CONCORDIA UNIVERSITY CHICAGO

 Developing an Effective Training Program for an Emerging Insurance Agency

by

 A. Abuisneineh

 Concordia University- Chicago

 LDR 7010

Developing the Organization's Human Capital

  Presented to 

Dr. Dawn Giannoni

 December 2014


         The lack of interest in training among staff at our insurance agency, expressed in terms of high ratio of training session absenteeism and the high number of professional mistakes that are committed by staff while producing client's insurance policies, is causing a great deal of frustration and anxiety to our management team. Many of the training sessions that are held by the company are attended by only few staff. When pressed for answers, absent employees expressed different justifications for their no-show, including the fact that the training is not paid, involving long travel, or is not held during suitable time.

        Our company is an eight-year old insurance agency that grew from one to 16 physical locations in the Chicago area. The company is employing about 40 agents, customer service reps, marketing, and accounting personnel. While the company maintains some manuals and policy handbooks, there is currently no systematic way of developing existing or new employees. The current training process for new employees goes through intensive one week of coaching, followed by sporadic peer mentoring and coaching. There is no current standards of measuring new employee training progress or performance. Furthermore, the company does not have any training plans for existing employees.

        Employees at the company keeps making mistakes that  are costly to the company. The outcomes of these mistakes can range from losing commission money and customers, to errors and omission (professional practice) lawsuits. Management believes that much of the errors and mistakes made by staff members are preventable.

        The purpose of the study is to determine the following:

·        The reasons why employees attend or not attend the current training sessions held by the company.

·        Develop a systematic training plan that includes goals, progress, and performance measurements. The training should encompass the contents and delivery of the training.

·        Build a strategy to train current and new employees. 

 

Literature Review

        Literature reviewed indicates several areas of interests for the human resources development of the organization which has started 8 years ago and is spreading now over 16 locations with 40 employees.  The current labor mix of the organization is predominantly Hispanic females with a median age of employees of 26 years and an average annual income of about $26,500. Hispanic clientele compose over 60% of the total customers.

.         Setting a training program is a systematic process. Brown (2002) asserted  that "Conducting needs assessment is fundamental to the success of a training program. Often, organizations will develop and implement training without first conducting a needs analysis. These organizations run the risk of overdoing training, doing too little training, or missing the point completely,"  (p.569).  Conducting needs analysis must be aimed at  determining the gaps between the current and required skills of the employees to do have job performance.

         Holzer, Stoll, and Wissoker (2004) found "a significant fraction of these workers are found to experience serious difficulties with performance and retention. Certain problems, like absenteeism and other soft skill deficiencies, are quite pervasive. These problems are highly correlated with measures of poor performance." The author suggested stringent screening process by employers, among other things.

        The lack of interests of employees is a lack of motivation. But then in a study that specifically addressed the insurance industry, Lahy and Quist-Newins (2010) stated that their study's  "findings suggest that the main impediments to recruiting and retaining financial services producers are the methods of compensation, lack of training, and lack of mentoring." (p. 40). It is clear that there is a problem in the organization in an industry where employees are explicit about their need for training but when training is offered employees do not come forward. Lahy and Quist-Newins (2010) reviewed a package of ideas that employees want which revolved around training, compensation, and mentoring. The study ended with a list of 24 recommendation for retaining agents.

        The financial service industry is sales oriented. People who posses better sales skills tend to make more money that people with no or ineffective sales skills. While the bulk of compensation in our agency is salary based, some staff members earn as much as 30% of their gross income from commission on policies sold. Emotion is perhaps one of the critical issues that is overlooked in training employees, especially in real estate and insurance, argued Kedwell, et al (2011). Specifically, emotional intelligence (IE) which refers to "the ability to acquire and apply knowledge from one’s emotions and those of others to produce beneficial outcomes" has been ignored by marketers in the financial services (Kedwell, et al., 2011, p. 40). EI could be the starting points for trainers to take employees in to a different aspect of training, something beyond product knowledge that can get boring.

        Working on organization culture is critically important in the insurance industry, an industry that is known for its misbehaviors with the public. In the insurance business, "cultural norms are actually transmitted by sales agents to clients. In effect, culture appears to be a critical dimension of what is actually sold to clients," (Evans and Blase, 1986, p. 80). The cultural norms that agents need to be transmitting to customers must all be stemming from an ethical core. Hoffman, Howe, and Hardigree (1991) found some correlation between ethical conduct and certain variables but, however, stated that insurance "Agents who have received ethics education perceived more unethical activities among others; however, ethics training had no impact on individual ethical behavior," (p. 13). While couching agents on ethical issues may not reduce their unethical conduct, it will spread an aura of ethical culture that employees with transmit to the clients.

        Retaining millennial employees can be challenging. Hagel (2014) quoted Angela L. Avant, CPA, the CEO of the National Association of Black Accountants, saying that "some Millennials have an expectation of plenty of pay and responsibility before they’ve demonstrated they can perform" (p.20).   The vast majority of our 40 employees are Millennials. This is one of the findings of Hagel's study: "In searching for work, cash is still king – 69% of respondents ranked financial rewards as the most important aspect of a job offer. That was followed by challenging and interesting work (57%) and training and career development (55%) – well ahead of benefits (34%)," (p.21.) In other words, having an interesting work can be a critical factors in the selection of the job.

        "An important implication [for the finding that Job Corps is not work for Hispanics past 48 moths of training] is that, for Hispanics, job training alone is not enough to help youth succeed in the labor markets they face, standing in stark contrast to what we  find for whites," (Flores-Lagunes, Gozalez, & Nuemann,  2010, p. 663-64). That discovery came while other studies show that there is little or no difference between  the way Mexican and Anglo working women manage their families and work (Marlow, 1990).  Special attention was recommended by deForest (1994) when dealing with employees of Hispanic backgrounds included the following:

1.     Conventional ways of handling grievance is not suitable for the Hispanic culture.

2.     Signs of agreement with supervisors are more of signs of respect, not necessarily agreement to perform.

3.     Too sensitive to sharp criticism.

4.     Less responsive to certain training measures such as punctuality.

        Any training program should incorporated the unique nature of the insurance business. In a study conducted by Budhraja (2008), "Around 96 percent respondents felt that they faced stress due to both personal and professional reasons, whereas around 4 percent of the respondents felt that they were not stressed," (p. 8).  Due to this high stress level, management may need to take a different look at the training program. Budhraja (2008) recommended that "Since stress in insurance sector is mostly due to excess work pressure and heavy targets, continuous training and motivation and offering programs on stress management and work life balance would produce positive results," (p. 14.)

 

Current Training Program

 

        The current training program at the organization is composed on the following:

        For both experienced and inexperienced new staff members the  current program starts with half day of orientation. The new employee is introduced to the various departments of the organization, work tasks and software used along with visual illustrations of the processes and software. Job description is explained and a written copy is provided.   Written organization policies are also provided to the employee where the policies are explained by a manager. At the end of the orientation the employee signs an acknowledgement of the receipt of the company. The new employee spends 1 to 2 hours during orientation experimenting with different software.

        Experienced employees go through 5-10 days of intensive training on the use of the different software and processes that the organization uses. After that point, the employee is assumed to be trained, and is left alone to handle clients.

        Inexperienced employees go through 2-3 months of training. In the first few weeks, inexperienced new employees go through shadowing another experienced staff members. Then they go through random checks for speed and accuracy.

        Sporadic attempts to offer employees additional coaching and training in product knowledge and sales techniques have not been successful. For the purpose of this research few employees were pressed for an answer of the reasons they thought to be the causes for the low attendance rate. There seemed to be a unanimous response among employees and managers who cited the following primary reasons for low attendance:

1. Time for training was not suitable for the employees (Sundays, late hours.) The organization had the habit of holding its training sessions either very early in the morning or on Sundays.

2. Training time was unpaid. In an industry where commission and incentives are primary issues, organization management believes that training is meant to improve sales skills of the staff, and thus his/her earnings.

3. Place of training was not suitable. The organization has several locations through the Chicago area and held its training sessions in the main offices in Palos Hills, making it harder for staff members living in remote locations to travel to attend training, especially in the very early morning hours.

        Management believes that 8 years after establishing the organization from a one man operation, there is currently a need to establish a systematic plan to develop the organization human resources. An effective plan will improve productivity through increase revenues and reducing the cost of training by maintaining higher numbers of quality employees.

        The organization does not have any statistics about the cost of training new employee. However, an inexperienced employee needs at least 80 hours of professional training, setting the cost at about $2,500, roughly. Experienced employees cost less to train, perhaps around $500 per year. All the training held are provided in the house by an experienced staff.

 

Barriers to Training and Development

        Roger Jr (2009) asserted that "Barriers to learning can  be in the form of lack of confidence and identity," (p. 910); and further quoted Merriam & Cafferella (1991, 00 86-90) who categorized barriers to participation to training and adult learning into the following:

1. Situational: Every person has unique situations that may stop him/ her from getting further learning and training.

2. Institutional: Sets of practices and procedures that discourage employees from learning and trainign.

3. Psychosocial or Dispositional: Refers to person's attitudes towards learning and self.

4. Informational: The person is not aware that training/educational program is available.

 

Recommendations for Training

        Setting a training program should be aimed at allowing employees to assist the organization attain its goal while accomplishing their own goals. Empowering employees with new skills and knowledge and polishing their existing skills, as well as  bridging their goals and those of the organizations will be the overarching goal of the training program.

        Appendix A illustrates an intervention plan for coaching and developing new and existing employees. The plan takes in consideration the different demographic, marketing, and sales background of the organization members, the insurance industry,  and the target markets of the organization.

        Appendix A refers to training the existing and new staff members who work in the customer service/ sales areas of the organization. Other areas of organization including human resources and accounting which have about 12% of the employees will be required to attend different training sessions. Currently these two department have no turnover in employment for the past 3 years. If an emergency emerges where an employee in these areas is needed the organization will promote someone from the customer service area. and will offer on-demand training for the newly promoted staff.

 

Leadership Challenge: Motivating Staff Members to Learn

        Besides creating the new training and development program, the primary challenge of leadership is to formulate a plan to motivate staff members to adopt the new training plan. Knowles (1984) assumed that adults are best motivated to learn by arousing certain internal factors such as self-esteem, self-actualization, and recognition. "Understanding where a person is in their life stage gives an understanding of  one’s motivation for learning," argued Rogers Jr., (2009). Caprino (2014)  suggested several points to help leaders in the training of the Millennials who compose the vast majority of the labor force at the organization. These include using non-traditional and flexible delivery methods, gamifying training, and obtaining feedback from employees who quit and those who stay.

        A sizable amount of secondary literature could be found regarding ideas of how to keep trainees motivated. These include the following:

1.  Target training to specific people and their needs. Consult employees about the kind of training/ learning they need.

2.  Include participation in training in the employee performance evaluation.

3. Avoid boring, redundant subjects. Offer employees training in different areas of the organization.

4. Offer incentives,  praise, and recognitions for attending  and participating in training.

5. Stress the importance of training in building career and professional development.

6. Be flexible in training time/ place/ methods.

7. Make training session fun and mix it with other social activities. For this particular organization, incorporating prominent speakers/trainers with common background (successful professional Hispanic females) may be inspiring.

8. Give trainees opportunities to provide their input of how to do things.

9. Make sure to include a profit sharing plan in any compensation.

 

Measuring Plan Effectiveness

        There is no current method that the organization uses in order to measure the effectiveness of any of its training techniques.  Measuring training effectiveness is important. The Kirkpatrick's model is perhaps one of the well known models that aims at measuring the effectiveness of training.

        The Kirkpatrick Partners (n.d) identified Kirkpatrick's model as a four- level model. Level 1 is the Reaction which measures the degree of the trainee favorable reaction  to the learning/ training plan. Level 2 is called the Learning and it measures the degree to which the trainees have acquired knowledge, skills, confidence, etc, from the training. Level 3, the Behavior, is aimed at measuring the degree to which trainees have applied what they learned at work. Finally, Level 4, or Results; which refers to the degree to which certain goals and outcomes have been accomplished as a result of the training.

        Since there is no current method followed by the organization, the new training and development plan should incorporate the first three levels through observations and questionnaires before, during, and after training sessions. The final step, the Results, is perhaps the most important factor to measure the effectives. The Kirkpatrick's model suggested several indicators including employee retention, production, morale, waste, sales, customer satisfaction, and staff complaints. For the purpose of this research we will use the following ratios:

1. Annual sales per average number of employees per year.

2. Sales per wages paid.

3. Earnings before interest tax depreciation and amortization (EBITDA) per annual wages paid

4. Annual wages paid per policy sold.

        The above ratios were selected because historical data is  available to run comparisons. That will make it easier to compare progress and success of the new training. Additional methods may be included in future years once the plan is implemented.

 

Summary and Conclusions

        The organization's age of 8 years justifies the historical lack of systematic training  plan. However, the increased complexities of operations engendered from the continuous expansion and nature of business; are causing a number of problems including high employee turnover ratio. A systematic training and development for the organization's human resources is becoming an immediate necessity.

        The new training program shall reflect the demographic characteristics of the labor force, the nature of the insurance industry, and the competitive forces. The plan should start immediately, with focus on existing employees.

        The new training plan will be part of the organization's Human Resources. It will maintain information and data about the plan itself (material, delivery, schedules), trainers, trainees, as well as progress and evaluation information.


References

        Budhraja, J. (2008). Causes of stress among insurance employees: An empirical study. ICFAI Journal of Management Research, 7(10), 7-17.

        Brown, J. (2002). Training needs assessment: A must for developing an effective training program. Public Personnel Management, 31(4), 569-579.

        Caprino, K. (2014). Quit trying to 'engage' Millennials. Forbes. Retrieved on 11/26/2014 from http://www.forbes.com/sites/kathycaprino/2014/05/01/quit-trying-to-engage-millennials/

        DeForest, M. E. (1994). Hispanic staffers: management and motivation. It takes special know how. Here are some important guidelines. Nursing Homes: Long Term Care Management, 43(3), 43-44.

        Evans, M. K. and Blase, J. J. (1986). Moral perspectives of life insurance sales personnel: The role of organizational culture in selling services. Int. Studies of Man. & Org.,  XVI (1),  80-93.

        Flores-Lagunes, A., Gozalez, A and Nuemann, T. (2010). Learning but not earning? The impact of Job Crops training on Hispanic youth. Economic Inquiry, l(48),  651–667

        Hagel, J. (2014). Meeting the challenge of the young and the restless. Journal of Accountancy, 217(5), 20-21.

        Hoffman, K. D., Howe, V, and Hardigree, D. W. (1991). Ethical dilemmas faced in the selling of complex services: Significant others and competitive pressures. Journal of Personal Selling & Sales Management, XI (4), 13-25.

        Holzer, H. J., Stoll, M. A., and Wissoker, D. (2004). Job performance and retention among  welfare recipients. Social Service Review, 78(3), 343-369.

        Kidwell, B., Hardesty, D. M., Murtha, B. R. and Sheng, S. (2011). Emotional intelligence in marketing exchanges. Journal of Marketing,. 75, 78–95.

        Kirkpatrick's Partners: The Official Website of the Kirkpatrick Model. Retrieved on 11/28/2014 from http://www.kirkpatrickpartners.com/OurPhilosophy/TheKirkpatrickModel/tabid/302/Default.aspx

        Knowles, M. S. (1984). Andragogy in action. San Francisco: Jossey-Bass.

        Lahy, K. E. and Quist-Newins, M. (2010) . What do financial services producers need for success in their careers? Journal of Financial Service Professionals, 40-49

        Marlow, C. (1990). Management of family and employment responsibilities by Mexican American and Anglo American women. Social Work,35(3), 259-266.

        Merriam, S. & Caffarella, R. (1991). Learning in  Adulthood. San Francisco: JosseyBass. Thoms, K. J. (2001). They're Not Just Big Kids: Motivitating Adult Learners. Annual Mid South Instructional Technology Conference. Murfreesboro, TN.

         Rogers Jr., C. (2009). Understanding the adult learners motivation and barriers to learning. ESREA: European Society for Research on the Education of Adults, 905-915. Retrieved on 11/28/2014 from http://www.academia.edu/1267765/Understanding_the_Adult_Learners_Motivation_and_Barriers_to_Learning


Appendix A

Training and Development Plan for an Emerging Insurance Agency

 

Orientation to Organization: (4- 6 hours - all new employees)

This will be a brief introduction of our organization including our sister organizations, the connections between different organization. An overall discussion of the different software and work process that our organization uses.

Also, the introduction  entails a complete discussion of  organization policies. At the end, employees need to sign an acknowledgement that copies of the policies have been provided and explained to them.

 

Week One (All new employees, 4 to 6 hours a day)

1. An assessment of the personal goals, strength and weaknesses of employees.

2. Definitions of auto insurance and techniques of quoting non standard auto insurance

3. Issuing nonstandard insurance

4. Recording, filing, and accounting for nonstandard auto insurance

5. Definitions, quoting, issuing, recording, filing and accounting for homeowners insurance

6. Concepts of Business Insurance for personal line agents.

7. Successful elements of customer services (welcoming, listening to, sympathizing with, and assisting clients.)

8. Maximizing earnings, goal setting, and importance of goals in our organization.

9. Office automation (faxing, managing phone system, emailing, scanning, maintaining office.)

10. Handling money

11. Sales techniques and ethnic differences

 

Week Two through week eight

Mentoring all employees. Each new employee is assigned an  experienced employee that will monitor and guide the activities of all new employees.

Evaluation of speed and accuracy of employees.

 

Ninth week to one year of experience

Members will attend mandatory meeting sessions that will continue to address important issues in the field.

1.  Nonstandard auto insurance

2. Standard auto insurance

3. Business and commercial insurance

4. Ethical conduct

5. Effective customer services

6. Organization automation

7. Marketing and effective sales techniques (extensive focus)

8. Managing work and personal life

9. Sales techniques and ethnicities

 

Furthermore, article clips, news and other printed literature will be circulated to members.

 

Over 1 year experience

Certain members who demonstrate charisma and leadership will be invited to attend sessions about leadership of  sales organizations. Topics covered include:

Developing leadership traits and habits

Building teams and coalitions

Conflict resolutions.

 

Methods of Delivery

1. Printed handbooks and material

2. Video clips (produced in house and on line)

3. Meetings (in and outside the office).

4. Teleconferencing

5. Articles and news clips

 

Compensation System

The organization is currently using a compensation system (Salary plus commission) that is comparable with other systems used by competition in the market. Keeping an eye on changes in the industry is a must.

Copyright © 2014, Insurance Navy Brokers Inc. All rights reserved.

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