As a CEO, I spend a lot of time talking with clients and peers. As we enter the fourth year of navigating the effects of COVID-19 on businesses and the economy, these conversations continue to focus on one main challenge: the competition for talent. It is a rare thing to pick up the Wall Street Journal and not see an article on the labor force, layoffs, or return to work challenges. With myriad issues, business leaders are developing a corresponding number of actions and solutions. But while the playing field continues to evolve, no one seems to have figured it out yet.
The labor market remains competitive – especially in the insurance and insurance technology sectors. The classic economic concept of supply and demand is at work. As the labor supply has become more constrained, the demand for resources has increased and driven the cost of those resources higher. The number of people available to work remains substantially smaller as a percent of the population compared to pre-pandemic standards [i]. The insurance industry also faces a looming “great retirement.” More than half of baby boomers are over 65, the traditional retirement age, and they’re retiring at approximately the rate of 12,000 a day. This threatens to exacerbate the supply challenge and drain industry knowledge dramatically. So, companies that cannot attract or replace talent effectively will find it increasingly difficult to compete.
Here is the key question: How do insurance and insurance technology companies respond to these challenges?
I offer three areas for strategic consideration and emphasis:
- Promote a meaningful purpose
- Emphasize career lattices
- Embrace hybrid work environments supported by digital transformation
Promote a Meaningful Purpose
Let’s face it, outside the industry, the insurance field doesn’t have a positive image and certainly lacks a cutting-edge vibe. This reputation will only exacerbate the global competition for talent.
The radical work environment changes brought on by the pandemic prompted many individuals to reflect on their careers. Coming out of COVID, they wanted to know that where they work and what they do matters and makes a difference. The good news is, in many ways, the industry was vital during the COVID-19 pandemic. After all, insurance makes a real-life impact when individuals face some of their most critical trials. Veterans in the industry understand this. They appreciate the meaningful work and the satisfaction it provides, knowing that one’s work has made a positive difference. But how do you prove this to new talent?
Look at any life insurance company’s mission or purpose statement, and I am certain you will find assurances of protection, security, and peace of mind. The life insurance industry is a noble industry. Recruitment, social posts, stories, and website efforts should emphasize this. You should also illustrate the industry’s stability and the clients’ meaningful mission journey. We may live in an instant gratification society, but when it comes to entrusting a company with my family’s or business’ well-being in my absence, I admire an industry that will endure and be there when I need it most.
Emphasize Career Lattices
A recent survey from McKinsey showed that slightly over 40% of workers left their jobs between April 2021 and April 2022 due to a lack of career progression or growth[ii]. A survey by Qualtrics for CNBC noted that nearly 90% of millennials said they would choose to stay in a job for the next ten years if they knew they would get annual raises and upward career mobility[iii]. The same survey indicated that 77% would be willing to cut their salary in exchange for long-term job security. Furthermore, according to LinkedIn, employees who make a vertical or lateral internal move are more likely to stay at their organization longer than those who do not[iv]. Workers who have moved internally have a 64% chance of remaining with an organization after three years. What does all this mean? Internal mobility is a crucial strategy for talent retention.
In this knowledge-based business, with many top executives and industry veterans on the verge of retirement, the insurance field is fertile for advancing internal talent. I was introduced to the concept of career lattices by my friend and fellow Tugboat Group CEO, Todd Govig of Govig Executive Search. Todd shared that ambition drives high performers – they want to learn and be challenged continuously. We traditionally think of career progression as a career path and ladder. But if one views career growth more as a lattice, individuals can move up, down, or across divisions and disciplines. With investment in talent and mentoring, individuals can take on different roles in the organization and increase their value, industry knowledge, and experience.
Too many individuals look for jobs and not careers. This short-term thinking pigeonholes them into a single-skill mindset, and they fail to take advantage of the industry knowledge and expertise that a longer-term career perspective provides. A career lattice approach to career growth creates a workplace where high achievers are challenged and can maximize their knowledge, learning, and career growth. The insurance industry should demonstrate the appeal of careers and not just positions at their firms, emphasizing career growth from the perspective of a career lattice.
Embrace Hybrid Work Environments Supported by Digital Transformation
Data-driven decision making and digital experiences have been on the insurer’s wishlist for most of the last decade. It took the catalyst of the pandemic to accelerate adoption, and there is no going back to pre-2020 experiences or expectations.
A study by Future Forum found an overwhelming desire for flexible and remote work arrangements. Fully “in-office” workers surveyed had the lowest satisfaction with their working arrangement. Over 83% of working moms want “location flexibility,” and greater than 50% of parents want to work remotely 3 to 5 days per week.
Embracing a hybrid work environment (a mixture of “in-office” and remote work) means establishing location and schedule flexibility norms. Trusting knowledge-based employees with schedule and location flexibility can attract talent, whereas rigidity can drive attrition. For many, a return to the office focuses on where but ignores the flexibility of when. Our experience at Andesa demonstrates our ability to produce effectively working predominantly virtual, yet we can still build culture and relationships with some limited and periodic in-office collaboration time.
We also need to consider the impact technology can make on the employee experience. Traditional data entry and paper processing roles – often the entry point into an insurance career – are being replaced with a need for advisory and digital experience skills as entry requirements. Digital transformation should be high on the insurance industry’s talent strategy list. This means an investment in training and a fresh look at the skill sets required for new talent.
The pandemic also accelerated the introduction of new technologies which improve communication, training, and collaboration across teams. Each company would be wise to research these tools and adapt those conducive to the work environment they want to achieve. Striking a balance of productivity, flexibility, and mobility across hybrid work is crucial for an insurance company’s success in the competition for talent.
The talent environment is dynamic and complicated, and as is almost always the case, there is no single solution to guarantee success. By promoting your purpose, emphasizing career lattices, and embracing hybrid work and digital strategies, those in the insurance industry have a better shot at winning the battle than those who ignore the marketplace dynamic.