Sales are the lifeblood of any business. And Producer Compensation is often one of the trickiest management issues you face. You can’t afford to pay too much – but if you don’t pay enough, you can’t hire and retain quality sales staff.Are you getting the sales results you want? Is that a function of the market or is it a function of how you motivate and pay your sales team? Producer compensation is likely the biggest single expense in your agency. As the market continues to be soft and the economy hard, it’s also likely you’re looking once again at how much – and how – you pay producers.
- Recruit the best candidates for each job
- Retain the best sales people and keep them motivated
- Reward the activity that helps you achieve agency goals and objectives
Here are the three critical success factors for compensation planning
First, your total producer compensation package has to be Affordable. It has to be cost effective. Right now this is a real hot button issue for many agencies. The market is still soft. Revenues are still down. Expenses aren’t. But affordability shouldn’t be one of those things you only think about when things are tough. Your compensation plan should be cost-effective regardless of the market or the marketplace.
The second requirement for success is that your plan be Goal Oriented. Your goals for producer compensation are more than just to increase sales or stop the bleeding – although that may be the place you need to start. Go back to your Strategic Plan for the agency. Who are you as a business? As an organization? Who are your intended customers? What products and services do you provide? What differentiates you from the competition? If your compensation program doesn’t line up with the answers to these strategic questions, you need better alignment. Why? Because you will get what you pay for. So be very sure you are paying for what you want.
And goal orientation needs to go both ways. Remember that your producers have needs – goals. If your compensation plan doesn’t address them, it will be less than effective. Ensuring that your compensation plan helps producers meet their own goals is a key to being Competitive.
And that's the the third requirement for a successful plan. Your plan needs to be Competitive to attract the best producers and keep them happy. It’s not just a matter of How Much you have to pay – but also How you pay it. But being Competitive in the marketplace for quality employees often butts right up against that Affordability requirement.