Case Study

Producer Compensation Redesign

industry & client situation

Our client, a multi-state payer, faced producer compensation costs that were growing in absolute terms and as a percentage of total administrative costs.  When adjusted for membership growth, PMPM compensation had grown at an annual rate of 8%, largely driven by the linkage between commission and medical cost trend.  The client asked Bridge to help develop and launch a revamped producer tiering and compensation program that would reward their top producers, while reigning in cost growth.



Incentive compensation is one of (if not the) key tools sales management can use to communicate an organization’s expectations and influence producer behavior.  Given its importance, before embarking on any changes to producer compensation, we first worked with our client to establish a set of guiding principles for the redesign:

  • Market Driven:  Programs must be structured to be competitive both in their design and in the total compensation opportunity they offer.
  • Performance Driven:  Compensation should be linked to key performance measures and seek to differentiate participants based on their overall performance.
  • Value-Based:  Compensation in the channel system should be given on the basis of the degree of participation in necessary channel activities and the value created by the participant.
  • Easy to Administer:  Programs should be designed to minimize complexity, support clear communication of organizational objectives, and be easy to administer.

Bridge performed a number of targeted analyses to develop a deeper understanding of producer compensation cost growth drivers, as well as to identify top producers based on measures of revenue, growth, and profitability.  We evaluated competitor compensation methods and benchmarks in multiple states.  Ultimately, we designed and supported the implementation of a producer tiering and compensation program that:

  • Rewarded top tier producers and exceptional performance
  • Controlled the rate of compensation growth (by delinking commission from premium growth)
  • Targeted the highest potential market segments
  • Ensured consistency across products and markets


The transition to the new compensation program was projected to deliver approximately 1-2% savings in the first year, accelerating in forward years as the benefits of delinking commission from premium compounded.