No matter which city hosts a conference for employee benefit brokers, one aspect is always the same: middle-aged white men account for an overwhelming percentage of attendees. And someone invariably cracks wise about the situation.
For the insurance industry, however, it’s no laughing matter. There’s a need for new, young talent — a problem that’s plagued the field for years. “Attracting young people to this industry is challenging. It’s been that way for a while,” says Tom Doran, executive vice president of Reagan Consulting, an Atlanta-based management consulting firm.
In fact, recent college graduates accounted for a dismal 6% of new hires, according to a 2014 Reagan study that looked at broker hiring practices over the previous five years. Just 35% of new hires came from outside of the industry, and more than half of new hires were experienced brokers who move from agency to agency. “We’re cannibalizing,” Doran says.
And aging. The average agency owner is in their 50s and the average producer is in their late 40s, according to Reagan, which gathered baseline data from 4,641 brokers from 562 firms and conducted a follow-up survey with 112 firms that hired 1,505 new employees over a five-year period. The study also found that about six in 10 firms aren’t hiring enough new employees to achieve their growth goals.
To combat this problem, many brokerages are using internship and mentoring programs to ensure there’s a steady flow of talent in the pipeline to replace outgoing baby boomers.
“Organic growth is everything,” says Susan Pietrucha, chief HR officer for Arthur J. Gallagher & Co., the No. 2 large-group brokerage in the U.S., according to EBA’s second annual listing of top employee benefit firms in the country ranked exclusively on health and welfare revenue based on Form 5500 reporting data as of Nov. 16, 2015, gathered by EBA partner miEdge, a business intelligence data analytics firm.
Organic growth impacts stock prices, and analysts want to know how much growth is organic and what is gained from mergers and acquisitions, she says. “This is absolutely fundamental to our strategy for the long term.”
Recruiting new talent is an ongoing endeavor at Gallagher, which has nearly quadrupled in size to 25,000 employees since Pietrucha started in 2007. “And we’re not stopping,” she says.
Much of that growth comes from mergers — Gallagher was involved in 62 acquisitions last year alone, Pietrucha says. But the Itasca, Ill.-based firm also dedicates substantial resources to developing home-grown talent. “At some point, the M&A activity couldn’t be the only piston in the engine,” she says.
Gallagher’s two-pronged approach involves a summer internship program, which began in 1964, and a new producer hiring initiative that started in August. The latter uses a three-year onboarding program “that will give any new producer coming in the support and knowledge as well as the skillsets … to try to validate them as quickly as we can,” Pietrucha says. “But a validation process that sets them up for success.”
Along with providing sales training, Gallagher pairs new producers with seasoned veterans and offers strong HR support, Pietrucha says. “It’s kind of like a concierge,” she says. “Any question you can possibly ask, you’ve got that one-stop shopping that you can try to get the answer.”
Having a mentor is crucial for success, says Ed Schloesslin, senior vice president of HR at Lockton, the No. 6 large-group brokerage. “Mentoring is a critical element along the continuum of the entire associate lifecycle, not just during the onboarding and assimilation phase,” he says.
It’s also helpful for an experienced broker looking to advance their career. “The mentoring element is huge not only for the associates that are brand new … but the people who are ready to come up and assume those positions that are being vacated by the boomers, or the people who are retiring,” he says. “We put a huge, huge emphasis on mentoring.”
Lockton finds some of those mentors from an unlikely population — people who have already retired or are nearing retirement. While it focuses on early-career and mid-career producers, Lockton also actively seeks industry veterans who are looking for a reduced level of responsibility and the opportunity to groom young mentees.
Schloesslin says baby boomers pass on invaluable knowledge to the next generation, millennials, who account for more than one in three U.S. workers, according to the Pew Research Center. “We need people across that entire spectrum,” he says.
College undergraduates who have just finished their junior year are ideal interns, Pietrucha says. Those students aren’t there to make copies and get coffee, she says, they receive real, on-the-job training. “They’re part of the business,” Pietrucha says. “We actually put you out there.”
Ensuring interns receive as real of an experience as possible is the goal, she adds. “It’s really important for us to tell them what they’re in for. It is not at all helpful to us as a company if we try to sugarcoat something.”
Not only does this help weed out those who find that the industry isn’t right for them, Pietrucha says, but the interns also appreciate the genuine experience. “That, to me, is what resonates most with the interns,” she says.
Pete Doyle agrees. He entered the internship program in summer 2000 and has been with Gallagher ever since, now serving as regional executive vice president based in Atlanta. “I always knew I wanted to do sales,” Doyle says. “The internship did a great job of giving you experiences that were very closely tied and linked to what you would be doing.” Doyle was considering following in his father’s footsteps as a trader on the Chicago Board Options Exchange, and says he most likely would have had he not interned at Gallagher.
A majority of recent interns can relate — Gallagher has converted 60% of its interns into full-time employees over the past five years, Pietrucha says. “When I got here, it was significantly lower than that,” she says. “It was in the thirties.” Pietrucha expects between 300 and 350 interns this coming summer — and the program is set to expand abroad to the U.K. and Canada in 2016 and to Australia in 2017.
Focusing on a global strategy is part of the new graduate development program at Willis Group. Launched in September in the U.S., U.K. and Singapore, the two-year, cross-business program puts recent graduates through three, eight-month rotations. “They cycle through different aspects of the business,” says Celia Brown, executive vice president, group HR director at Willis, the No. 4 large-group brokerage.
At the end of the two years, each employee is evaluated and possibly, but not necessarily, placed in a full-time position. “It’s real work, but it’s not a permanent assignment,” Brown says. “You’re hired into the program.”
The program intentionally limits the amount of spots to 50 full-time and 40 summer interns — Willis isn’t interested in hiring a subset of hundreds of potential employees. “This is not a huge program,” Brown says. “The goal is to find talent. Ideally, we would have a job for every person.”
While the specifics about each rotation are still being defined, Willis wants each intern to receive varied experience, including property and casualty, human capital and re-insurance, when the first graduates arrive in summer 2016. “The idea is they get the full boat,” Brown says. “They all get each element of the program.”
Top performers could have the chance for international travel, Brown says. Traveling abroad for work is not only attractive to millennials, but it also enhances a new producer’s skill set, she says. “It is a fantastic way to develop an employee,” Brown says. “Giving somebody that added dimension to their experience makes them a much more valuable employee both from their core knowledge, their cultural experience and the cross-pollination that happens on both sides of the equation.”
Relationship with universities
When recruiting interns, Lockton looks at colleges and universities from a national, regional and local perspective. The national level focuses on a half dozen schools that have a high interest in the industry and a history of providing talent to multiple offices across the country, Schloesslin says. The firm builds bonds with the faculty and the heads of the risk management programs. “We really invest in relationships,” he says.
The regional approach focuses on Midwest schools that can provide talent to two or more offices around Chicago, St. Louis and Kansas City, Mo., where Lockton is headquartered. At the local level, those universities can provident talent for one office. “Those are still very important to us,” Schloesslin says. “The national, regional and local focus enables us to be a bit more measured in terms of how we establish a presence on campus and not just doing it randomly.”
Willis, too, scours the country during its recruitment. While it has a targeted set of schools, Willis doesn’t solely focus on risk management programs, Brown says. It’s interested in students majoring in a variety of subjects, such as economics, math and English. “We are looking for a broad range of skills,” she says.
One of the challenges when recruiting young talent is the misconceptions many people have, such as ‘insurance is a boring industry’ and ‘a broker is stuck in an office cold-calling prospective clients all day.’ “The insurance brokerage industry hasn’t historically had an exciting reputation,” says Kim Van Orman, senior vice president and chief HR officer at USI Insurance Services, the No. 7 large-group brokerage. “But it is. And that is changing.”
Brokerages don’t market themselves like the major carriers, so most people have no idea what brokers do, Doyle says. “It certainly takes some educating and some discussion to break some of the general views on the industry,” he says.
Discussing the segments one can work in, such as cyber risk or professional liability, helps enhance the appeal of the industry, Brown says. “It can be as sophisticated and worldly and intriguing and impactful as any other financial services or technology or other professional services area once you look behind the curtain and understand really what it’s all about,” she says.
Technology is another aspect that many don’t include when they think of today’s market. “It’s about the delivery of benefits. It’s also about technology platforms through which to deliver benefits,” Brown says. “There’s your technology link that may not occur to an engineering major.”
Given Gallagher’s growth, keeping a steady stream of new talent flowing is essential, Pietrucha says. “Recruiting for us, especially producer recruiting, is so critical to our strategy that it’s only going to grow,” she says. “The competition for talent is never going to end. It’s been this way as long as I’ve been working.” As millennials — who grew up with technology — continue to make up a larger portion of the workforce, the industry will inevitably change, too, she says. “What we look like today … we will not look like five years from now.”
Brokerages’ recruiting strategies must also adapt, Pietrucha says. “The way you prospect a business may be completely different,” she says, “and I think our recruiting efforts will have to match that.”
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