As the economy continues to improve, insurance agencies are finding that hiring and retaining qualified employees, which is never easy, has become even more of a challenge. It’s become tougher even though salaries at independent agencies are rising.
It’s also become tougher because the jobs are tougher.
“There’s so much more demanded of staff people today, so finding people with the right qualifications is required, whereas in the past, it might not have been to the same extent,” believes Chris Burand, founder and owner of Burand & Associates LLC based in Pueblo, Colo.
With fewer people looking for jobs, and the jobs themselves becoming more demanding, agencies looking for people are dusting off old ideas and trying new strategies.
Sierra Teger, human resource director, at The Buckner Company, a Salt Lake City-based independent agency with offices in Utah, Colorado and Idaho, characterizes hiring for independent agencies as a “passive candidate market,” meaning not many experienced agency staff are actively searching for jobs. Teger leads hiring and compensation strategies for The Buckner Co., which employs 170 people in both Salt Lake, Colorado and Idaho offices.
Three years ago, Teger found more “active candidates” searching job postings. At that time, she’d easily secure 30 resumes of which a handful were at least somewhat qualified for the job.
But over the past three years, there’s been a “total shift” in the recruiting strategies, she said.
Nowadays, Teger lists agency job openings on three or more job boards and receives nothing. “It doesn’t matter what the opening is for. I almost get zero resumes, and the ones I’m getting have no qualifications for what we’re looking for.”
If she does receive interest, it’s typically an individual aiming to reach their quota to receive unemployment benefits, she said.
New employees are very seldom found these days through traditional channels. This complete turnaround from just a few years ago has prompted her company and others to get creative with recruiting strategies.
One strategy that has helped is monetary awards for employee referrals.
“We pay our employees $500, if they refer a candidate who’s hired, after that person’s been with us for 60 days,” she said. Teger said the better the hire, the better the award. “We’ve even gone up to $700, even $2,000 as an employee referral bonus for bringing on somebody great.” The program has been helpful, but it’s costly.
Teger has also focused more on recruiting at local colleges. “We have partnered with quite a few of them, building really strong relationships with the career development teams,” she said.
The Buckner Co. has also opened its doors to show job candidates what the firm is all about. “We have been hosting open houses on-site at Buckner, where we provide appetizers and drinks, deliver a presentation about our company and (employee) benefits we offer, and other opportunities.” For its headquarters in Utah, company makes sure to invite “plus-ones” to the open house events as well. “Because family is huge, especially in Utah.”
Teger said hiring is no longer just posting a job opening. “It is all hands on deck to try to get candidates in the door. You have to get creative.”
Knowing the job market is always important but it’s critical today to be competitive.
Since 2011, Insurance Journal’s Agency Salary Survey has shown that agency salaries and total income (includes all compensation in addition to salary) for management, producers and service staff have increased. (See related story and charts on the 2018 Agency Salary Survey, page 18.)
Multiple Strategies, Multiple Generations
Five years ago, the insurance industry worried about the mass exodus of baby boomers as they approached retirement age, but so far that hasn’t happened, or at least not at the rapid pace that was anticipated.
More workers continue to work past traditional retirement age. According to U.S. census data, 19 percent of Americans age 65 and older are still working today – the highest rate since 1962.
“We’ve known for a long time we were going to have this war on talent, but we thought that it was going to be because all the boomers were going to retire and leave these gaping holes in our sales and service ranks,” said Julia G. Kramer, executive vice president, chief organizational performance officer at BXS Insurance (BXSI) based in Tupelo, Miss. “But what we are finding out is that boomers are staying.”
In her view, the war for talent has become an issue not tied to replacing retiring employees but rather hiring for growth. What’s been surprising to Kramer has been the increasing difficulty of hiring employees in client service-oriented positions to maintain that growth.
“We are having as much difficulty, and sometimes even more difficulty depending on what area of the country we’re looking in, hiring for experienced client service professionals,” Kramer said. “It’s a little harder than even finding producers and that is surprising.”
Kramer said she knew hiring qualified and experienced service staff would continue to get more challenging but didn’t realize that challenge would surpass that of hiring a qualified producer.
BXSI got creative by elevating the client services department hiring needs to the same level of its sales department. “We want to just make sure that we are focused obviously on revenue generation, but not to the detriment of the client experience and the career experience of client services professionals.”
While BXSI increased its focus on hiring service staff that hasn’t hindered the search for producers. “We are always hiring for producers.” The difference: Producers get hired as opportunities come about.
“Every insurance brokerage firm does opportunistic hiring of producers so the larger you get and the more structured you are, you may say we’re going to hire ‘X’ producers this year and have a budget, have your commission splits all worked out and your base salaries and your validation schedules. We do have that kind of hiring, but most of our hiring is opportunistic.”
Kramer said 100 percent of the producers hired in 2017 came from referrals considered “opportunistic” in nature, while client service staff mostly comes from typical job openings/postings.
Know the Market
Knowing what the market pays, and what it pays for every position in the agency, is a hiring professional’s strongest position, according to Kramer.
“If you don’t know your market, how do you know what you should be paying?” she asked. “Typically, unless you’re benchmarking against industry data, you are breathing your own fumes year after year.”
If agencies don’t keep up, they run the risk of suddenly needing to hire a less experienced person at 20 percent more than the veteran hire being replaced because internal salaries have not kept up with marketplace, she said.
“You also run into problems with retention then, and it’s not necessarily your boomers anymore, but millennials,” Kramer added. “If they don’t feel fairly compensated, they won’t stay with you.”
She advises agency owners to know their own labor market and know the area’s compensation norms. “You can decide to lag the market or lead the market, but you’ve got to know what the market is to make those pay decisions.”
Knowing the market requires knowing more than salaries, too. Given the tough competition for talent, agencies have to get creative not only in how they compensate employees but also in how they present that compensation to their employees, says Mary Newgard, partner and senior search consultant at Capstone Search Group.
She calls it “creative compensation” or valuing a total compensation package in a way that makes it competitive in today’s tight employment market.
“What agencies are going to have to do is assign a dollar-value to each aspect of the total compensation package,” according to Newgard. This helps to show current and future employees the real value of their overall compensation.
Assigning value is easy to do with base salary because it’s just the number, she said. “It’s easy to do with benefits because you know what your benefits cost (health coverage, etc.) and what you’re willing to pay.”
However, things such as flex-time, additional personal time off (PTO) and other valued “soft benefits” should be broken out and valued.
In today’s agency and brokerage job market flex time is highly valued, according to Newgard. It can be a deal-breaker for more experience staff.
Last year Newgard was working with a “fantastic” benefits account executive. “She was making right at about six figures. And while she wasn’t completely unhappy, she was definitely interested in the opportunity that we presented. She got all the way to the offer stage and her increase was going to be about a 20 percent on her salary plus variable bonus income – a pretty substantial increase. But when the rubber met the road, she was only working four days a week in the office with her current employer, with the fifth day, every Friday, at home.”
Newgard said that as a working mother with children in daycare, the 20 percent increase just wasn’t enough to make up for the Friday workday at home.
“At the end of the day, she turned down the 20 percent offer,” she said. “That is a really good example of what you’re hearing from other agencies about needing to be creative with compensation.”
Another way some agencies are getting creative is helping employees cover family benefits.
“I don’t think it’s unheard of for agencies to pay a very large portion of the employee’s benefits costs, but if you have family and you have dependents on there, that can get pricey,” Newgard said. The more that agencies can do to add to the benefits coverage, the better the compensation proposal.
“What happens for candidates is when they get to the offer stage and they see the employee benefits plan and the costs (of that plan), the first thing they’re going to say is, ‘Well out of my paycheck now, it only costs me ‘X’- this one with you is going to cost me above ‘X,’ so now that raise isn’t going to be that great.”
Newgard advises agencies to assign dollar-values to every part of the total compensation package.
“They can really make that a huge selling-point,” she said. “That’s where agencies need to get a little bit better on selling whatever compensation they are selling – putting dollar-values to it and really upselling the notion of how much they are giving.”
Tommy McDonald, vice president at Marsh, Berry & Co., Inc. offered similar advice to agency owners: communicate well on compensation value.
“Being able to communicate that there is career growth and firm growth outside of monetary gain is important. I believe that employees want to work for an agency that is headed towards something bigger. Selling that vision is important,” he said.
“I think the fact that this industry, historically has been driven by salespeople is something that people are addressing today. Hiring top talent isn’t just a sales issue. More firms are having to address the need to keep top talent inside their firms at all levels.”
McDonald says agency owners are more mindful today that employees in service roles want to see a path that allows them to grow in their career. “That may cost them more money or force them to be more creative in how they compensate, what benefits they offer and how they need to evolve their culture,” he said.
“A career path for service people is something that hopefully organizations are trying to put some math and some thought around,” McDonald said. Growth has been historically and primarily driven by the quality of your sales staff alone. “But now, more firms are realizing that new business production and sustainable growth is an agency challenge, and service quality matters” he said. “Hopefully firms focus more on being creative so that they can hire people, keep them motivated and employed in our industry.”
Asking for More
Agency owners will have to pay more to get the quality they need, according to agency consultant Burand.
Employees are well aware of the healthy economy and tight job market and it’s not uncommon these days for them to seek to cash-in by asking for raises. That’s not a situation many agencies have had to deal with in the recent past.
“I do have clients who are facing, for the very first time, strong requests, particularly by staff, for more money,” Burand said. “I think the staff feels like the marketplace is such that they can go get another job just about anywhere, and therefore, the time is right to ask for more money.”
That might be the result of agencies being too slow after the credit crisis and the economic downturn, where so many agencies froze raises, he said. “They were a little slow to make adjustments and the two forces kind of came together in the past 18 months or so to create a scenario in which the employees felt pressure personally and the opportunity in the industry to ask for more money, and they have.”
Burand said that most of the time, the requests are reasonable and in many cases agency owners are catching up. “I think most people think it’s a really good thing.”
There are of course other scenarios where some staff may not have a good perspective on what their pay actually should be, he said. “They’re kind of going overboard in their requests and demands.” However, Burand said in his view that’s a very small minority of agency staff.
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