Salaries and total compensation rose in 2021 for all levels of empoloyees reporting in the Insurance Journal Agency Salary Survey.
But while insurance agency personnel on average made more money last year, their satisfaction with compensation overall declined despite the higher salaries and total compensation. (See page 37)
As they face continued competition to find and retain the best talent, agency owners also face heightened demand not only for better pay but also for a better working environment.
“Compensation is certainly important, but there are many other factors a potential employee will consider when evaluating an offer and a current employee will consider when deciding whether or not to stick around,” Tyler Asher, president of Independent Agent Distribution at Liberty Mutual and Safeco Insurance, told Insurance Journal. “Non-monetary benefits like flexibility, autonomy and career development are a great way to make an agency more attractive to employees.”
Perhaps more important than offering specific benefits is understanding the unique values of an individual, according to Asher. A new graduate, for example, is going to have very different wants and needs than a parent or an employee nearing retirement. “While there’s always going to be a need to offer a blanket set of benefits like health insurance or retirement contributions, there’s also an opportunity to customize the employee experience for the individual.”
Alicia Kiser, vice president of human resources at Wauwatosa, Wisconsin-based M3 Insurance, agrees that customizing an employee’s career path and personal development is important.
“I really think we’re kind of into this war for talent and I think at some point that’ll fizzle out,” she said. But what will remain in the future is what employees now expect of their employers. That has changed permanently, she said.
“I think that expectations of workers, whether it be in our industry or not, have changed,” Kiser said. Some have referred to the pandemic as the great reset, she added. “I think employees have pushed the reset button in a lot of ways. Whether that be around their expectations of an employer from a compensation perspective, from a benefits perspective, or from a flexibility perspective,” she said.
Agencies should also be aware that employees are evaluating their employers in other areas such as their stance on inclusion and diversity, Kiser added. “You think about what’s all gone on over the last couple of years … that stuff is not going away,” she said. “So there’s the short-term war for talent, but also expectations are changing, and those types of changes will stick around.”
The war for talent in the agency ranks is not new, but it has been exacerbated by the pandemic, according to Tony Caldwell, an author, speaker and co-founder, chairman and CEO of the OAA, a member of SIAA based in Oklahoma City, Oklahoma.
“We’ve all been talking about talent and availability of talent for a long time but clearly COVID has moved a lot of people to the sidelines permanently,” he said. “I think we just accelerated retirements by five years in 2020 and 2021, which increased the leverage that the remaining people have, but also the workloads and everything else.”
Another competitive pressure to compensation is inflation. “We’re seeing people moving around a bunch because of inflation,” Caldwell said. But also he sees agency staff moving to new jobs in 2022, even more than last year, because of quality of life and quality of work issues. There’s ongoing pressure for continuing remote work, he said.
“I think we’re seeing a lot of agencies offering two days a week, and some full-time remote. Some people are getting employees hired away by agencies three states over and so that is dramatically increasing the competition, which isn’t really just solvable by giving somebody a 5% raise,” Caldwell said.
Caldwell says agencies must now be more flexible with work arrangements, such as work-from-home options, and also must consider ramping up other benefits, such as the number of personal time off days. “I think agencies generally offer a pretty good benefit cafeteria because we’re in the business. But we’re seeing in smaller agencies, maybe that didn’t do that in the past, having to step up and provide benefits that they hadn’t been forced to do up until now.”
Moving People, Moving Wages
Agency owners and managers (51.4%) responding to this year’s Agency Salary Survey reported an increased demand for higher pay in 2021 but a large majority (76.8%) said they didn’t see a higher number of resignations in 2021.
One agency owner wrote in the survey: “There is a demand for higher salaries, sometimes by 20% or more.”
Another manager noted that demands for higher pay are much higher for new hires who are looking to start at higher comp levels. “This is driven by marketplace pressures,” they said.
“Higher compensation levels will continue to be the trend,” Jeff Holmes, COO of SIAA, told Insurance Journal. “As a result, the need for a solid hiring strategy comes into play more than ever.”
Job history, cultural fit and verifiable patterns of success all become extremely relevant in today’s competitive landscape, according to Holmes. “Top talent can be a game changer in any organization,” he said. “Don’t be caught off guard by failing to recognize the difference between top talent and those simply seizing a market opportunity.”
While it might appear that higher salaries are the only option, that’s not necessarily true, says Mary Newgard, partner at Capstone Insurance Recruiters, which released its Insurance Agency Compensation Report 2021 in January. It showed perception isn’t always reality when it comes to rising salaries.
“With the exception of a few roles, most salaries [at the support staff levels] show minimal variance year after year,” states the report, which examined information from the companies and individuals Capstone has worked with in recent years, including examining the salaries of job candidates placed by Capstone Recruiters.
Newgard said the study examined one-year changes in compensation but also reviewed changes over a five-year period. While the survey showed increases in salaries, salaries didn’t rise or change as much as was expected, especially when reviewing changes over a five-year period, she said. For example, the five-year change for CSR, account assistant/associate tech was up +3.38%, but the five-year change for the P/C account manager was up +10.28%.
“Our report showed things don’t fluctuate as much as we all feel they do except in isolated pockets where certain market trends put pressure on a particular type of position.” That includes areas where service staff specialize in certain classes of business.
According to Newgard, one of those pockets is in the area of high-net worth clientele. Last year, demands for higher salaries for private client/high net worth account managers were up significantly, she said.
“Those personal lines account managers that are working on higher value clients, are in demand,” she said. “This was the group out of every group that was getting 25% increases to stay or to go.”
That trend is not the case for all account manager positions in the agency. But there are certainly pockets experience increasing demands on compensation, she added.
Newgard says it’s important to shine light on what motivates an experienced insurance agency professional to move to a new agency.
“If an agency calls me and says that they have an opening for an account manager, they want an experienced person, which means they would like to hire somebody from another agency who’s already an account manager,” she said. “When we go into the market and talk with people, I would say it’s pretty evenly divided when it comes to their ‘search motivation.'” According to Newgard, a portion of that search motivation can be attributed to dissatisfaction over their compensation.
“They’ll say things like, ‘I’m not getting salary increases because my company doesn’t do annual reviews,’ or ‘I was unhappy by the bonus I received last year, even though I know that my company performed well.’ To me, that’s probably about 20% to 30% of the time,” Newgard said.
But for 70% to 80% of the time, the search motivation lies around employees’ feelings of missed opportunities, she noted. They might say, “I don’t feel like I have an opportunity for career advancement or development.” That’s a significant portion of job search motivation, Newgard said. “A lot of that is remote work, the workplace flexibility, benefits, and how their boss treats them.”
This is one reason Asher and others say customization is so important in today’s employee experience. “One employee might want more flexibility for when and where they work, another might want to attend a professional conference, and a third might want more leadership opportunities,” Asher said. “Agencies may not have the resources to invest in all things for all employees, but they should be able to invest at the individual level.”
Employees are not the same in a post-pandemic world, he added. “You know that employee you thought you knew before the pandemic? Their unique experiences over the last two years have also likely changed what they value from work, so it’s important to consistently revisit an employee’s wants and needs over the course of their career,” Asher told Insurance Journal.
Remote and hybrid work is an area more agencies have an opportunity to explore, Asher said. Yet, according to an agency growth study yet to be released by Liberty Mutual and Safeco, nearly two-thirds of agencies are unwilling to hire a remote employee and more than half plan to keep staff in the office full time in 2022.
The Liberty Mutual/Safeco survey, which polled 738 independent agency employees, including a mix of personal lines and small commercial agencies, found that 56% of agencies plan to have employees work full time in the office in 2022, while the other agencies plan to have employees work from home an average of two days a week. Of those that do work at least partially remote: 57% believe they have better work-life balance, 52% have more personal happiness and 47% are more productive when working from home.
“In a post-COVID hiring market, flexibility is going to be the expectation,” Asher said. “And an agency’s ability to attract and retain top talent is almost certainly going hinge on how willing they are to provide at least some flexibility in remote work.”
Culture building is another area where many agencies need to get more strategic and intentional, he added. “Culture is in everything you do, big and small: How you recognize an employee’s accomplishments, the time of day you make calls and send emails; the words you use to describe customers; the types of technology employees have access to. The list goes on.”
Asher says there’s often a disconnect between what agency leaders think about their culture and how employees experience it. For example, in agencies that employ seven or more people, nearly 70% of agency principals and managers believe their team can bring their authentic selves to work, yet just 46% of frontline staff agree with that statement.
“Closing the gap between perception and employee experience will be one of the most effective ways to keep talent in 2022,” Asher said.
M3 Insurance’s Kiser, agrees career development, purpose, and feeling valued as an employee are critical in a competitive talent landscape.
“Recognize and help employees feel like they’re making progress in their career journey and find ways to compensate them for those things that they’re taking on creatively,” she said.
Not every employee wants to work remotely all the time, she said. “What we’re starting to see is people who were working 100% from home, they’re kind of getting sick of it, or it’s not as great as they thought it would be because they’re missing out on the culture, the apprenticeship, the full experience,” she said. “And so it’s about striking the right balance so that you’re providing flexibility, but still helping with that same employee experience and cultural vibe.”
SIAA’s Holmes urges agencies to start with an honest evaluation of what the agency needs. “Evaluate the needs of the business first, and hire for positions that primarily drive meaningful revenue,” he said.
Holmes also encourages agencies to consider technology and how it plays a role in streamlining agency operations. “Virtual assistants and service centers are underutilized in most agencies business plans,” he said. “Investments in producer talent, and outsourcing service could better position your agency to thrive in the years to come.”
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