Poor producer performance includes producers who do not produce, do not earn renewal commissions and do not follow procedures. Poor producer performance translates directly into staff discontent because staff performance, attitudes and morale deteriorate when:
o The staff has to do more work to cover for the producers
o The staff does all of the work on the renewals, but the producers are paid the renewal commissions
o The staff is concerned that the clients are not receiving the service and coverages they need because the producers do not have adequate knowledge
o The producers do not generate enough in sales to justify their positions, but the producers have total freedom to come and go as they please.
A lot of agency owners inflict permanent damage on their agencies because the owners dismiss customer service representatives' (CSRs') attitudes as typical of the producer/CSR relationship. With the advantage of visiting hundreds of agencies, I can attest that this perception is most often not the case. CSRs, like most people, respect competent producers and will handle a lot without complaint if they know the producer is excellent and is working hard. I have seen many agencies where the producers do not follow procedures well and the CSRs do too much of the work, but the CSRs are still motivated and have good attitudes because the producers are excellent at their jobs. In other agencies, the situation is harmonious because the producers do all of the work they are paid to do.
If you have discontentment among your staff, look carefully at your producers. First, examine whether your producers earn their renewal commissions or whether the CSRs perform most or all of the work. If the producers are not doing enough to justify their renewal commissions and they are only average or poor at their jobs, should the producers be paid full renewal commissions, or should the CSRs be getting some of that commission? With average to poor books, a producer should have the time to fully work all their renewals, so why are they not doing so? They might even grow their accounts and their books if the producers fully worked the renewals themselves.
Second, if producers do not know the agency's procedures, should the producers be paid their full cut? Not following procedures creates more work for the staff, which means more expense and less profit. Unless the producer's book is so huge there isn't time, it does not cost the agency any money for the producer to do things right. In fact, it saves the agency money. So why allow the producers to make the CSRs' lives tougher?
Third, if the producers are unknowledgeable of coverages, should they even be employed as producers? In some cases, the answer is yes, provided the agency can team the producer with someone who knows coverages. But in this case, should these producers receive full commission?
Producer performance is the key to agency profitability and morale, and the key to improving performance is producer accountability. Not only does morale improve if you address performance, but profitability also improves. In this economy, agencies that want to maintain their profit margins must address producer performance issues. Producer expense is the single biggest expense in most agencies, which is fine if the agency receives a good return on its money. If a producer is not performing adequately, the agency is likely losing money.
For example, consider the impact of CSRs doing all of the renewal work. My time studies show that CSRs work approximately 9 hours on normal commercial renewals. However, if they also have to do the producer's work, they likely have to do at least 2 more hours of work. If the CSR makes $40,000 annually (national average for agencies with $1.25 to $2.5 million revenue, per BMG's 2007-2008 Non-Producer Compensation & Benefits Survey), he or she makes approximately $20 per hour. According to The National Alliance Research Academy's 2006-2007 Growth and Performance Standards, the national average commercial CSR for agencies of this size services 300 accounts. The extra renewal work adds an extra 600 hours of work, almost one-third of their time, at a cost of $12,000 plus benefits, and the CSR still has other work.
I would be upset about that workload, too, especially if I did not get paid for it and someone else was paid for not doing it. Owners often are confused by thinking that when the CSRs do the renewal work, it does not cost them money because the CSR is not being paid extra. However, the agency does pay extra, in the form of having to employ extra CSRs and higher staff dissatisfaction.
If you want to increase morale and profits, increase producer performance through greater accountability. If you do not want to tackle producer performance and accountability, prepare to cut your spending, because your profits will be declining. Then grab some earplugs and lock your office door.

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