Leverage agency resources by retaining your talent

(Editor’s note: This is the fifth in a series of articles offering “best practices” suggestions for the hiring process in the independent agency. More information is available at iiat.org under Agency Management.)

In previous articles, Paul Martin and I have shared key strategies for recruiting, hiring and training employees. While designed to be effective and efficient, the processes we outline, nevertheless, require significant agency resources–resources that can only be leveraged if you retain the talent. One way to maximize retention is to adapt a marketing mentality to the employment context. Think of employment as the service and employees as your customers. The same fundamental principles most of you use to retain clients can be applied in the employment context as well: Shared interest, economic value, good communication, social bonding and regulatory compliance.

Shared interests
In maximizing retention, most agencies recognize the importance of understanding what is important to clients and make sure agency services are not only aligned with but further those interests. The same is true for employees. Ask your employees three questions:

1. What do you want out of working for the agency, short-term and long-term?
2. What are your most important personal values?
3. What values do you want your employer to demonstrate?

Then develop an agency vision and mission aligned with the personal goals and values of your employees. All future strategic initiatives can then be articulated in terms that are consistent with these shared interests and enhance the likelihood that they will be enthusiastically embraced.

Economic value
Successful agencies communicate value rather than price when dealing with clients. They recognize that price is a factor, but not the only factor. Clients want to be sure they are getting a good deal. The same is true for agency compensation. For most employees, there is a minimum level of pay expected based on their perception of worth and need. Once that is met, quality of employment is more important than money. To ensure compensation won’t be a source of dissatisfaction, create a fair, formal wage plan that meets these objectives:

Internally fair: Jobs should be designed and valued based on work-related logic. The structure and rationale should then be communicated openly and consistently to employees. Employees don’t need to know about individual pay decisions, just that the process is fair and consistent.

Externally competitive: Let’s face it, if you don’t tell them how you stack up, they can find out for themselves. Survey pay levels in your market and around the industry. Locally, include similar work in other professional service industries. Share the results with your employees. If you are not competitive, talk about what needs to be done together to get competitive. Or, stress other “value added” aspects in working for your agency.

Performance driven: Pay satisfaction is positively correlated with the employee’s ability to influence it. This can be accomplished by making a portion of pay, pay raises or incentives allocated to merit.

Financially viable: Employees understand that your ability to pay is a function of profitability. Greater transparency associated with agency financial performance will increase tolerance for disappointing pay decisions, at least in the short term. Demonstrate that you have a business plan for increasing their economic value in the long-term.

Extensive TWO–WAY communication
Regular, mutual communication is essential to good customer retention. Clients want to be kept informed on how to improve their insurance program and you want to know if they become dissatisfied with your service. Providing plenty of opportunities for employee communication is also essential for cultivating the feeling that work experience is fair and fulfilling. Employees need both affirmation that they are contributing and opportunities to develop. The process of building shared interest and a formal wage plan will accomplish part of this. Other ideas for fostering communication include:

A formal feedback process.I like 360 peer feedback whereby an individual is rated by all the people who know something about their work, including subordinates, peers, managers, customers and even suppliers.

Grievance procedure: This can be a review of any issue up the chain of command or a formal conflict resolution process. A formal outlet will provide a contained avenue for venting frustration and decrease the reliance on the informal grapevine.

Social bonds
Clients are more likely to stay with vendors they know and trust. There is risk associated with change and uncertainty. That’s why you go to great lengths to build strong social bonds with your best clients. Social capital theory says the same thing about the workplace. Individuals maintain greater organizational commitment when they feel connected in a positive way to one another. You can foster social bonds in the workplace by providing opportunities for staff to get together as a group to share common experiences or pursue a common goal. Examples include staff social events, adopting a charity or group celebrations for agency successes.

Regulatory compliance
The insurance business requires things of customers that on the surface don’t seem very customer friendly. There are underwriting requirements, loss control recommendations, and agency E&O procedures that must be satisfied. In this age of heightened litigation and regulation, it can be hard to balance compliance and trust in both the marketplace and the workplace. The key is to associate such requirements with the higher principle behind them such as good customer service, respect for fellow employees or the public good. When-ever and wherever you communicate workplace rules, make sure you also identify the higher purpose behind the rules.

The best way to retain your talent is to recognize that they are also your customers. You sell them employment and opportunities for development and they pay with their time, talent and enthusiasm. The key is to understand, manage and meet their expectations. In the employment context, there exists a range of acceptable financial and working condition expectations that must be met to maintain good faith and loyalty. Experiences that fall below what is considered adequate engender frustration and decrease loyalty. Experiences that meet or exceed expectations breed enthusiasm and strengthen loyalty. By serving your employees with the same retention principles that you use with clients, you can enhance the value and durability of your employee relationships and ensure a long-term relationship.

Rick Bondurant is director of agency management resources for the Independent Insurance Agents of Texas. Contact him at rbond@iiat.org.

Topics Agencies Legislation Talent Training Development