These findings are based on responses from more than 400 agencies and brokerage firms nationwide who participated in BMGs “2001-2002 Non-Producer Compensation and Benefits Survey.” The survey, conducted every other year, is the seventh in the series enabling BMG to track and report on changing trends in the industry.

The survey asked respondents to provide salary data, bonus and incentive plan information for 32 positions. The study asked about salary data by position, revenue range and location. It also covered other benefits offered, such as telecommuting.

The trend in compensation has clearly shifted towards variable pay related to business results. Principals and producers are linking their business strategy and incentive plans to connect non-producer performance with rewards for achieving specific sale and task objectives.

To be effective, organizations have realized that reward programs must not only be aligned with their business needs, but also with the expectations of their employees.

In 1999, BMG found that 47 percent of agencies offered incentive plans to managers and 74 percent offered incentives to non-managers. Today, more than 80 percent of those surveyed offer incentives to managers and 75 percent offer incentives to non-management staff.

Performance goals, individual sales results and growth in the book of business were the highest factors used to award bonuses for non-management positions.

Past surveys indicate that businesses rely upon sales incentives to help grow their business. Incentives will continue to evolve as agencies and brokers seek new methods to increase revenue and improve productivity.

The increase in incentive plan participation reflects an agency's desire to align employees with the agencys growth and profitability goals, and to reward them for their contribution to the agency's overall success.

Most of those surveyed projected their compensation increases for 2001 would average 4.2 percent. The Southeast and Pacific Regions saw the largest variation with increases of 4.8 and 4.9 percent, respectively, which could be a by-product of greater economic growth in the region.

Planned increases for 2001 are equal to or slightly lower than 2000s actual increases. This indicates concern for the economy, an agency's need to control compensation costs and a shift in compensation dollars to incentive plans.

This years survey found the positions of sales managers, marketing managers and marketers appearing more frequently in agencies than in the past. Agencies are restructuring to provide producers with more sales management and training, and to allow them more time to focus on new business development.

The position of network systems administrator is growing, the survey found, reflecting the need for agencies to be more high-tech in their dealings with branch offices or carriers. More agencies and firms are also adding claims specialist positions to provide value-added services for large commercial clients.

The BMG survey also found firms are offering more flexibility and benefit choices. Changes in lifestyles, the faster work pace and competition for talent are clearly reflected in shifts in the benefits organizations are providing.

Baby Boomers and the “GenXers” are most concerned that benefits be relative to their lifestyle, providing a balance between work and personal life. These benefits consistently rank higher in importance than the nature of work, job security and salary.

To meet their employees desires, agencies are offering more benefit choices and flexibility in their work schedules. Designated leave benefits, such as paid sick and vacation days, are being replaced with “Paid Time Off” plans. Flexible work hours have grown steadily. Fifty-three percent of the surveys participants offered this benefit in 2001 compared to 39 percent in 1999.

While telecommuting has not become widespread, 11 percent of the agencies said they offered this benefit.

In discussing retirement benefits, the most commonly used mechanism is the 401(k) plan. Over 66 percent of agencies reported offering a 401(k) plan, with 36 percent of those agencies matching employee contributions. Profit sharing and retirement plans were less commonly used. Employee stock option plans are the least common, offered by only 8 percent of agencies and firms.

With the cost of benefits continuing to increase faster than salaries, BMGs survey found that there has been a marked shift in most industries to view compensation as a package. This type of rethinking is becoming more and more common among agencies and firms.

Looking forward, agency principals and executives reviewing their organizations total compensation package should be aware of the value most employees place on insurance, retirement and educational benefits.

Even with the downturn in the economy, demographics indicate the competition for talent will likely continue for at least another decade. It will be important for agencies to understand these trends in compensation and to effectively design and implement programs to retain and attract the best employees.

Suzy Hammett is a vice president with Business Management Group, a management consulting firm specializing in the insurance industry based in Hartford. She can be reached at [email protected].

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 29, 2001. Copyright 2001 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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