Average revenue per employee key to success

par Caroline Phémius | May 19 2005 03:51PM

The prosperity of a property and casualty (P&C) brokerage is directly related to its ability to maximize the revenue generated by each employee, according to the proponents of an increasingly popular coaching strategy.

In 1997, Rick Bauman decided to put an end to his 22-year brokerage career to begin offering his coaching services to clients across Canada based on a technique that was created by Roger Sitkins and has taken the U.S. by storm.

Today, Bauman Consulting, based in Burlington, Ontario, has made major inroads into the Canadian market with 36 firms using these principles to generate an average of more than $4.5 million in commission earnings.

In addition, Groupe InterNotions, headed up by Michel Drouin, obtained the rights to use the Bauman concept in French Canada in 2001. Fifteen brokerages are coached by Groupe Internotions. Mr. Drouin is also president of Charlebois Trépanier, a brokerage network based in Gatineau, Quebec.

Mr. Bauman explains that the purpose of this coaching program is to give members the push they need to transform their business into a high-performance operation. The target is to achieve profits before interest, tax and amortization of 25%, as well as 15% to 25% growth in revenue per year, and revenues per employee of $125,000.

At present, Mr. Bauman estimates that the average income per employee in companies that adhere to his program is $110,000, versus $80,000 elsewhere.

“We don’t show our clients how to work harder. We show them how to work smarter,” says Mr. Drouin.

Members are strongly cautioned against acquiring competing firms, as they need to focus all their energies on the organic growth of their own business. They are constantly reminded of the rule stating that 20% of clients are responsible for 80% of their revenues. Both coaches feel that these clients are neglected far too frequently by companies across the country.

Meetings during which firms come to present their success stories are organized every six months or so. “We also have ‘boot camps’ to train recruits when companies hire new employees,” adds Mr. Drouin.

Mr. Bauman indicates that members can contact his firm for telephone or online advice at any time.

The two coaches agree that, by putting the emphasis on premiums rather than income, companies are hampering their business development. What’s more, they point out, you cannot tell what the real size of a company is by its premiums.

In fact, Mr. Bauman considers that the concept of using premium volume to determine the size of a firm is virtually a thing of the past. “Brokers cannot spend premiums but revenues.”

Mr. Drouin believes that “this information should be used only by insurers.”

However, this rejection of the premium volume concept does not stop Charlebois Trépanier from highlighting its $16 million in premiums on its website. Moreover, InterNotions and Bauman Consulting confirm that 51 companies that have opted for their approach together generate some $1.3 billion... in premiums.

A growing membership

By the end of the year, Mr. Bauman expects to see his number of members grow from 36 to 50. And Mr. Drouin, who currently does business with 15 firms, is aiming to add five more to his roster. In terms of personnel, Mr. Bauman foresees integrating a new coach into his team to bring his workforce to eight. But he especially wants to bring in more associate coaches – employees of his members that also work part-time for Bauman Consulting. “We have two associate coaches and we hope to grow that number to maybe 15 associate coaches,” he says.

Mr. Bauman says a company must generate at least $2.5 million in commission earnings to be able to integrate the Bauman Consulting model into its operations. Firms earning less may still be considered if their growth potential is strong enough.