Emerging trends in broker compensation
In the midst of the ‘Great Reshuffle,’ brokerage principals are finding employee-recognition programs a better way to compensate brokers for good performance.
Fifty-three per cent of the 119 brokerage managers participating in Canadian Underwriter’s 2022 National Broker Survey touted employee-recognition programs as the best way to motive broker performance.
“Recognition is such a powerful tool to motivate and engage staff,” one young male executive from a Canadian mid-sized brokerage commented anonymously in the survey. “Money is often temporary.”
Last year, at the height of COVID restrictions, only 42% of brokerage principals surveyed in Canadian Underwriter’s 2021 National Broker Survey reported employee recognition programs had been beneficial for improving the performance of their brokers.
This year, however, public health restrictions are easing, and employees are returning to work in the office. Or at least, some are. Many labour studies suggest workers are re-evaluating their priorities and leaving current employers to seek better mental health and work-life balance elsewhere.
Eighty-one per cent Canadian executives are having difficulty finding people with the right skill set to fill position, according to a national survey of 500 Canadian executives from 11 industries recently conducted by Environics for CERIC — a Canadian charitable organization that advances education and research in career counselling and career development.
Performance-based compensation remains the best way to reward the loyalty of brokers who choose to stay where they are, the survey suggests.
While touting workplace flexibility as a plus, one woman with between 16 and 30 years in the business, applauds the move her mid-sized brokerage has made. “Moving to a performance-based employer” has improved broker performance over the past two years, she says, rather than basing compensation on “intangibles.”
Overall, survey numbers suggest the brokerage managers’ use of performance-based compensation as a tool for rewarding hard work is gradually dwindling — down from 72% in 2020 to 68% in 2022.
This depends a great deal on the size of the brokerage, with 100 % of the largest brokerages (those with more than 100 employees) extolling performance-based compensation, whereas at small brokerages (under 20 employees), this form of compensation was endorsed by only 57% of those surveyed.
Smaller brokerages (fewer than 20 employees) were much more likely than their larger counterparts to employ profit-sharing plans to encourage broker sales performance.
One broker in the survey noted that commissions need to change to reflect the fact that brokers must do a lot of work to prepare for client meetings while prospecting. But they aren’t rewarded for the work if the client declines the offer.
“I believe that for brokers (not necessarily brokerages), compensation is something that needs to change,” a manager at a large brokerage commented. “If I go to a dentist, a lawyer, a physiotherapist’s office, or any of many other professionals, I have to pay for that first appointment and a broker can spend hours a year on first and even subsequent visits or interviews and gain zero in compensation.”
And client service representatives (CSRs) have taken on a whole new lot of work in the new digital world, and compensation needs to change to reflect that, said one broker.
“If market has moved to order takers from digital online hits, then CSRs are far more important than in the past,” a female working in a mid-sized brokerage commented. “They no long refer back to producers they have to handle it ALL. We need to redefine and give them the wages and support for the new emerging role.”
One broker is doing this through a commission on new business.
“We have a commission payment on new business for CSRs,” one senior female manager at a small brokerage commented. “We have great results and it’s a way to add to their compensation package.”
Feature image courtesy of iStock.com/erdikocak
