Risk factors To Be Considered in Agency Analysis and Valuation

It is no secret that finding good people to work in insurance agencies is difficult. Unless you are in a major metropolitan area (where the cost of qualified people is getting astronomical) it is very difficult to even FIND qualified and experienced insurance agency staff. Those who are available seem to be “industry re-treads”, going from one agency to the next and always finding a reason that they must leave after a few years. The good employees are being treated well enough at their current employer that either satisfaction or inertia keeps them from looking for other opportunities.

So how do you replace, upgrade staff and train new staff to support your agency growth?

First, let’s clear the air about buying employees for more money –

One of the reasons stated most often by employees seeking change is that they are not earning enough money. There are a few indicators that validate or invalidate that reason (or excuse) for job shifting.

1. Ask how long it has been since they got a raise and, if a prolonged period, why they didn’t get a raise.

If the answer is that they have received regular raises – just not enough – be suspicious. There are other reasons for the employee moving that you have not yet heard. If raises have not been sufficient but the employee has stayed in that agency’s employ for a reasonable number of years, there were other things keeping her there (or there may have been valid reasons for smaller than desired raises).

If the employee has gone for a while without a raise, find out if it has just been that employee’s issue or if no one in the agency has received a raise (not uncommon). In this case, a long enough period without a raise could increase dissatisfaction sufficiently to require a career move.

2. Determine from the prospective employee’s current (or last) salary or desired compensation if your compensation program is better than the one the employee is leaving.

Why bother if your salary schedule is not even up to the one that the candidate is leaving? And how are your employees going to feel if you offer considerably more than current employees earn to a new, untried and untested employee?

Experienced Employee Candidates – “Have you got what you bought?”

The best reason for seeking already experienced candidates for employment is that you cannot train new employees due to size or inability. But you must acknowledge that any experienced new employee may be technically knowledgeable, but will still have to be trained into your way of doing business and your agency’s systems and procedures. Don’t hire before you have a training plan in hand (in writing). That plan dictates who will be responsible for each segment of training that will familiarize the new employee with your systems, procedures and culture. This process also keeps a close eye on new employees as they work through their probationary periods in order to assure you that you actually got what you think you bought.

If you are large enough, organized enough and have sufficient dedicated management to train employees, you are probably better off …

“Rolling Your Own”

Hiring and training agency employees costs less at the outset and more over time but gives you someone ‘tailored’ to your agency behavior and processes. This becomes very noteworthy to all of us who have had to listen to “this wasn’t the way we did it at my last agency” for months or years before (or until) your agency becomes that “last agency” for someone else’s long-term employee. The initial cost of hiring inexperienced people is the interview and testing process needed to be relatively certain that the candidate has enough common sense, skill and talent to be worthy of the investment you will be making in your time in their career training.

Never hire someone at the initial interview or screening. Never hire someone without at least one other person interviewing the candidate. When at least two people (with prepared questions that differ from each other) agree that a person is of sufficient merit to be hired TEST THE CANDIDATE. A number of valid and valuable personality dynamics tests are available (Caliper, Omnia and others) specializing in the insurance industry that will peg a candidates chances of success in the job for which you are hiring.

Where to Find Them

With some very notable exceptions I’ve found that you don’t have to be a “brain surgeon” to be successful in an insurance career. Some very successful agents have started in the business without college educations or just out of college without prior business experience. So don’t discount high school seniors as candidates and don’t think that only large companies can recruit out of colleges. INVEST is a wonderful current program aimed at high school students published by the IIABA. FutureForce was a great program put out by the same organization that stepped your through college recruiting. Check with your association for either or contact us for assistance in recruiting in both directions.

Our choice in the last few years has been to hire bright, aggressive youngsters with the “right” attitude and aptitude (as tests prove) and creating a training program from six months to two years to mold them into the kind of employee that will add benefit and value to our client agencies. We recommend that course to you. If you choose to hire experienced insurance staff, make sure that they are leaving their current employer and coming to you for a valid reason. You can’t afford to invest your time and money in folks who will bring their undesirable “baggage” with them to your agency until you, too, find a way of displacing them.