How insurance agencies can structure their compensation models.
A gifted team doesn’t just show up every day and work hard for no reason. They have bills, they have expenses, and they have many of the same needs and wants that you do. That is why we have worked to find ways to motivate our team through a competitive and attractive compensation model that is a little different from our counterparts in the insurance world.
A few years ago, we pulled everyone off a salary-based model and went to an hourly model (against the advice of many colleagues). We took the salaries that we had in place and divided them into a comparable hourly wage. It worked out better for most of our people since there are certain months that have five weeks, and they now get fairly compensated for working overtime. We also rebuilt our commission model based on production, with no limits or caps. We now base commissions on new business written, with a retention piece built into the compensation model and much more.
We’ve also got multiple incentives built into our compensation model to encourage team members to earn more. We have become pretty creative over the years—there’s almost nothing I won’t try to motivate my people through compensation and incentives. Our team members get to play “Wheel of Fortune” each month. We also have incentives in place where team members can earn extra commission percentage points. We have referral goals—and reaching or exceeding those goals entitles them to split a pot of cash (usually around $2,500). We constantly try to keep things moving and exciting because we have found that the very best people want to work in a fun, stimulating, progressing environment.
When it comes to people’s money, make it as easy as possible for them to understand it and get more of it. We created a compensation sheet based on an idea that was shared with me years ago. Here is what the sheet includes (broken down year by year):
- Base salary
- Yearly bonuses
- 401k contributions made (including matches through our 401k matching program)
- Social Security balance
- Health insurance premiums (paid for them by our company)
- Other company-paid benefits
- E&O (Errors and Omissions) premium payments (paid for them by our company)
We add it all up and share the totals at the end of each year with every employee. During our monthly one-on-one discussion, I say, “This is what you earned last year. Now you have a benchmark for next year. Let’s talk about your goals for next year and how you can exceed this number.”
Why have we retained so many of our people over the years? Because we share these kinds of things with them, we help them understand what their value is, we commend them when they do a good job, we hold them accountable when they need to improve, and we keep them in line doing the things that lead to a profitable business. We want to continue
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