P R A D

chapter 3 Defining Hiring Needs

When firms in the baseline survey were asked if they were hiring enough producers to support their growth and perpetuation objectives, 41% reported that they were under-hiring. When we ran an analysis of their actual hiring, we found that the percentage of firms under-hiring is likely in the range of 55-60%. Many agencies are unaware of just how far behind they actually are – because the appropriate level of producer hiring for their firm has never been accurately determined.

55-60% of agents and brokers are under-hiring

Defining an appropriate level of producer hiring is difficult. We believe that the appropriate level of producer hiring is the volume necessary to both service existing business and to achieve desired growth objectives, while accounting for normal producer attrition. The appropriate level of producer hiring may be different from firm to firm, and it may even be different for the same firm from year to year. However, we believe that there are three key constructs and measurements that firms can use to establish an appropriate level of producer hiring: sales velocity, generational capacity and producer investment. Growth is the lifeblood of an agency. Study after study and firm after firm reinforce this point. Growth creates opportunity for employees, business for carriers, resources for clients and returns for shareholders. But not all growth is equal. Organic growth, specifically, has a unique power to drive agencies and their stakeholders forward. By organic growth, we mean an agency’s actual growth excluding any acquisitions and book purchases – growth achieved through growing the production force and by writing new business. Organic growth has many factors that must be understood before any conclusions about producer hiring levels can be drawn: pricing changes, exposure base changes, agency compensation rate changes, retention rates on existing business and new business. Sales Velocity

Although the first three factors listed above are market driven and are largely outside the control of agents and brokers, the last two – retention rate and new business – are not. Fortunately, these

7 Producer Recruiting & Development Study