Everyone likes to get paid well, but is higher pay a business strategy? How could paying people more be good for your insurance business? While it can seem counter-intuitive to look at increasing your payroll expenses when you're seeking success in the insurance industry, think of higher pay as insurance for your business. It's an investment in people that will pay off over time. Increasing the insurance agent salary that you pay won't necessarily hurt your bottom line. It could actually help it.
Investing in People Shows That You're an Excellent Employer
What would you prefer: an employee who's biding time until the next opportunity becomes available or an employee who considers that joining your insurance agency is a savvy career move? Yes, paying lower salaries is a way to keep expenses low. However, when you advertise a position with a lower salary, you may turn away the very employees who could bring your business to the next level. Make yourself an employer of choice by creating a strong and supportive business culture, but do it by paying higher salaries for well-qualified individuals.
Higher Salaries Can Improve Employee Performance
Consider your higher salaries to be an investment in better customer service and business management. If an employee is satisfied at work, that person may have a higher job performance. While various studies have found that better job performance is or is not tied to higher pay, there's reason to look into how you compensate your employees. In a study cited in the Harvard Business Review, employees whose wages were increased performed far better than those who remained constant: "It was obvious to them that we didn't have to give this additional compensation, but that we had chosen to." It's important to show a career path through your organization as well. Show employees that there is an opportunity to earn a higher salary through hard work and dedication, and you could improve your business performance as well.
Higher Salaries Inspire Commitment
Employee turnover is painfully expensive. According to an article on Eremedia, it can cost 30 to 50 percent of an employee's annual salary to replace a lower-level employee, but it can cost 150 to 400 percent of a mid to higher-level employee's salary. Even if the costs are much lower, this is a cost that your business does not need to bear. When you pay your employees a higher insurance agent salary and combine this with an excellent working environment, you will retain quality employees more easily. You'll keep the investment you've made in training, and you'll keep the practices and connections that employee has made. Good employees are invaluable to your business: Seek them out and try to keep them with a higher salary.
When you're building your independent insurance business, contact the American Agents Alliance. We're here to support your business development. From a deeper understanding of industry standards to networking opportunities, learn more about the many membership benefits that your agency can derive from your membership with Agents Alliance.