P R A D

developed. Multiplying an agency’s NUPP by its producer hiring success rate results in the Effective NUPP. For example, a firm with a 2.0% NUPP and a producer hiring success rate of 56% would have an Effective NUPP of 1.12% (2.0% x 56%). An optimum Effective NUPP ranges between 1.0% - 1.5% of revenues. Therefore, in order to have a successful producer investment program, two crucial things must happen: 1) an agency must make a significant investment (the NUPP) and 2) an agency must have a healthy producer hiring success rate.

Effective NUPP

1.5%

Optimum Range

1.0%

0.5%

0.8%

0.0%

RVI

Guideline

Tying It All Together

We encourage agents and brokers to perform regular calculations of the WAPA and NUPP and, for privately held firms, WASA. These calculations provide key insights on agency health. Over time, these measures provide a great way to assess important trends that cannot be overlooked or wished away. These metrics provide invaluable assessments of overall agency “health” and, over time, can illuminate important trends affecting perpetuation and growth objectives. We also encourage every agent and broker to focus on organic growth as a key driver for success. Find ways to maximize account retention, but focus primary efforts on increasing Sales Velocity. Find ways to maximize new business production for existing producers, but recognize that the key driver to long-term growth is hiring more producers and maintaining healthy producer age bands. With a clear picture of organic growth targets, determine the number of producers needed based on the assumptions, objectives and realities of the agency. With a clear understanding of the Generational Capacity realities currently in place, develop a hiring and management strategy to improve the health of the organization: • Fill producer gaps in existing age bands – work towards equal distribution. • Increase books of business handled and new business generated by each producer and within each age band – ensure strong contributions from the producers in each age band. • Spread ownership to position the firm to remain privately-held if that is your objective. Consider using private ownership as a means to attract, retain and motivate producers. • Make certain that leadership talent is being developed in each age band. Top performing agents and brokers are effectively tapping into the leadership potential in every age band, particularly the early career and early-mid career age bands.

Armed with an understanding of hiring needs, attention can now be focused on who to hire.

16 Producer Recruiting & Development Study