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Incentive Compensation Plans for MGAs

This article was adopted from Mr. Nohre's presentation at the American Association of Managing General Agents' University Weekend, which was held in August in Scottsdale, Ariz.) AS MGAs get larger, they need comprehensive compensation plans. The goal

By Dirk Nohre | Updated on April 30, 2006

This article was adopted from Mr. Nohre’s presentation at the American Association of Managing General Agents’ University Weekend, which was held in August in Scottsdale, Ariz.)

AS MGAs get larger, they need comprehensive compensation plans. The goal should be to create a system that pays a base wage and benefits at fair market value, and that also has an incentive compensation component that aligns agency and employee objectives. The idea is to link bonuses to factors under employees’ control that are critical to the agency’s success. Then when employees win, so does the agency.

Once these factors are identified, they must be shared with employees, which requires that the agency disclose a certain amount of financial data. It’s also important to continuously clarify expectations and reinforce goals. When goals are not met, employees should be held accountable. You must fire people whose performance is lower than acceptable. A marginal performer tends to de-motivate the high performers, so you must maintain your standards by either developing these people or letting them go.

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