The Talent Crunch Is Poised to Get Much, Much Tougher: Here’s How to Win

I recently participated in a discussion on agency challenges for a major commercial property/casualty carrier. When asked about their challenges, every single agency owner cited talent as their number one challenge. Frankly, there wasn’t much conversation about anything else. While this is consistent with what I had been hearing for years, the intensity in the room was palpable.

Soon after, I participated in a discussion with a local investment banking firm, where an executive said their survey research demonstrated that just over two open positions are being advertised for every unemployed person in the country.

That’s up from the previous quarter and year. In the same call, we discussed the overall unemployment rate. At under 3.5%, the rate continues to stump economists as they try to predict when inflation will abate and the Federal Reserve will quit hiking interest rates. After almost 18 months of raising rates, inflation seems persistent and that is linked to the low unemployment rate.

We’ve known for years that most employees in the independent agency system will be age eligible to retire in this decade. And they are doing just that, along with others in the Baby Boomer cohort. This generation, the largest in American and world history, is being replaced by one of the smallest generations.

So, of course employees are getting more and more difficult to find. The basic law of supply and demand tells us that as supply goes down in the face of consistent or rising demand, the cost will go up. That’s happening across the economy with non-farm wages up almost 5% year over year, according to the federal government. Yet, insurance agency jobs go unfilled.

When the people needed to fill positions don’t exist despite rising salaries how can you fill the positions needed to sustain or grow your agency?

Out with the Old Way

The first step is to realize that employers no longer have the power in the employer/employee relationship, employees do.

What does this mean? Now, the employers must interview to be found worthy of the employee and not the other way around. This has implications both for how you advertise or recruit people and how you plan for it.

The traditional manner of seeking a new person for your team was for the business owner to develop a job description and post it on various advertising media. This type of recruiting effort essentially asked prospective employees to “prove” themselves to the employer and “sell” themselves as a great fit for a job based on posted criteria. The employer decided who fit and who didn’t, and then controlled to a large extent the compensation and benefits discussion.

This traditional method was also somewhat passive in that the business owner put an ad out there and waited for qualified people to show up and read it.

This isn’t working very well any longer. As a result, many business owners are turning to professional search firms to find talent. However, using a search firm, which was typically only used by agencies in acute or urgent circumstances, has lost its effectiveness because it is now so commonplace.

Recruiter calls are experienced frequently by most agency employees. As a result, these calls are becoming background noise. A recruiter I’ve worked with for over two decades told me this is the toughest environment he’s ever navigated, and he doesn’t expect it to get better.

In With the New

Clearly, traditional recruiting methods aren’t working as well as they had in the past. And competition among employers continues to increase, making the task all the harder.

So, if the traditional methods of recruiting a new employee no longer work, how do you “win” in the supply constrained marketplace for the talent you need?

First, accept the new reality. You have to convince the people you need that you have the workplace, position and future they want not the other way around. This means you must understand and focus on your competitive strengths compared to other employers. If you aren’t offering top notch compensation packages that include salary, bonus and benefits, you must either retool or accept consistent recruiting failure or less experienced or talented people.

It also means that you must assess, and modify as required, soft benefits like remote work options, job sharing and similar things. If you choose to be less flexible or generous, you will need to reconcile yourself to talent problems. Of critical importance is company culture. The Millennial and following generational cohorts care deeply about company culture and that is showing up in surveys as often more important than cash compensation.

It’s important to realize that the marketplace for talent is dynamic and constantly changing. Your people are hearing what your competitors are offering on virtually a weekly basis and you need to understand your competition for talent as deeply as you understand your target markets for insurance sales.

A Proactive Approach

All of this brings me to my essential point on winning in the talent competition. It can no longer be a passive activity, nor can you wait until you have a vacancy to start looking for a candidate. It’s important to remember that younger generations value job tenure and stability less than the older one, so increased turnover is also a growing risk. Simply put, you must be marketing for talent all the time.

By marketing for talent, I mean that you must proactively be communicating in a compelling manner your employment value proposition in the same way you are accustomed to marketing for new insurance clients. You need to regularly advertise, post on social media, attend, and actively participate in relevant industry events, and so on. And you need to do it with the same mindset as when searching for clients.

Prospective clients want to know “what’s in it for me?” The same holds true for prospective hires.

You have to convince the people you need that you have the workplace, position and future they want …

When you have a live insurance prospect in front of you, a careful needs and wants analysis comes before a winning sales pitch. That is now required in hiring new team members. It’s no longer first and principally about you, it’s about them. You must be able to convincingly demonstrate why you are a prospective employee’s best choice.

As much as any set of tactics or strategies, the critical thing about winning in the talent marketplace is a change of mindset. The old ways demonstrably don’t work anymore, and the power relationship won’t revert for at least 20 years based on population and demographic statistics.

So, the shortages are here permanently. The winners in the competition for talent will acknowledge that. They’ll embrace new ways of building the great teams that power success in the agency business.

Topics Talent Training Development