Today's Viewpoint: A MarshBerry Publication

The Importance of Key Performance Indicators for All Employees

Key Performance Indicators (KPIs) are indispensable tools that align individual efforts with organizational goals, providing clarity and measurable benchmarks for success. By creating, implementing, and continuously evaluating KPIs for all employees, firms foster a culture of continuous improvement and accountability.  

Insurance brokerages are constantly seeking ways to improve performance and productivity. One crucial tool that plays a pivotal role in this pursuit is the utilization of key performance indicators (KPIs). KPIs are essential for all employees within a firm, from entry-level support staff to senior leadership. KPIs provide a clear and measurable way to track individual performance and align it with the company’s overall goals. This is especially important in the rapidly changing world of insurance, where brokers need to be able to adapt quickly and efficiently. 

Why KPIs are necessary for all employees 

KPIs serve as critical instruments in ensuring that every individual within an organization is aligned with the company’s goals and objectives. It is important that organizations formalize KPIs for all employees and ensure effective communication of these metrics throughout the company. This helps to prevent any disconnect between an individual’s perception of their performance and the firm’s evaluation. This is especially crucial with service teams, where customer satisfaction and performance are intimately linked. KPIs eliminate ambiguity, providing clear and objective benchmarks against which employees can measure their contributions. 

What makes a good KPI? 

A good KPI is a metric that is relevant, measurable, and aligned with the organization’s overarching goals. KPIs should change on an annual basis to reflect the dynamic nature of business. These metrics must be quantifiable, utilizing rating scales from 1 to 4, where a 3 indicates a job well done, and each level is clearly defined to avoid subjective interpretation. Attainability should be a key factor, with stretch targets earning a rating of 4. Importantly, KPIs should contribute to moving the organization forward, beyond mere job requirements. Each individual should have 3 to 5 performance related KPIs, with at least one focused on professional development and be developed by managers and the employee. 

KPIs for different employees  

  • Service employees: For service employees, KPIs are often profit-driven but should also reflect their individual performance. Linking KPIs to bonuses throughout the year ensures that employees can continuously track their progress and align their efforts with organizational goals. 

    Examples of effective KPIs include: Customer service satisfaction scores, the number of activities in an agency management system, the ability to cross-sell and round accounts, average policies in force (or PIF), and retention rates. 
  • Producers: Producers’ KPIs should be closely tied to new business goals. By linking year-end bonuses to producers’ achievement of new business goals, organizations can foster a proactive culture and unite teams with a common purpose. 

    Examples of effective KPIs include: Metrics related to cross-selling, referrals, increasing average PIF, and continued education/professional development. 
  • Senior leadership: KPIs are not limited to specific roles within an organization; they should be set for every individual, from the receptionist to the CEO. In the C-suite, KPIs allow leaders to hold each other accountable, fostering an environment where leadership teams take action and initiative. Board members and other leaders should be aware of each other’s KPIs. This transparency ensures that success is defined not solely by meeting revenue goals but by achieving a broader range of objectives. 

    Examples of effective KPIs include: Revenue goals, sales velocity, acquisitions, employee engagement, hiring needs, employee retention. 

How to implement KPIs successfully 

The best time to implement KPIs is at the start of a new position or a new year, coinciding with strategic planning. During this phase, leaders establish the goals for the year, and managers determine how to achieve them through KPIs. 

But, implementing KPIs is not sufficient on its own; effective communication and consistent monitoring are equally vital. Managers should review KPIs quarterly to keep employees on track and motivated. Moreover, allowing employees to drive at least one of their KPIs increases their buy-in and commitment. 

When building out a KPI plan, consider these five steps:  

  1. Identify the company’s goals. What are the company’s most important goals for the year? Once the goals are identified, KPIs can be developed to track progress towards those goals. 
  1. Cascade KPIs down the organization. Once the company’s KPIs are in place, they should be cascaded down the organization to each department and team. This will help to ensure that everyone is aligned with the company’s overall goals. 
  1. Communicate KPIs to employees. Employees need to understand their KPIs and what is expected of them. This can be done through one-on-one meetings, team meetings, and other communication channels. 
  1. Track and review KPIs regularly. KPIs should be tracked and reviewed on a regular basis, typically quarterly or monthly. This will help to identify any areas where performance is falling behind and make necessary adjustments. 
  1. Reward and recognize employees for achieving their KPIs. When employees achieve their KPIs, they should be rewarded and recognized for their efforts. This will help to motivate employees and promote a culture of high performance. 

Key performance indicators are indispensable tools that ensure alignment, accountability, and performance improvement throughout a firm. All employees, from service teams to producers and senior leadership, can benefit from KPIs when implemented thoughtfully and communicated effectively. By utilizing relevant, measurable, and dynamic KPIs, organizations can bridge the gap between individual and organizational goals, fostering a culture of continuous improvement and success. 

Contact Don Folino
If you have questions about Today's ViewPoint, or would like to learn more about how MarshBerry can help your firm determine its path forward, please email or call Don Folino, Vice President, at 440.220.4105.

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