One thing that has come up several times over the last few weeks when dealing with CWC clients is the lack of confidence many owners have when hiring staff. I’ve heard people say that they “do not have the cash flow” or they “don’t feel comfortable investing in staff” right now. 

The labor market is probably the most difficult I have ever seen. But I believe the economics of paying for staff is still the same or possibly better than ever for some carriers. 

How can this be? Let me explain…

Like many of you, I can remember a time when the only way to dramatically increase revenue was to increase renewals or write life insurance because exponentially increasing revenue by writing more new business was not attainable. Writing life insurance is tough and required a lot of commitment. There were many years that I was operating in the red and I relied on renewals and bonuses to bring us back into the black. In addition, earned premium was rising and this made all of it work and possible to scale rather quickly. 

Fast forward to today. Yes, renewals have changed for some of you over the last several years and could change more in the future. But even with those changes, I fully expect renewal revenue to be stable or climb for most as rate increases continue to be filed. However, new business commissions are also changing at many companies to incentivize agencies to grow and not just survive on renewals. Plus, with all of the renewal increases the industry is experiencing there is an increase in new business opportunity.

So, what does all of this mean? 

In the past, when you ran the ROI on a producer, your average premium per item was lower and your new business commissions might have been lower. There are several factors to consider when calculating the ROI for your agency – salary, average premium per item, bundle rate, incentive requirements, the commission scales that you pay, etc. But for many of you, I bet when you run the numbers you may only be looking at 17-25 items per month to literally break even on a producer. 

How does this impact your confidence to hire? Well, if you will simply run the numbers needed to break even, set the expectation, and hold people to that standard, you should be very confident in your ability to see a positive ROI on staff. Done correctly, you would only be out a few hundred dollars for someone that does not work out. That is no more than what many people are willing to spend on a lead vendor to try them out. Why not take the same approach with staff? 

The key is an interview and onboarding process that sets the standard and clearly communicates the expectation along with real accountability. There should be no grey area. You need black and white, and you need to stick to your guns. Create a sense of urgency and if the candidate is not a fit, the sooner they leave the better. If you put people on the phones the first day that they start and evaluate their ability to do the job, you can identify rather quickly those that can and those that can’t. Now, you need to be honest with yourself in terms of support and resources that you are giving these people. If you are not doing that, you need to make changes or adjust requirements based on what you actually provide. The days of hiring people and just hoping they get better or keeping them because they are “trying” should be over. This is a results-oriented business, and you need to adhere to the same rules, or it will cost you. And THAT is exactly why people lose confidence when hiring. 

You should have as many producers as you can support with resources and training. Space is really not a limiting factor any longer. You can hire remote.

So, be aggressive and be smart. Create a standard, communicate the expectation, and stick to it. Train these people and hold them accountable. Continue to develop your team and create a true sales organization. Do all of this and you can hire with confidence knowing that these hires will help you scale your business or that they will be gone rather quickly. With all the rate activity that competitors are going to be filing in the future along with high premiums there is no better time to staff up and grow. Agencies of the future better be GREAT at sales. Not good, GREAT. If you don’t feel like you have that today, there is no better time to get to work and make it a reality.