Each time we survey agency owners on their compensationpractices, we see so much more than raw numbers. Embedded withinthe data is the story of how agencies around the country and ofvarious sizes run their business--how they are growing organically,changing their sales practices or managing their various lines ofbusiness.

Compensation is certainly not the only motivator for agencyowners and sales staff, but it is an important one, and can be usedto shift producer sales activities to the more lucrativemiddle-market and large accounts.

The typical organic growth rate for agencies that have notchanged their sales practices is 5-to-6 percent, but other agenciesthat are adopting best practices to focus on new business arehitting double-digit growth targets. It requires work and courageto do things differently--and we can usually spot it in thepositions they fund and in their approach to compensation.

A telltale sign of a better-than-average-growth agency is thepresence of a full-time sales manager. In fact, our research showsthat 80 percent of agencies with revenues of $25 million or moreemployee such a person.

Only about one in four agencies with less than $8 million inrevenues is likely to have a full-time sales manager, but many willhave a part-time sales manager--or an owner who doubles in thatrole.

The sales manager can ramp up production dramatically in anumber of ways--from recruiting, training and directing producers,to properly acknowledging good work.

On a day-to-day basis, the sales manager helps direct theproducer to the right activities that will bring the biggestimpact. They'll go along on sales calls with the rookie or theproducer having an off-period, and help sales people figure outwhat part of the call is effective and where there's room forimprovement. They'll guide, coach, bark, cajole, or do whateverelse is necessary to bring forth that improvement.

The sales manager also helps qualify leads so producers usetheir time well. They'll teach the producer how to quicklydetermine who makes the insurance decision at a business, andwhether the insured is serious about switching agencies--bothimportant to know up front.

The sales manager will coach them on quickly assessing thespecific type of risk a business presents and its loss history.That way the producer won't spend a lot of time with a businessthat is unlikely to fit the profile of the carriers the agencyrepresents.

The sales manager often helps recruit new producers, whichgenerally involves finding and training people who have no priorinsurance knowledge and/or no prior sales expertise.

While it generally is too difficult to recruit experiencedinsurance producers from competitors, a very good solution may beto hire experienced sales people from other industries. The salesmanager trains them in the particulars of insurance sales, and willalso identify resources to provide insurance training.

As more and more agencies have hired noninsurance sales people,the need for good, basic insurance training has become so criticalthat The Hartford School of Insurance teamed up with The NationalUnderwriter Company (parent of this magazine) to train newproducers and certify them with the new Commercial Lines CoverageSpecialist designation.

With the sales manager playing such a critical role in creatinga sales-driven organization, it stands to reason that compensationbe based in part on the sales being fostered. In our survey, wefound that 60 percent of agencies pay sales managers a bonusincentive, with 30 percent of respondents calculating bonuses as apercentage of new business commissions.

Compensation also is being used by the most successful agenciesto encourage producers to stay focused on selling middle-market andlarge business, and to pass on personal lines and small commercialbusiness to customer service representatives.

The CSRs now have a greatly expanded role involving sales aswell as service, so more of their salary depends on their salesskills, as well. In fact, 65 percent of agencies in our survey nowcompensate CSRs for writing business--up from 43 percent four yearsago.

For many agencies, this change in business model andcompensation is difficult, but it is important.

The owners of one agency, for example, were startled to learnjust how unprofitable their small accounts were when they factoredin the cost of middle-market producer compensation expense. Becausethey were not discouraged from bringing in small accounts,producers were not as productive as they could have been.

It took courage to take what felt like drastic measures, butthey changed their organization and reinforced that change byadjusting their approach to compensation.

First they set up a Small Accounts Unit staffed by CSRsdedicated to cross-selling existing business and handling allincoming calls--both service and sales. Middle-market producerswere no longer compensated for selling accounts with less than$1,000 agency commission, and were expected to pass on thoseaccounts to the new Small Accounts Unit.

To encourage buy-in and minimize the initial negative impact onproducer compensation, the agency temporarily paid producers apercentage of the new business they passed on to the new unit.

Since the agency was too small to hire a full-time salesmanager, one of the owners assumed the role, training CSRs in theirexpanded responsibilities while coaching producers to spend theirtime profitably seeking out and selling larger accounts.

A few years later the agency was growing nicely, and theproducers who had grown their books of business were actuallybetter compensated and happy that the agency had made thechange.

With the continuing soft market and the annual inflation ofexpenses, the handwriting is on the wall. Agencies that want toflourish in today's market must develop a sales culture and focuson new business. Those that do will reap the benefits of growth andstronger profits.