Hiring new employees can be like a game of chance. One could be the next rising star in the company who paves the way for wealth and success, while another could be the weak link in the chain, dragging everyone down with them.

Randy Schwantz, CEO of The Wedge Group, recently published his fifth book, GRIT: Find, Hire and Develop REAL Producers. In it, he breaks down what business owners need to look for when evaluating the right candidate for a sales position, particularly in the insurance brokerage field.

Randy Schwantz

Schwantz spoke with EBA on how to avoid hiring and wasting valuable time and money on “fakers.”

EBA: In your book, you reference the decline in the hiring process during the 2007-2008 recession. How did the recession affect benefit adviser and brokerage firms directly?

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Schwantz: When [the recession] hit, all businesses started cutting back. The first thing they started to cut back on was investing in new producers because the payback from those guys was 12, 24, 36 months down the road. So in order to cut back expenses, [firms] cut back on producers, training and cut back on a lot of things and focused just on core business. Then, what happened was a kind of slow recovery and a lot of people never quite got back into the game of hiring again. Now, we are almost at a level of epidemic proportions. It has been almost nine years and people who were 50 are now 60, people who were 40 are now 50 and the average age of the producer force is getting considerably older. Now something needs to be done about it and all of the consultants, all of the M&A guys, all of the smart people in big firms are saying, “We need to hire producers,” and so there is a big emphasis now on finding good producers. The problem is they’re making a lot of mistakes.

EBA: What do you mean by “real producers?”

Schwantz: A real producer is somebody who will actually prospect, set appointments, go out, sell, win the business and continue to grow a bigger book of business. That’s a real producer. The others are the faker, the loser, the pretender, the person who thinks they want to produce and acts like a producer. What’s interesting is that they generally interview well and that’s why they get hired, but when it comes down to actually doing the hard work that it takes to set appointments, to leverage negotiations, to win business, the failure rate in the commercial insurance industry is over 48%, according to Reagan Consulting. So there is huge fallout. The best firms are hitting on 80% [success rates] and the worst firms are hitting on 20%. So there is a ton of money wasted because of bad hiring practices.

EBA: What do firms need to do to avoid these fakers? What are the signs they need to watch out for when they are going through the hiring process?

Schwantz: It’s a multi-step problem, if you will.

1) They are not sourcing enough people and so then the people that they do get, they feel compelled to make a hire. So they are already in a box before they get started in many cases.

2) Their recruiting pitch to get someone fired up about entering this industry would cause most of us to turn around and go the other way. Instead of making it compelling, it sounds like they are saying, “Well, I wouldn’t want to do that.” The industry already has a mediocre reputation because nobody is coming out of college thinking they want to be an insurance broker or go into insurance sales. This is a phenomenal business to get into. This is a business where you get to make a lot of money, where you get to meet really interesting and innovative people, you get to get on the inside of companies and see how they make profit and how they grow and see what they do. It is an amazing business, but many of these people that own agencies are not telling an amazing recruiting story. So then they feel that nobody wants to come into this business and it becomes a self-fulfilling prophecy.

When they do actually get someone in to hire, they feel lucky rather than making the candidate feel lucky. If a Division 1 college football coach was recruiting you, the first thing they are going to do is tell you how great the university is to get you excited about wanting to come to that school. That is the recruiting piece. Then there is the assessment piece. They are going to make you run the 40, they are going to put you in the weight room to see how strong you are, they are going to send you off to the physical therapy guy to see if you have gained strength, they might even do x-rays to make sure shoulders and knees are okay or a get a sports psychologist to make sure you are not screwed up in the head.

All of that stuff is looking for evidence to determine if this guy can play football for the team before they give him $150,000 scholarship. In hiring, most people think you can’t come up with evidence to determine if this person has what they need to make it in this business. So they’ll do a nice little interview to see if they like you. Maybe ask a few probing questions. They will do a personality profile and if it comes back at least mediocre a lot of times they will say, “We’ll give you a shot.” So the interview and assessment process is really weak.

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EBA: Between having prior knowledge and experience, and being trained for the job, where does the right candidate need to land to be considered a real producer?

Schwantz: Most of it has to be trained. Once you hire somebody the next piece is onboarding and training them. On the commercial side of this business [employers] spend all this time and money on the technical side of stuff rather than what they really hired them for, which is to be great sales people. I wrote another book called, The Wedge: How to Stop Selling and Start Winning. It really focuses on how to bust the incumbent relationship. Somebody has got to lose in order for you to win. So too many times when they hire them, they send them off for all this technical training and never get back down to what the core job is: to go sell and go win business and they don’t have a methodology for that. So these new guys suffer for that, lose their confidence and many of them don’t make it.

EBA: What do you think should be the takeaway from your book?

Schwantz: The takeaway from the book is like writing a great article. There is a systemic approach to hiring and if you define the system and build the skills then your ability to find, hire and develop real producers, people who will be with you for a long period of time, be great high performing producers, the opportunity to do that is really high. If you don’t have a systemic way of doing it then it’s just going to be rolling the dice and getting lucky in most cases. The difference in what it does for your bottom line and your net worth could be millions.

EBA: What inspired you to write this book?

Schwantz: I’ve got five books and this is just the next one in the series of helping my client base solve one of their absolute biggest problems. In other words, if we go back to what happened in ’07, a lot of people quit hiring, and now it is on everybody’s front burner. Yet, by and large, when all of these clients come to [The Wedge Group] we would ask them, and here’s kind of the joke:

Schwantz: “How many sales people do you have?”
Client: “Well, I guess it depends on what you call a sales person.”
Schwantz: “Well, sales people are people who are on variable comp who can earn more if they sold more. So how many do you have?”
Client: “If you put it that way, we have seven, but two are actually selling.”

What happens is they have team of people, but only 20% are actually performing. So it’s just a huge problem.

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