My "Red Bead" job experience - What is yours!
I have been in the Insurance sales business for over 12 yrs now and I am still fustrated
with the performance review and reward systems that companies use to determine an agent's value and/or if they are going to keep their jobs. I have seen many good agents quit the business just because they were told to produce more.
One company I use to represent is now out of business because they could not keep "good" agents. They were a multi-line company selling auto, home, life and investment products. However, they only based the agent's performance on Life commissions issued.
They did not take into account any of the other products or the number of life applications submitted. It all boiled down to what was issued and the actual commissions generated in life policies.
For example: Agent-1 submitted 10 apps. in a production period that issue with only a $1000 in commission, and Agent-2 only submits 4 apps in the same period and those generated $4000 in commission. Agent-2 is considered the "good" agent, and Agent-1 is considered "not performing to required standards." Agent-1 is put on probation or terminated.
Another example: same scenario Agent-1 submits 10 apps, but only 7 are issued and produce $1200 in commissions, and Agent-2 submits 4 apps. that all are issued and produces $4000 in commissions. A similar performance review of the agents - Agent-1 is either put on probation or terminated and Agent-2 is praised for having a higher production result.
In either case Agent-1 is consistantly seeing more people and making more sales, but his/her net commission is lower. Whereas, Agent-2 is seeing fewer clients and has poor time management and other agent skills, but is praised for her/his net commission results.
The Insurance Industry is plagued with this type of performance evaluation. Most companies only count the net commission earned and not the other factors affecting the sales and issue process. It doesn't matter that an agent has great sales, marketing, time management and other business skills, if the net commissions generated are not to the levels the company is requiring. It doesn't matter that the agent makes the sale to the client and the client is declined for any number of other factors. The agent did his/her job in selling, but other factors outside of the agent's control come into play: underwriting issues, client was untruthful as to their health, client changes their mind for any reason - lost job, died, etc....
These performance and reward systems focus on only one factor - the net commissions.
They do not take into account the other abilities of the agent. The "Red Bead Experiment" brought to light what I have personally felt and experienced, as well as seen happening to many of my colleagues.
What have you personally experienced that was brought to light or clarified by the "Red Bead Experiment"?
