What Is Your Captive's Talent Acquisition Strategy?
July 10, 2017
The time is ripe for getting the right talent on staff for the insurance industry. Insurers understand that without an effective talent acquisition strategy, the right candidates will not be hired. Hiring the wrong people leads to turnover, which is costly in terms of time, money, and morale. Getting it right is vital to the future success of any business, and captive insurers are not immune from this reality. When is the last time you considered talent acquisition and the challenges and risks that it poses for your captive?
Competition for Talent Intensifies
The Wall Street Journal ran an article June 23, 2017, by Leslie Scism titled "Insurance Is a Fun Career! Just Consider the Zombies and Bacon," which drives home points concerning the incontrovertible demographic trends that are reshaping labor markets.
The numbers are irrefutable, with the average age of an employee in the US insurance industry now at 59 years and the need to replace 25 percent of its workforce over the next 4 years, talent needs are large. The problem is exacerbated by the changing needs of the insurance industry, due to technology, and the fact that many millennials view insurance as boring or staid. No wonder Acuity decided to produce its own zombie video.
Why Should Captives Be Concerned?
Many leaders of captives may wonder why they should be bothered to develop a talent acquisition strategy. After all, captives tend to be smaller companies with fewer employees and may outsource their management entirely. Therefore, the need for talent acquisition is a secondary concern. However, captive management companies, accounting firms, actuarial firms, insurance brokers, and the myriad vendors captives rely on for their daily operations are not immune from this issue.
Captive board members should consider that, as these firms struggle to acquire the necessary talent, there are a number of negative outcomes for their own organization. First, if jobs go unfilled, workloads will increase and the possibility of errors grows. Second, even with staffing increases, it takes time to train new hires. Current staff may be pulled away to assist with this training, and there may be changes to team assignments in your organization. These disruptions may be incremental but will certainly impact operations.
In our opinion, all captives should develop a talent acquisition strategy. Deloitte produced a white paper in 2013 titled The Talent-Intelligent Board, which is worth taking the time to read. The executive summary opens as follows.
In most organizations, talent is an essential resource—in fact, your talent is the one thing that can distinguish you from your competitors. Without the right people to execute and deliver the organization's strategy and objectives at all levels, the business will fail to reach its full potential.
A board's oversight responsibility is well understood in the areas of risk governance, ethics, and corporate responsibility, but less often mentioned with regard to talent. Yet, talent is an intrinsic part of the risk culture of an organization.
In developing a talent acquisition strategy, captive insurers need to keep several points in mind. First, the business of insurance is undergoing a fundamental change as technology and data interact to reshape the industry. We explored some of these changes in "Big Data: What Captives Need To Understand." Second, the millennial generation, which now has supplanted the baby boomers as the largest percentage of the workforce, has dramatically different expectations than the aging boomers. This will necessitate a dramatic shift in corporate culture, which will require time and effort from management. For those looking for some additional insights on the millennials, Lindsey Pollak, a keynote speaker at the Captive Insurance Companies Association (CICA) 2017 International Conference this past March, writes a very informative blog.
Regardless of whether your captive has internal management or uses a captive manager, the board should develop a talent acquisition strategy. Internally, it can be used to ensure your captive is doing what needs to be done to effectively compete in the war for talent. Externally, it can help the board assess whether its professional partners are doing the necessary things to attract key people and provide the thought leadership your organization requires. We suggest that the talent acquisition question become part of any professional services request for proposals that your captive issues.
While talent acquisition strategies differ, there are some fundamental principles and questions captive boards should keep in mind as they move forward.
- Talent networks are now global in nature and technology driven. The old Rolodex network has been supplanted by semi AI (artificial intelligence) driven searches and contacts. Can you create or source a talent ecosystem to find new people?
- Recognize that an employment "brand" needs to be as strong as a marketing "brand." The Alphabets and Facebooks of the world understand this concept. What makes insurance an exciting and interesting place to work or for that matter why should a recruit want to work for your captive?
- What's the talent bench strength in your captive or in your various professional service providers? How are you or these entities managing succession risk?
- Are you monitoring key statistics such as external hiring success rate, time to fill open positions, the effectiveness of onboarding strategies for new hires, longevity, and success of new hires?
- How are you engaging your existing talent every day? Recognize that, in today's business environment, the most talented professionals don't go looking for work; new opportunities come looking for them. What performance best practices should we be using to manage our talent?
The fact of the matter is the demographics are fixed. The next 10–15 years will see a supply side imbalance due to the rapid aging of the workforce and the smaller size of the subsequent generation. Captive insurers will not be immune to this change.
July 10, 2017