Agency Compensation Models

Slides:



Advertisements
Similar presentations
© The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Rewarding Business Performance Chapter 24.
Advertisements

Doug Pearson May 15, 2013 Meeting Moderator. Agenda Polling to set the stage Briefing from Belinda Cavazos, Teche Federal Briefing from Josh Seago, Beacon.
Part V SALES FORCE LEADERSHIP Chapter 12: Compensating Salespeople.
© The McGraw-Hill Companies, Inc., 2005 McGraw-Hill/Irwin 25-1 REWARDING BUSINESS PERFORMANCE Chapter 25.
TH EDITION CHAPTER 17 MANAGEMENT OF THE SALES FORCE Manning and Reece.
PBMA 2008 Compensation Underwriting Sales Reps Presented by:Kirk Nelson.
SHOW ME The MONEY Just how much do you know about how people get paid?
© The McGraw-Hill Companies, Inc., 2008 McGraw-Hill/Irwin Financial & Managerial Accounting The Basis for Business Decisions FOURTEENTH EDITION Williams.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Compensating Employees Definition Objective Bases Types Determining Reward Job Evaluation Compensation Structure.
State Employee Compensation Virginia Department of Human Resource Management Virginia Governmental Employees’ Association Annual Meeting DoubleTree by.
Compensating Employees Definition Objective Bases Types Determining Reward Job Evaluation Compensation Structure.
Leadership California State University Sacramento Presented by Jeff Szczesny.
Compensations Team 10 Dominik Pieniak Jean-Olivier Pilon.
Chapter 5 Compensation & Benefits
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license.
How to Attract and Retain Good Agents Agency Compensation Trending & Methodology Kurt Eaves, CPCU, ARM Vice President, Direct Division.
© South-Western Educational Publishing GOALS LESSON 5.4 HUMAN RESOURCES  Describe the process of hiring employees  Explain the training needed by a salesperson.
Actionable Strategies for the Design of a High Performing Organization.
Pay for Performance A strategic approach to design Dermot Hand August 2012.
SHOW ME The MONEY Just how much do you know about how people get paid? UNIT 3 TAXES AND BANKING.
Chapter 14 Performance Measurement, Balanced Scorecards, and Performance Rewards Cost Accounting Foundations and Evolutions Kinney and Raiborn Seventh.
Chapter 14: Performance Measurement, Balanced Scorecards, and Performance Rewards Cost Accounting: Foundations & Evolutions, 8e Kinney and Raiborn.
What do I do with my personal resources?
Customer Satisfaction and Compensation
Private School Tuition Tax Credit
COMPENSATING SALES PEOPLE
Health & Wellness Benefits Maximize & Grow Your Business
People in Business The revision session!.
REWARDING BUSINESS PERFORMANCE
9 Selling Your Product Section 9.1 Principles of Successful Selling
Performance Management and Employee Development
WELCOME.
COMPENSATING SALES PEOPLE
Management Compensation and Business Valuation
Chapter 9: Human Resources Management
Stakeholders Relationship
Chapter 1 The Pay Model © 2014 by McGraw-Hill Education.  This is proprietary material solely for authorized instructor use. Not authorized for sale or.
Compensation & Rewards
Payroll Accounting $ $ $ $ Making Accounting Relevant Chapter 12
11-3.
Finding and Keeping Good Employees
Service - Profit Chain Inputs Outputs
Profit and Loss Accounts
Business organization and behavior
Just how much do you know about how people get paid?
What to Look for in an Employment Agreement
Primary Uses of Deferred Compensation
Compensation & Benefits
Staff Compensation Update
9 Selling Your Product Section 9.1 Principles of Successful Selling
Managing Non-Interest Income & Non-Interest Expense
Employee Compensation Planning
Foundations of Business
Chapter 9 Compensation and Benefits
© 2012 South-Western, Cengage Learning, Inc. All rights reserved.
Incentive Plans SESSION 6 - Incentive Plans.
9 Selling Your Product Section 9.1 Principles of Successful Selling
Compensation Programs
Foundations of Business
MANAGING HUMAN RESOURCES
Kristin O. Bulat, JD, LLM, SVP Strategic Resources, NFP March, 2019
Building Appreciation For Incentive Plans
COMPENSATION.
Copyright ©2012 by Cengage Learning. All rights reserved.9- 1 Chapter 9 Compensation and Benefits Prepared by Joseph Mosca Monmouth University.
Benefits Plus Staff Overview
Managing Employee Performance and Reward
Benefits Plus: A Lead Generation Tool
Benefits Plus: A Lead Generation Tool
East Coast Competitive Review January 2014
Presentation transcript:

Agency Compensation Models Rick Bondurant

Compensation in Context Employment is a service Pay is the price Switching costs are high But so is employee disengagement

Characteristics of a Formal Pay Plan Compensation Truths Characteristics of a Formal Pay Plan Pay is a dissatisfier, not a motivator Being reactive costs more than being proactive Pay process is more important than pay levels All pay is commission-based Mutual interests are aligned Externally competitive Internally fair Related to agency performance

Aligned Interests My work has purpose I know what’s expected of me I have the resources I need I get to do what I do best I get regular feedback and recognition for good work Management cares about me personally I have opportunities to learn and grow My opinions count My co-workers are committed to the purpose I have a trusted confidant at work Adapted from the Gallup 12 “Total value proposition not just price”

Externally Competitive Paralegals & Legal Assistants $45,160 Loan Documentation Specialists $50,000 Customer Service Reps $28,770 Insurance Processing Clerks $43,200 Account Managers* $53,000 Insurance sales $82,610 2016 Bureau of Labor Statistics for Waco * MarshBerry for Southwest

Internally Fair CSR 10.00   14.00 18.00 Jill 15.50 Jack 11.25 Jane 14.50 Joan 17.50 Jill is a pl csr with 5 years experience and services pl commissions of $130,000. Jack is a pl csr with less than 2 years experience and services $85,000. Jane is a commercial csr with 2 years experience and services $120,000. Joan is a commercial csr with 7 years experience and services a commercial book of $250,000.

Performance-based For every dollar of commission $1.00 Targeted Operating Profit .15 Left to pay expenses .85 Business dev./selling expenses .05 Overhead .17 Left for compensation & benefits .62 Pay for non producer staff .30 Left to pay producers .33

Staff Models Salary only Base plus % of new only Base plus flat amount per new policies Base plus other rewards or incentives % of book serviced

Producer Models Level commission: 35% new and renewal Split commission: 40% new 30% renewal Tiered: 30% for under $200,000; 35% for under $400,000; 40% for over $400,000 Account threshold to qualify for producer book Vesting in book Commission rate varies inversely with degree of agency support Larger books bring larger economies of scale and thus agency profit

New Producer Model Base for minimum sustenance needs 1st year production target 1X base 2nd year production target 2X base 3rd year production target 3X base Adjusted for leakage Bonus for excess production

Manager Compensation Example Base salary Profitability: 1% of agency profit Retention: 5% of salary if goal met New Business: 1% of goal Overall Growth: 0.5% of difference from last period to current period

Bonus Plan Example 1 As a % of Salary Performance Rating Growth Bonus Productivity Total <3.0 0% 3.0 - 3.4 2.5% 5% 3.5 – 3.9 4.0% 8% 4.0 – 4.4 5.5% 11% 4.5 – 5.0 7.5% 15% Performance rating 1 through 5 for individual performance criteria Net revenue growth goal i.e. 110% of prior revenue Productivity goal i.e. 110% of prior revenue per employee

Bonus Example 2 Net revenues Operating profit 15% Bonus pool 15% of profit Operating profit 10% Bonus pool 10% $500,000 $75,000 $11,250 $50,000 $5,000 Owners and producers don’t participate Can allocate based on any number of criteria

Communication is the Key Transparent process aligning agency & employee interests Total value proposition Market based Internally fair Performance driven Strong business rationale