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Managing Principals by Julia Kramer You Get What You Pay For

How does your firm measure up to the competition? Now you can know everything there is to know about insurance brokerage compensation.

By  Julia Kramer

To keep pace in the recruitment and retention marathon, a firm must find the ways and the means to keep its compensation structure competitive in the current market. In our industry, up until recently, the way has been hard to find. Searches for competitive salary data for brokerage firms yielded few, if any, satisfactory results. The surveys on the market were developed using relatively small sample sizes, didn’t represent the needs of small, medium, large and super-sized firms and/or did not cover the vast number of variations in position descriptions—all critical to correct pricing. Firms plodded along, starved for accurate and specific pay data.

Sustenance has arrived. In 2006, The Council worked with McLagan Partners, a consulting firm with expertise in the financial services industry, to develop for our members—using member-firm data—a comprehensive and detailed report on competitive pay levels in our niche of the industry. Seventy-four firms participated in the survey, and pay information was revealed on more than 26,000 employees, covering 100 distinct job descriptions. The result, the 2007 Insurance Brokerage Compensation Survey, is the ultimate compensation tool and a must-have for firms competing to attract, hire and retain both emerging and experienced talent ranging from entry-level positions to your top executive roles.

The survey reports compensation data by position and includes salary, cash bonus, commission and long-term or deferred awards (such as stock and stock options). For certain job titles (producers, for example), data are reported for more than 2,500 validated producers, broken down by product line, producer role, firm geographical/regional location and metropolitan area, company size, ownership structure, production level and size of client/client segment. In addition, both detailed compensation data and statistical data are provided on all positions, including the five highest non-producer positions. This includes the top-tier executive “C-suite” as well as scores of other positions in accounting, sales support, marketing, HR, IT, legal, loss control, compliance, licensing, claims and administrative. All market data are broken down, by position, into pay quartiles (low, medium, high), top 10%, average pay and median pay.

Participating firm statistical data in the report is robust and includes revenue, revenue per employee, revenue per producer, producer cost of production, location, number of employees, number of producers, producers as a percentage of total employees, staffing by function and other key ratios, such as the ratio of producers to account executives. This information is critical in understanding your firm’s position and making important human capital decisions.

Detailed job description data allow firms to compare and contrast their own job descriptions with those represented in the survey. Job descriptions include summary statements and details on core functional responsibilities, supervisory responsibilities, typical experience levels and key distinctions of the position. Descriptions are presented in logical groupings so that related positions are reported together. For example, head of compliance, compliance manager, senior compliance administrator, intermediate compliance administrator and junior compliance administrator are presented side by side, in a columnar format, for easy comparisons by level.

Valuable customization options give participating member firms the unique ability to see their data compared to full survey data or in comparison to other firms selected from the list of participants.

· The Core Report includes detailedsurvey results covering salary,cash compensation and total compensation forfive top management positions.There’s no charge for this report, but members must submit pay and production data for all survey positions to receive these results.

· The Expanded Report includes detailed survey results for the full range of positions, including all detailed and statistical information as described in this article. There is a fee associated with this report in addition to the requirement to submit pay and production data for all survey positions.

· A Peer Group Analysis—a comparison of your firm’s pay levels to a specific group of other organizations that you select—is available for firms that want the ultimate in compensation analysis. There is a fee associated with this analysis in addition to the requirement to submit pay and production data for all survey positions.

The popularity and success of the 2007 survey underscores the validity and necessity of member-specific compensation data. The Council, recognizing that pay data must be current to be effective, will repeat the survey on an annual basis. Member firms interested in receiving the 2007 Insurance Brokerage Compensation Survey and/or in participating in the 2008 survey should contact Cheryl Matochik, The Council’s director of Strategic Initiatives, Office of the President, at cheryl.matochik@ciab.com or directly by phone at 202.662.4424.

Kramer, an HR consultant, is a contributing writer.


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