Most often, this month's headline is posed as a sales question. In truth, it's an agency management issue. The difference is critical, because by framing it as a sales question, the agency owner or sales manager places the responsibility for "enough" sales on the salespeople. Certainly, producers can and do underachieve, but the burden of delivering appropriate revenue falls on management. The amount of new business a producer produces depends on many factors, most or all of which are under management's control. The answer to this question consists of three underlying sets of questions and answers: 1) How much new business should a producer produce? 2) How much new business can a producer produce? 3) How much new business does management want a producer to produce?The amount of new business a producer should produce depends on:o The producer's current book size, how that book is serviced and whether a responsible trade-down plan exists. These variables can result in new business production ranging from $0 to more than $300,000.o The producer's hunger. A producer who has lost his or her hunger is not necessarily a bad thing, provided they're satiated at an adequate level.The amount of new business a producer can produce may be limited by numerous factors. They include:o The agency's capacity and infrastructure. Some agencies are very poorly designed for new business, and therefore high producer expectations would be unrealistic. Other agencies have phenomenal capacity, a menu of value-added tools and CSRs who are severely underutilized. Barring other factors, these producers should be churning out plenty of new business.o CSR quality and capacity. I've met many agency owners who do not properly compensate their CSRs. The result, predictably, is a staff of lesser-quality personnel. The producers then legitimately complain that they cannot write more new business because their CSRs cannot adequately service it. The same problem occurs if the CSRs' workloads are very high–not in terms of commission amount, but of accounts and activities. Another consideration is the quality of the relationships between the CSRs and producers. Do they mesh well as a team? If an agency has high-quality CSRs with capacity, its producers should clearly outperform their counterparts in less fortunate agencies.o The producer's experience. Experience works both ways. The less experienced a producer, the more business they need to write and the more difficult writing new business will be. The more experienced a producer, the less likely they need to write much new business. And with many years of experience, it's less likely they can sell a lot of new business even if they want to, because the market may have passed them by or the size of their book precludes additional capacity. Good management is key to balancing experience with profitable business.o Retention rate. The higher the retention rate, the less new business a producer needs to write, and vice-versa. But if poor retention is a problem, new business certainly isn't going to solve it–and by pursuing new leads, management is only chasing its tail. Quality, not quantity, is the issue. Fix retention, then go after new business.o Compensation. Many producers have zero incentive to write new business because they're earning plenty without growing their books. Too many agencies pay producers enough to "keep them happy" regardless of their actual effort. Owners explain that they pay producers so much because "that's what it takes to employ a producer."The problem, of course, is that some producers are paid well out of proportion to what they're actually contributing. Instead of paying an inflated amount to keep the producer "employed," agencies should pay producers according to the value they bring–and the value a producer brings is not the same for all sales.Compensation should be based on specific requirements, such as account size and account quality. Many agencies today are making a major mistake by setting only minimum account sizes. Larger accounts can be just as unprofitable as small accounts if they're of inadequate quality. Similarly, well-managed small accounts can be much more profitable than large accounts.Producer compensation cannot be a simple 40 percent new and 30 percent renewal formula. Compensation should be tailored to the agency's particular situation. Simply copying other agencies' compensation plans is a huge mistake. Very large agencies provide a great example. Large agencies tend to spend much more on advertising, marketing and building competitive advantages than smaller agencies. Accordingly, larger agencies generally pay their producers much less. Most of the time, though, the drop in producer compensation is not enough to cover the cost of the extra services. The result is lower profit margins because the agencies are inadequately tailoring their producer compensation plans to circumstances.Base your plans on your situation, not someone else's.The final aspect to examine is how much new business should management want a producer to produce. All new business is not equal, so a flat dollar amount is meaningless. Consider retention, mentioned above, as an example. I've seen many producers consistently overachieve on new business goals, but their retention rate was horrendous. How profitable is it to put business on the books one year, only to lose it the next? (Hint: not very.) Good management will not want unlimited business. Good management will only want high-quality, lasting business.The bottom line is that unfortunately, a definitive numerical answer for the "right" amount of new business does not exist; it's management's responsibility to develop it. If the producer's book is too big or the agency's infrastructure is not suited to additional growth, it's management's responsibility to make the necessary adjustments. Until this is done, worrying and complaining about lackluster new business production is counterproductive. On the other hand, if the producer is doing an inadequate job within the guidelines, it's management's responsibility to fix the situation relative to the production variables.If you really want to improve your agency, commit to taking responsibility for your producers, and then consider these variables relative to each of them. If you build it, they will sell! For a team to perform to its full ability, your agency's structure must allow for it. When it does, then and only then does "Are my producers producing enough?" become a sales question.Chris Burand is president of Burand & Associates LLC, an agency consulting firm. Readers may contact Chris at 719-485-3868 or by e-mail at [email protected].