Here’s a chilling stat: For every two producers you hire, only one will pan out.
According to a well-referenced study by Reagan Consulting, just over half of new agents and brokers are successful. The other 44% wash out before they can be of value to the organization. The picture gets even more ominous when you consider that as many as 60% of firms aren’t hiring enough producers to meet their growth goals. That makes retaining producers and validating them quickly particularly important.
Plenty of organizations have robust hiring departments and devote a lot of resources to attracting and landing top candidates. But far too many firms squander this top talent once a new employee is through the front door, and good producers end up leaving the organization.
This isn’t only a drain on resources; with the average cost to replace an employee amounting to as much as two times his or her annual salary, it hurts your bottom line, too.
While poor hires likely lead to some of the turnover, the more common cause is subpar onboarding and early employee training programs.
See also: Why You Need Happy Producers (Part 2)
The benefits of a formal onboarding program
Every organization has an onboarding program, whether they realize it or not. Keep a new hire waiting in the lobby until his direct supervisor shows up a half-hour later? Shuffling the new hire from introduction to introduction and forgetting to tell him where the bathroom is? That’s your onboarding program. Undoing those early negative impressions is a real uphill battle.
Study after study has shown that formalizing your onboarding program is key to maximizing its success. Employees are 69% more likely to stay with an organization for up to three years if it has a formalized onboarding process, according to the Society for Human Resource Management (SHRM).
Considering Reagan Consulting’s finding that it takes an average of 32 months to validate successful producers, keeping agents and brokers around beyond the three-year mark can have a huge impact on an agency’s bottom line.
An effective, formal onboarding process doesn’t just keep employees around longer, it can also significantly expedite the time to validate and improve employee engagement. SHRM researchers identified additional advantages that ultimately benefit both employees and employers:
- Higher job satisfaction
- Organizational commitment
- Higher performance levels
- Career effectiveness
- Lowered stress
What’s more, a formal onboarding process can help managers more quickly identify producers who aren’t a good fit for the organization. Spotting red flags during the onboarding process can help you make adjustments (up to and including termination) before you’ve spent too much time and resources on the employee. This enables organizations to identify the financial impact—positive or negative—earlier in the validation process and adjust accordingly.
Effectively onboarding all new producers
Your formalized producer-onboarding process needs to be consistent across all new producer hires to ensure more useful benchmarks and metrics. But developing a program that works for the many different kinds of producers is challenging. Each hire brings his or her own set of experiences and gaps in skills. Broadly, new producers typically fall into one of four categories based on their experience with sales and the insurance industry:
- No experience — little to no familiarity with sales or the insurance industry
- Sales experience — familiarity with the sales process but little to no exposure to the insurance industry and agent/broker processes
- Insurance experience — knowledge of the industry but little to no sales experience
- Established producer — proven agent or broker who may have worked for a competitor
Onboarding processes need to add value for all of these groups. A robust, fully formed onboarding program should begin well before an employee’s first day and extend well past the six-month mark. But the entire program doesn’t have to be built at once. Start with something as simple as sending an email. When Google reminded hiring managers to plan an employee’s first day, the new hire got up to speed 25% faster and reached peak productivity a full month earlier, all thanks to that leg up on day one.
See also: Happy Producers, Happy Customers
Focus on onboarding efforts that give producers a better idea of what your company’s all about, beginning with company culture and specific company processes and procedures. When done right, explaining HR policies and company handbook rules can reveal a lot about your organizational culture.
As you work to formalize your onboarding process, make sure to regularly check in with managers and new hires to verify the effectiveness of your efforts and find areas for improvement.