As we approach the end of another year one of the things that many agents are considering is evaluations and raises.

Most agents equate evaluating their employees with compensating them.  While they are related, if both are done simultaneously most employees develop selective deafness until you mention the amount of their raise and relapse into that deaf state after the raise amount is transmitted.  One way of testing this is to do your next evaluation/raise the way you have always done it.  Hopefully, you put some time and effort into the evaluation of their performance.

One day after the evaluation, give the employee a little quiz.  Ask them to write down the positive and negative points that they remember from the evaluation (without referring to any documentation of the evaluation).  I think you will be surprised by the result.

We have found that evaluations are best done at different times than pay raises.  The reason for this is that if you review an employee’s performance and find deficiencies that can be remedied, a delay of several months before scheduled pay reviews can give the employee motivation and time to remedy the deficiency.  If the employee is evaluated as adequate or better in all facets of the job, knowing that pay raises are still several months away will keep their performance from slipping (if they feel that they have a long period between evaluations).

Evaluations should never be subjective.  They need to be based on the primary functions of the job.  Those functions and their measurements of success should be defined within the employees’ job descriptions.  The evaluation measures their performance against the success measurements of the functions of their job.  That’s why Job Descriptions should be reviewed (and changed, as needed) on no more than an annual basis.

The second part of every evaluation should be a development plan for the next evaluation period.

Many agency employees have captured the essence of their current job.  They may perform it adequately, but are they growing in the job?  Are they progressing to potential promotion to more senior and more responsible positions?  If they are happy where they are, do they advance their skills and knowledge each year to avoid stagnation?  An employee with 10 years of experience in customer service could be a highly skilled and highly knowledgeable insurance professional, growing each year — or could be a clerical drone with one year of experience (to learn the job) repeated for 10 years.  Which would you prefer?

The Development Plan gives the manager and employee personal time to plan out the future desired for the employee and provide ways that the employee can gain skills to attain that future.  Of course, we never make promises, but we certainly can help employees gain knowledge and skills so that when an advancement becomes available, the agency’s employees are quite competent to interview for the job.  And if the agency has no advancement potential, we give all employees the chance to make themselves better at the job they occupy toward the result that they are more productive for the agency.  Many agencies include mandatory continuing education (real education, not just coursework needed to maintain licenses) in employee development plans.

If you have followed our discussions of ICP (Incentive Compensation Program) in which employee compensation responds to enhanced productivity subject to department and/or agency profitability (call us if you need more information on ICP – 800-779-2430 or e-mail ), you already understand the separation between evaluation and compensation.  Evaluation defines both your historical performance and the need for enhanced skills in the next evaluation period while compensation is determined by individual or group productivity.  It is possible for an employee to be very productive but to perform so poorly that the agency determines that they must discipline or terminate the employee.  For example, if the employee handles an ever growing book of business but doesn’t adhere to agency systems, procedures and policies, (s)he may be risking E&O exposure and making many errors while trying to handle a large workload.  This should be unacceptable to agency management and the result would be less than exemplary evaluations and warnings, retraining or replacement – even though they are very productive employees from a revenue handled standpoint.

Whether you entertain an ICP or not, consider separating evaluations from pay raises, updating your Job Descriptions and establishing functions and measures of success for every employee in every job in the agency.  We recommend evaluations twice each year because we, in the agency business, traditionally do not give enough feedback to our employees on a regular basis and this sets the groundwork for doing so.  If you have questions about the ICP, Evaluations, Job Descriptions or any other part of agency operations, please don’t hesitate to call me.