There is no doubt that the insurance industry is changing. With the advent of new technologies and the ever-growing digital age, insurers must adapt rapidly. And while many aspects of the business are changing, one area that has not received enough attention is talent strategy. To compete in today's market, insurers need to have a talent strategy that mirrors their core business strategy.
What exactly is talent strategy?
In short, it is a plan for how an organisation will identify, attract, develop, and retain the talent it needs to achieve its business goals. While this may seem like common sense, in reality, most businesses do not have a talent strategy in place. This is particularly true in the insurance industry, where the talent pool has been relatively static for many years.
There are at least two reasons why talent strategy is imperative. First, talent has become one of the most critical factors in business success. In a recent study by McKinsey, talent was found to be a key differentiator in business performance. "Although only 5 per cent of respondents say their talent-management system has improved company performance, among those, 99 per cent say they are more likely to outperform competitors," read the report.
"Additionally, respondents at companies with very effective talent management are six times more likely to report higher total return to shareholders (TRS) than competitors, versus those at companies with very ineffective talent management," it added.
Finally, the war for talent is only getting more intense. With the economy improving and the unemployment rate at historic lows, remote work on the rise, and the talent pool shrinking, businesses are having to fight harder than ever for the best talent. This is particularly true in insurance, where many employees are nearing retirement age, and there is a lack of replacements with the necessary skills.
How can a talent strategy transform the insurance industry?
For starters, it will require insurers to think differently about talent. In the past, insurers have focused primarily on attracting new talent. However, to compete in today's market, they need to be just as focused on several other talent-related areas, including:
Upskilling and reskilling current employees:
To keep up with the changing landscape, insurers need to make sure that their current employees are continuously learning and developing new skills. Upskilling and reskilling are less costly and time-consuming than recruiting and training new talent, and they can help to close the skills gap. Another McKinsey study shows that "replacing an employee can cost more than 100 per cent of the role’s annual salary while successful reskilling can cost less than 10 per cent of a role’s salary."
But it's not just the cost that is important; it's also the talent itself. Providing employees with the opportunity to learn new skills and develop their careers will help retain them and make the talent pool more diverse. For example, suppose an insurer offers a training program for employees who want to move into management. In that case, it will not only help develop talent from within but also bring new perspectives and ideas into the organisation.
Assimilating new talent:
When insurers do recruit new talent, they must take the time to assimilate them into the company culture. This is particularly true when it comes to relatively new or niche skill sets such as data science and analytics, digital marketing, and design thinking. These skills are in high demand, and it can be tempting to hire talent from outside the company without fully considering how they will fit into the existing culture. However, this can often lead to frustration and disengagement on both sides. Insurance companies must ensure the old guard is prepared to work with the new talent and provide support to help the new talent assimilate. This may include onboarding programs, mentorship opportunities, and training on company culture and values.
Updating the talent mix:
Another way that talent strategy can transform the insurance industry is by updating the talent mix. This is an opportunity to promote much-needed diversity, both in terms of gender and ethnicity. It is also an opportunity to bring in talent from different industries and backgrounds, which can help to foster creativity and innovation. Studies have repeatedly shown that diversity leads to better business results, and it is, therefore, essential for insurance companies to make sure that their talent mix reflects the demographics of their customer base.
Creating a dynamic work environment:
Finally, talent strategy can help to transform the insurance industry by creating a more dynamic and vibrant work environment. This is something that candidates are increasingly looking for, and it is essential for attracting and retaining top talent. The insurance industry is known for being relatively conservative, but that doesn't mean companies can't create an attractive work environment. There are several ways to do this, including:
- Offering flexible working arrangements:
Flexible working arrangements are becoming increasingly popular, and they are something that candidates are looking for. They can include things like flexible hours, working from home, and job sharing. Offering these types of arrangements can help make the work environment more attractive and lead to better business results.
- Investing in employee wellness:
Employee wellness is another critical trend that insurance companies should be aware of. There are a number of ways to invest in employee wellness, including providing gym memberships, offering wellness programs, and having on-site amenities such as childcare.
- Providing development opportunities:
Investing in employee development is another way to create a more dynamic work environment. This can include things like training programs, mentorship programs, and career development planning. By providing employees with opportunities to develop their careers, insurance companies can show that they are invested in their employees and committed to creating a positive work environment.
In his best-selling book, "Leaders Eat Last: Why Some Teams Pull Together, and Others Don't," Simon Sinek uses empirical evidence to show that companies with a "people-first" philosophy are more likely to survive and thrive during times of adversity. The same is true for talent strategy. A talent strategy that puts people first will help to transform the insurance industry by attracting and retaining top talent, promoting diversity, and creating a more dynamic and vibrant work environment.
“To ask our employees not simply for their hands to do our labour, but to inspire their cooperation, their trust and their loyalty so that they will commit to our cause," Sinek writes, explaining what a "people-first" company culture looks like. "To treat people like family and not as mere employees. To sacrifice the numbers to save the people and not sacrifice the people to save the numbers.”