Attracting and Retaining Employees in a Competitive World

By Sharon Cunningham | September 16, 2002

One consistent trend throughout the United States is the difficulty in finding people to fill job openings. No matter where I travel, I hear this lament from agency owners and managers. In some areas of the country, there are price wars for service people fueled by the competition for good talent. Not only is it difficult to recruit skilled workers, but also to retain them. In the past, companies expected job loyalty, but today, we hear stories of employees accepting other job offers only weeks after being hired. We have to wonder if people have changed or is it that employers are not able to satisfy employees. Although many segments of the economy have a surplus of qualified people, the insurance industry has a shortage of people. To win the battle for workforce share, agencies must rethink their strategies to effectively recruit, motivate, and retain committed employees.

Today’s high-performing employees are looking for more than compensation packages and benefits. So the first step in attracting talent is to examine the agency’s strengths and determine if employees have benefits to sell. Employees today might move to another job for better compensation, but they are also looking for growing, successful companies which provide an employee friendly environment where they can participate in the decision-making and be part of the team. Some agencies have found creative rewards, such as providing breakfast foods or fruit in the kitchen or free soft drinks, not just coffee and tea. Others designate employee committees to plan social functions or they take the office on trips when agency goals are achieved. The key is to have a positive work environment where employees are recognized and rewarded for good performance, where there is good communication, and where everyone shares in the excitement of being part of a successful firm.

Recruiting through referrals
Most agencies use a variety of methods to attract job candidates, including newspaper ads, Internet job sites, referrals and recruiters. I have worked with a few organizations whose turnover is minimal. In fact, they have a waiting list of talented people who have the desire to work for their agency. These agencies realize that attraction and retention are both marketing issues. They have developed a positive image in the marketplace and are constantly selling prospective job candidates on the advantages of working for their agency as well as reminding their employees of these advantages. They have also made a commitment to create a workplace with purpose, excitement, and mutual alignment and re-focused their energy on the needs of their employees from a whole-life prospectus. In these organizations, the most effective method for recruiting people is employee referrals. The agency employees can interest their friends and associates in working at the agency and selling them on the many benefits of working for it.

To gain full benefit from these referrals, a formal process should be put in place to regularly identify candidates and keep the pipeline full. The agency employees should know the story they can tell about the benefits, working environment, perks, or advancement opportunities the agency offers. To help them identify what the agency benefits are, ask them to help you make a list of why they like working at the agency and what they appreciate about their jobs or their co-workers. While you’re at it, consider whether employees have a good relationship with their managers. Studies have shown that managers play a significant role in influencing the employee’s commitment to the agency and the agency’s likelihood of retaining them.

Some agencies actually develop a PowerPoint presentation to tell the agency story, its capabilities, introduce its staff, and provide customer testimonials. Knowing what makes the agency unique and communicating that message effectively is the foundation for building a workforce that is energized and committed to achieving the organization’s goals. Agencies that are community leaders are also more successful in attracting talent as job applicants form impressions about agencies from various sources. The agency’s support of local and civic organizations, not only attracts business prospects but job candidates, as well. Its involvement in the community sends a message about its values and increases the likelihood of attracting candidates who are a good match with its culture and values. Agencies that can align their recruiting strategy with their marketing strategy are successful in developing brand identity and are able to establish a clear picture of what sets them apart. It’s also the best way for smaller companies to compete against big ones for talent.

Other recruiting methods
Another effective method of finding new employees is to use recruiters who will search for job candidates in the area. If you enter into these agreements, it is important to find recruiters who can source quality people, rather than merely provide resumes. Agency managers should work with the recruiter to provide a profile of the skills and qualities the recruiter should look for and expect that the candidate be pre-screened. There should also be an agreement that the recruiter will not solicit the agency’s employees for other clients. Internet sites can be effective for identifying candidates who may be moving into the area.

Newspaper ads are usually the least effective methods of recruiting, as the people who may be the best candidates does generally not read them. With critical skills in high demand, top performers who want to make a job change are not looking in the classifieds but are seeking out employers who provide outstanding work environments and continual learning and advancement opportunities. Studies have shown that employees and potential employees rank career development as their number one priority in determining which employer they will commit their skills and long-term loyalty to. Feeling valued, having open communication and a fun workplace are also key factors in their selection criteria.

Selecting employees
Too many hiring decisions are made because a manager has a “gut feeling” about the candidate that is not substantiated. When new employees are hired, agency managers will spend time training and coaching them. An employee who never should have been hired will cost the agency, not just in salary and benefits, but in the time of other employees who are involved with them. Poor performers drain overall productivity because they force managers to allocate additional resources to get the job done. They also create resentment in good performers.

Two tools that can help managers make better hiring decisions are behavioral interviewing and pre-employment assessment tools. Behavioral interviewing requires, first, that the interviewer spend an adequate amount of time with the candidate. It is difficult to determine a person’s suitability for a job if you spend only an hour with them and if only one person interviews the candidate. Since past experience is a good indication of qualification for the job, the
interviewing questions should be directed at behavior. For example, if an interviewer who wants to assess sales skills might ask them to describe a difficult sales situation that resulted in a successful sale. To assess service skills, the interviewer might ask how the CSR handled a difficult client or provided assistance to someone else in the agency. Creating a standard list of questions used which is used by all the agency interviewers assures that good interviewing is accomplished, but also that the interviewing team can compare notes.

Pre-employment assessment tools can also avoid costly hiring mistakes. Insurance tests can identify the level of knowledge an individual has, but you can also ask an employee to demonstrate their proficiency with the computer system or other software commonly used. Candidates for CSR positions can be further qualified when their peer CSRs interview them to assess their knowledge and skills. Psychological testing can help assess sales capability and predict the individual’s ability to succeed with the agency’s sales approach. Since sales skills are necessary, not just for producers and marketers, but also for CSRs, these assessment tests should be used for various agency employees.

Even with good screening, employees will turn down offers. In some cases, their compensation expectations may be beyond what is realistic or they may just be testing the marketplace. But in other cases, the offer is rejected because the agency made a poor impression on the employee. Agencies known for their ability to attract and hire good employees go to great lengths to maintain an upbeat, positive relationship with all applicants, even those not hired. They treat applicants like their customers, provide them with feedback in a timely manner, and are always recruiting (selling), even during the job interview.

Reward systems
Every agency today is aware of the need to manage compensation costs. The challenge, however, is to also make sure employees are paid competitive wages. Finding sources of salary information, conducting your own salary surveys or sharing information with a group of competitors can help retain employees who might leave because they are underpaid. Without accurate survey data, agency owners risk overpaying or underpaying employees. Many agencies are adapting a pay for performance compensation system, which rewards employees for achieving results related to the agency’s business goals. An agency’s compensation plan should connect employee performance to overall business goals.

To reduce the costliness of annual merit plans, agency owners are looking at creative ways to reward employees for contributing to an agency’s success. In transitioning from traditional merit and performance-based systems, two viable incentive options are profit sharing and gain sharing. Profit sharing is tied to an agency’s increase in profitability. Gain sharing is tied to increases in operational efficiency and may be an interim step to a long-term profit-sharing program. No matter which option best fits your agency’s business plan, goals must be established so employees can determine what they have to do to achieve the reward.

But employees also value rewards that are not monetary. Surveys conducted by the Society of Human Resources Management indicate employees ranked interesting work, employer flexibility, feeling valued, having training, and advancement opportunities as top factors influencing their decision to change jobs.

In smaller agencies, promotional opportunities may be fewer, but there should always be new skills to learn and the opportunity to feel job satisfaction. Setting milestones for education and developing performance-based criteria can enhance the job and help reduce turnover. Higher-level positions, such as the Senior CSR position, can also be used to reward performance that is beyond normal expectations. Higher-level skills or additional job duties should be the criteria for promoting an individual to a senior position. If the CSR is an agency automation expert, for example, or can take on part-time responsibility for conducting quality audits or training, you can create a career path where one may not have existed.

Offering perks can also be a cost-effective way to attract and retain employees. For example, casual dress, flexible starting times, earning time-off (comp days, floating holidays or summer hours), job sharing, or using part-time positions provide the agency with a powerful advantage in the job market.

The best performers welcome high expectations and want to know they are on a team with exceptional people. A good method for defining and communicating individual expectations is through the performance review process. Through periodic feedback, employees can gain a better idea of how they are doing and what training opportunities they should pursue to develop their skills and knowledge. Communication in general is important to modern employees. They want to know how their work fits into the big picture of the agency’s vision and mission. They appreciate monthly meetings that provide updates on plans and new developments and address their questions and concerns. They are also motivated by public and personal recognition. And finally, they respect organizations that ask for feedback on management and on the agency overall.

Attracting and retaining employees is as much a marketing issue as it is a management issue. Developing and promoting a positive organization and reminding employees of the value of being part of it is critical to getting those referral sources and keeping the talent that you have.

Sharon Cunningham is president of Business Management Group, a management consulting firm based in Hartford, Conn. BMG provides a variety of services, including management and operational assistance and compensation planning to agents and brokers nationwide. She can be reached at 800-772-0208 or at

Topics Agencies Talent Training Development

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Insurance Journal West September 16, 2002
September 16, 2002
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