focus indicated success at a greater rate than that of those without prior sales experience or those that were generalists.
• Young Producer Economics Are Attractive.
When compared to hiring other experienced producers, the economics associated with hiring young producers can be attractive. As might be expected, the initial investment (salary) in a young producer is typically much lower than that of an experienced producer.
However, we also determined that successful young producers can perform at a level comparable to successful producers of all ages when give the appropriate resources.
Given the difficult economic environment we find ourselves in, both the relatively low initial investment of a young producer and the ability to generate organic growth for the firm could prove to be attractive.
With all that said, hiring, training and retaining young producers is a different game. Those firms that will succeed must do four things well.
• First, if they want to recruit college kids, they must establish a presence on college campuses as a means to identify the best talent.
• Second, the firms should invest in mentoring of the young producers to the point that mentoring becomes part of their firm’s culture.
• Third, young producers should be hired in classes, fostering a collegial bond among the young producers.
• Fourth, the young producers should be provided with resources that will make them successful.
In summary, young producers will not be able to rely only on experience to win business, and firms that can provide support to young producers via experienced producers or in-house risk management or other resources will have greater success.
None of this is to say that hiring experienced or “older producers” is a bad idea. However, “The Young Producer Study” confirmed our suspicion that a large, untapped resource exists for firms in their search for production talent.
There are compelling advantages young producers can bring to firms from a cultural perspective in the form of energy and enthusiasm, as well as practical advantages from the perspective of shareholder return and client relationship perpetuation.
While it won’t work for everyone, the opportunity to hire and develop young producers is compelling and worth exploring.
Brian McNeely (Bmcneely@reaganconsulting.com) is a consultant and Angi Bemiss(Angi@reaganconsulting.com) is senior vice president at Reagan Consulting Inc., an Atlanta-based management consulting firm that developed and produces the “Independent Insurance Agents and Brokers of America Best Practices Study.” More information about the firm can be found at www.reaganconsulting.com.