Growing Your Property Casualty Agency

Hiring a relative can be a terrific or a terrible move. Unfortunately, it isn’t always easy working with your relatives, day after day. Personal and professional problems frequently arise. Regardless, for years, agencies have been passed on from one generation to another. For many independents, this method has thrived as a built-in perpetuation plan. And the plan often starts with a close family member being hired as a producer. In many cases, this works well. The benefits of working with kin include trust and pride. However, this act can be a two-edged sword.

Bringing relatives into the firm simply to provide them with employment isn’t always the best path to follow. The person may accept the job only until something better comes along. In contrast, you may be hoping that after they work there for a while, that they’ll make it their chosen career. These conflicting views are a common cause of friction. Other principals, producers and CSRs may also express concerns if their pre-hire viewpoints were never taken into account.

This column can be used as a starting point for minimizing potential problems and for increasing your odds of success. Ask yourself the following 10 questions, plus more of your own. Also talk to a human resources expert to get up to speed on what you can ask about and discuss at job interviews, particularly when a relative is involved. Plus, ask them to familiarize you with other important employment-related do’s and don’ts. Laws constantly change and you need to stay up-to-date to stay out of trouble.

1. Does the agency need (really need) another producer? Hiring a relative just to give them a job can adversely impact the agency.
2. Do you have the means to pay the person? The costs associated with hiring and managing an inexperienced producer are always greater than first imagined. So, scrutinize this familial act of employment very carefully. Run projected P&L numbers five years into the future. Incorporate realistic revenue projections and detailed operational and sales-related costs, including compensation. Focus exclusively on dollars that are due solely to the person’s employment.
3. Do your partners (if any) willingly agree to the hire? Other partners, particularly those with older children, may become jealous and resentful of the situation, if they were not allowed to actively participate in the hiring decision. This is especially true when the new agent does not later perform to the same standards that non-relatives are held.
4. Will someone other than a related principal supervise the new agent? This is essential as it helps to make sure that the relative is performing at the same prospecting and sales levels as that of any other new producer.
5. Will the relative be interviewed by at least two non-related managers or staffers? These pre-employment interviews bring an objective perspective to the potential hire. When most opinions are favorable, others in the agency will be more predisposed to accepting the person, instead of as an undeserving legacy.
6. Has the relative successfully passed two industry-recognized sales aptitude tests? These tests help to determine if the producer candidate has the interest and drive to become an insurance sales pro. It is wise to have the relative take two such tests. A non-related agency executive, and the related one, can compare the results.
7. Has the relative been irreversibly jaded about the future of the business? You want your new young agent to be enthusiastic and open to fresh ideas. However, if the relative has been listening to his family’s view of the agency business for years, and this viewpoint has been negative, it may have rubbed off. The key question is can the prospective hire start their sales career with a reasonably open mind?
8. Does the relative bring special skills, fresh contacts, and self-motivation to the job? Computer, marketing, and Internet skills are all essential to an agent’s success in the 21st century. A healthy list of personally known prospects and the drive to prove one’s self are equally vital. Look for all of these elements, before offering the job.
9. Will the relative be given preferred office space or handed an officer’s title? You are inviting problems with your existing staff if you provide the relative with an office or a title that is more suited to a veteran executive than a brand new producer. Non-related employees may end up believing that the visible trappings of success are unattainable without a blood connection.
10. Will the relative have “instant authority” over agency staff? Problems can develop quickly if the new hire, by sole virtue of their birth, has de facto authority over non-related employees. CSRs and more senior producers will reasonably resent this development. So make certain that the relative’s direct access to the principals, doesn’t translate into actual authority, until it’s earned.

Alan Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the 1001 Agency Ideas book series and other popular P/C sales resources. He may be reached at (800) 724-1435 or by e-mail at: shulman@agencyideas.com. His Web site is www.agencyideas.com.

Topics Agencies Talent Property Casualty