Wages are going up. We know that. As inflation soars, and as the cost of living rises, and as unemployment continues to touch historic lows – employees are basically in the driver’s seat. And their demands are higher wages and more flexible work cultures.
We’re seeing it across the board. Low, medium, and highly skilled workers are all experiencing salary increases at the same rate – with an overall average of 5.3% (as of June 2022) – the highest rate since June 2001 (also 5.3%). Millennials (age 26-41 in 2022) represent the largest population of the US workforce at 35%. But with the speed at which baby boomers are retiring, the percentage of millennials in the workforce are expected to go from 35% to 75% in the next 3 years (by 2025).1
All of this presents a double problem for most companies who are being challenged to recruit and retain employees while also managing the overall cost of doing business because of rising payrolls. But it’s an even bigger problem for those in the insurance industry. Because millennials don’t want to work in insurance.
Millennials in insurance.
All companies are searching for the brightest and the best employees to fill one of the 11 million open positions in this country, and millennials are the sweet spot for middle management and leadership roles. These are individuals who were born between ‘81 and ‘97. They grew up in the digital age and currently embrace and understand the importance of technology, data, mobile and social – very well.
Do you know how many millennials are interested in getting into insurance? According to the Pew Research Center – only 4% of them.
Artificial Intelligence. Augmented Reality. Robotics. Cybersecurity. SaaS. Gaming. Telehealth. These are just a few of the hot industries that the insurance industry is competing against to woo the best talent. Combine these exciting industries with the defining characteristics of your typical millennials (tech-savvy, crave work-life balance, hungry for advancement, tend to job-hop) and you’ve got a good match. Millennials want action and adventure.
Five strategies to help insurance companies attract (and keep) the best talent.
The insurance industry has a long and proven history of stability, is very resilient relative to other industries, and has been practically immune from recessions. But that still may not be sexy enough for your typical millennial. Here are five alternative strategies for attracting (and keeping) the best talent.
1. Offer higher wages (than other industries and competitors). Crazy, right? Salaries are already through the roof. Look – the insurance industry can’t compete with Google or Meta when it comes to (promises of) action and adventure. After all, risk assessment is part of what makes the insurance industry so stable and successful. Furthermore, the insurance industry lags the IT industry (“Information Sector” according to BLS) by 13% in average hourly earnings; and lags the “Professional, Scientific & Technical Sector” by 20%. So higher salaries for the right talent needs to be part of the recruiting pitch.
MarshBerry’s 2022 Insurance Brokerage Compensation Study has shown that a well-designed compensation strategy can have a huge impact on hiring and retention, perpetuation, culture, value creation and the overall performance of an insurance brokerage. The study shows that the highest performing firms have higher payroll per employee than the average firm. High growth firms are willing to spend more money for top talent which drives efficiencies and scale in all other critical expense categories. Even in a tight labor market, these firms continue to produce outsized results.
2. Be more flexible (and understanding) with your work culture. A work culture that understands where people’s priorities are – will always be more attractive. Since COVID, people have looked at their health, their family, their travel, and their overall priorities differently. Flexible work arrangements are very attractive and are quickly becoming the new normal. Recent data projections (by the job search service Ladders) estimate that 25% of all professional jobs in North America will be remote by the end of 2023. Furthermore, in this global economy, “9am-5pm” doesn’t mean much or may not matter at all. The firms that embrace performance over policy will win (and retain) the best talent – and reap the rewards of that talent.
3. Create better training and development for advancement opportunities. Getting the best talent is one challenge. Retaining that talent is even more difficult. Data shows that wage growth for people who switch jobs is 6% (vs. 4.5% for job stayers). So, even if you can attract the right people, ensuring you have the right culture and growth opportunities in place to keep them – is just as important. The silver lining for insurance brokerage firms is that the insurance industry boasts one of the highest average tenures among both private and public sectors. Insurance firms who take a proactive approach to establishing strong training and development programs are more likely to have better staff retention, with higher job satisfaction and better productivity from employees.
4. Be better at branding your firm. In an open letter from several insurance company CEOs, as part of the Insurance Careers Movement initiative, they stated: “What’s clear is that the critical role our industry plays is not fully understood, particularly among millennials. We need to do more to engage, educate and enlist the best and brightest to join us.”2
While this is an industry-wide problem, and needs to be addressed at that level, it doesn’t mean it can’t be done better at the firm level. What does your company represent? How well do you explain what you do? What is your culture like? How well do you leverage your people in creating awareness of your business? Look towards your human resources, recruiting, Diversity, Equity, and Inclusion (DE&I), and professional development teams to help create a unique corporate brand and vibrant culture that helps attract the best talent – despite being an insurance company.
5. Invest in millennials. Don’t make your open positions about “insurance.” Make them about “marketing” or “finance” or “operations” or “human resources.” Hire talent based on skillset, not industry experience. According to the MarshBerry 2022 Compensation Study, high growth firms tend to hire more employees newer to the industry which not only fosters growth – but also presents coaching and mentoring opportunities and ensures perpetuation of talent as people move up or retire.
Why do you need the best talent?
Seems like a strange question. But here’s the answer: because even with the headwinds of a tough economy that is demanding higher wages for everyone, plus a competitive job market, the firms with the best talent can continue to organically grow.
Now is the time to start implementing strategies that will help your company hire and retain the best talent to thrive. MarshBerry’s talent acquisition services can help.
If you have questions about Today’s ViewPoint or want to learn how to win over millennials to join your firm, please email or call Brian Ambrosia, Director at 440.220.5430.