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Portfolio > Asset Managers

Reversing The Retention Slide

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The numbers are in and theyre not good. The latest annual Agent Production and Survival study from LIMRA International shows that 4-year agent retention is down to just 11%–the lowest its been in more than 30 years.

Managers cant control all the factors that have led to this situation, but one they can control is agent selection. That can be the key to boosting retention and productivity and achieving real sales power growthbut only when its done right.

Here are 5 immediate ways to improve agent selection.

1. Dont just go with your gut.

We may all feel were great judges of character, but that 4-year agent retention rate of 11% proves otherwise. Heed your gut feeling when it sends up red flags, but also keep your selection process balanced, objective and focused on identifying the best sales representative candidates.

Use your eye for talent to spot good potential, but give it a rest while you impartially evaluate a candidate. Then, listen to your gut again for any remaining doubts about the candidates ability to succeed.

2. Rely on the experience of others.

Tap into the experience of thousands of other managers and recruiters by using a well-validated employment test. Managers often use biodata tests, personality tests, or a combination. A biodata test collects critical information about a candidates work and life history, and compares that with the backgrounds and performance of tens of thousands of previously hired agents. These tests handicap the odds a candidate will succeed as an agent by evaluating the success rates of similar candidates.

A validity study by one company drives the point home. It followed a large group of new hires over their first 4 years in the job. Individuals who scored high on the biodata test the company uses had a 130% higher 4-year survival rate. And among the 4-year survivors, high scorers earned 36% more commissions than low scorers. The test was not the only factor in their success, but test results do help managers temper their gut when making a hiring decision by giving them a dose of reality: the on-the-job performance of similar candidates.

Personality tests reflect how people present themselves–their style, not necessarily their substance. Applicants typically have some sort of sales personality or they wouldnt be applying for the agent job in the first place. But personality alone does not predict success, and the personalities of successful agents cover a broad spectrum. Just look at personality types in any agent hall of fame. These agents achieved success because of the ways they were managed and rewarded, and the ways they managed and rewarded themselves. The results of personality tests are best used to guide the training and supervision of qualified candidates.

3. Listen carefully.

Its natural to want to sell the career to a promising candidate, but top interviewers have trained themselves to listen carefully and collect all the information they need to make a thorough evaluation.

Because the best predictor of future behavior is past behavior, its important to use a structured, behavior-based interview guide and ask the same basic questions of all candidates. The best interviewers learn a lot about candidates past behavior by asking open-ended questions that explore how, and how well, candidates actually performed specific activities. They dig deeper still with simple follow-ups such as “How did you do that?” and “What did you do next?” And they let candidates do most of the talking.

The interview will reveal much about candidates successes and failures as well as their concerns about joining your organization. Be sure your notes include these possible obstacles and objections so you can weave the solutions into each career presentation.

The last challenge of the interview is your evaluation of the candidate. Try to remain neutral and evaluate the candidate as soon as possible after the interview. Just as you ask a consistent set of questions in the interview, use consistent guidelines to evaluate the responses.

4. Take multiple snapshots.

You cant turn candidates loose on prospects to watch their performance. But managers of high-performing agencies all tend to gather information about candidates from multiple perspectivesusing tests, behavioral interviews, precontract exercises and other resources.

Precontract exercises such as market opinion surveys and prospecting exercises show how much work candidates are willing to do and also reveal the quality of their natural markets. The results provide important information managers can use to help new agents hit the ground running and build a foundation for success. By looking at candidates from many different perspectives and hiring only the most talented, these managers more than recoup their investment in selection and attract still more talent to their agency.

5. Make sure candidates understand the job.

Many people who apply to become agents dont understand the hard work it takes to succeed. Every manager who uses precontract exercises can attest to the many applicants who drop out of the selection process when their work capacity is tested.

Over and over again, LIMRA research has shown that most early-terminators quit because they did not understand what they were getting into. You should thoroughly describe the job, both its positives and its negatives, so candidates can make clear decisions about their fit to the career. If a candidate doesnt like the job now, he or she wont like it later. Its much cheaper to lose candidates during the selection process rather than after investing hundreds of hours and thousands of dollars on training, licensing, and coaching.

A final thought

Low retention and productivity are a major challenge to the industry. Companies are losing opportunities to make sales, consumers who want insurance are losing opportunities to buy and the cost of the agency system rises. Hiring the right talent is the key to high production and low turnover. Hiring the wrong candidates just leads to wasted training and management resources, high turnover, low production, higher costs and lost opportunities. Stick with the best practices in selection and youll greatly improve the quality of your new hires.

, Ph.D., is a vice president and head of the Assessment Solutions Group of LIMRA International in Windsor, Conn. His e-mail address is [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, March 19, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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