Producers Failing on a Draw

[Beachguy]

When do you guys cut your losses on a producer that's not meeting goal? I have one that's $150,000 in premium over the past year and it's cost me about $20,000 in salary.

When do you cut the cord ? If they can't get to $300,000 by year two is it worth the trouble ?

I'm thinking of just taking away the draw and going straight commission but increase the split for the producer.

 

[Aram Fingal]

You really should have set up expectations at the very beginning based on what you needed them to do to make it worth keeping them. Like, if you're going to pay them $2k per month draw or salary, figure out how much business you need to do to bring in that much commission to the agency and make at least that their minimum production requirement. Have it spelled out in their employment contract what they need to produce and how long they can go below production before termination. Something like if they miss requirements one month, they have until the end of the next month to make it up or they're done. You don't want to mess around too long with a low producer or it will just get harder down the road, which is kind of where you're at now. You need to decide what you need them to produce to make it worth keeping them at the level of pay you need to pay them to stay. And then you need to put it all in writing including what the consequences are if they don't meet expectations.

The other side of the coin though, is if they came close to paying for themselves in the first year, they will more than do so in the second with renewals. On the other hand, you'll probably also have to pay them more. I can't see someone sticking around for too terribly long for $20k per year.

Just a bit of intuition here, but I suspect you are a captive agent. An IA would have made more than $20k commission on $150k of premium. Not by much mind you, but at least you wouldn't have been paying out of pocket for them. It can be really hard to pay producers as a captive agent because you get less commission than an IA. If that is the case, you may just have to suck it up until they pay for themselves if you want to have a producer in your office.

Mind you, $12,500 per month of premium seems kind of low for someone who is only producing and has no other responsibilities.

 

[djs]

Lets face it, someone making $20K a year isn't going to afford their own marketing. This leaves the question of how are people coming in the door for them to sell to.

Do you have other producers that are doing better? Are they having to cold call for all of their clients? Are they pitching and not selling or are they not getting enough people to pitch to?

It sounds like your producer is pretty close to paying for themselves, so I would sit down with the producer and see if there is a way to get production up. A decent producer is hard to find and it sounds like you are close to having one, just not there, but maybe a little coaching / guidance can help a lot.

I do agree with Aram though, you need to know what level of performance is acceptable to you and go with it. Make sure you spend time to get your producers there, but if they don't, time to move on. Also, make sure you are doing what you need to do to help your producers produce, not just throwing them to the wolves and hoping they survive.

Dan

 

[Beachguy]

Lets face it, someone making $20K a year isn't going to afford their own marketing. This leaves the question of how are people coming in the door for them to sell to.

Do you have other producers that are doing better? Are they having to cold call for all of their clients? Are they pitching and not selling or are they not getting enough people to pitch to?

It sounds like your producer is pretty close to paying for themselves, so I would sit down with the producer and see if there is a way to get production up. A decent producer is hard to find and it sounds like you are close to having one, just not there, but maybe a little coaching / guidance can help a lot.

I do agree with Aram though, you need to know what level of performance is acceptable to you and go with it. Make sure you spend time to get your producers there, but if they don't, time to move on. Also, make sure you are doing what you need to do to help your producers produce, not just throwing them to the wolves and hoping they survive.

Dan

Independent agency. FYI. We get walk-in business. Call in business. I expect an agent to dedicate 100% of their time to producing. I did so and was a success and 2 other producers did so. They are also successful. I don't see this current one working as diligent. Thanks for the feedback

 

[TFMSINC]

In the future, use a written agreement (contract) with an activity clause.