Dealing with talent acquisition is like getting hit by asteamroller: You have plenty of time to get out of the way, butyou'll get flattened if you don't.

Unfortunately, many agency owners have been moving in slowmotion on hiring and retaining new talent. Every year we watch theneedle creep higher on the age of the average agency owner, whichis currently at about age 56, according to IIABA's most recent“AgencyUniverse” survey. The tidal wave of retirements during the next10 years will leave many agencies without a pipeline of incomingleadership—and the issue is especially acute for small to midsizedfirms.

Reagan Consulting finds that successful agencies equip producersfor success, create a culture of accountability, and recruit anddevelop new producers. However, even successful agencies say theyconsistently struggle with No. 3. “Most have not properly assessedthe level of hiring needed to sustain their growth objectives or toperpetuate private ownership,” according to Reagan's recent Producer Recruiting and Development Study. “Andwhen agents and brokers do hire, the success rate is far less thanit could be.”

And the challenge isn't limited to producers: Account managersare also rapidly aging out, says Diane Mattis, executive directorof IIABA's InVEST program.

Recruitment is a battle the industry must fight on two fronts:educating young people on the potentials of an insurance career,and educating principals on the need to address recruitment longbefore retirement age, says IIABA Chairman Dave Walker. “Times havechanged; agency principals can't wake up at age 60 and say theywill sell or perpetuate the agency, because by then it's too late,”he says.

This can be an uphill climb. In a study conducted by theGriffith Foundation, riskmanagement undergrads said they had never considered insuranceas a career until after taking a risk management course at thecollege level, citing the tired old litany of misconceptions:Insurance is boring. Insurance means working for GEICO orProgressive. Insurance is about selling life insurance. Insurancedoesn't pay well. You have to put in 20 years to get anywhere inthe industry.

Insurance educators are well aware of this perception. Theindustry faces a “serious demographic problem,” with moreprofessionals retiring than being replaced, says David C. Marlett,CPCU, IIANC Professor of Insurance at the Department of Finance,Banking and Insurance at Appalachian State University in Boone,N.C. The biggest challenge is “the negative perception of theindustry and the lack of diversity…increasing the number ofunderrepresented students is one of our top priorities. We oftenhear from recruiters that this is their priority also,” hesays.

And it's a fact that most insurers do not have a goodrepresentation of young people within their ranks, says JodyQueen-Hubert, director of the Ellen Thrower Center forApprenticeship & Career Services at St. John's University,School of Risk Management, Insurance & Actuarial Science, NewYork. “Students interview or intern (at an insurance company) andsee people they can't relate to,” she says. “Employers in suburbanlocations may face an even greater lack of young people; they areattracted to living and working in urban locations after collegeand prior to becoming 'adults.'”

The irony is that an insurance education makes young peopleeminently hireable: Marlett estimates that 90% of risk managementgrads are hired within three months of graduation.

To help spread the good word about insurance, dozens of thenation's top insurance and risk management organizations launchedthe MyPath: Insurance program, designed to attract top talentthrough its engagement-driven website and millennial-facing advertisingcampaign.

There are steps you can take as well, some simple, all leadingto making your agency more attractive to young hires.

1. Always be hiring

One of the major findings of the Reagan recruitment study wasthat almost 60% of agencies and brokerages are under-hiring—nothiring enough producers to support their growth and perpetuationobjectives. Under-hiring is a problem in both the short- andlong-term, especially since the producer success rate in the Reaganbaseline study was only 56%.

“The top 25 of these firms will hire 10 producers to end up witheight successful hires,” the study notes. “To end up with eight successful hires, thebottom 25% will have to hire more than four times as manyproducers.”

Reagan identified three key measurements firms can use toestablish an appropriate level of hiring: sales velocity,generational capacity, and producer investment.

Sales velocity is calculated bydividing this year's total new business by the prior year's totalcommissions and fees. For example, an agency with $10 million intotal commissions and fees in the prior year that generates $1million in new commissions and fees has a sales velocity of 10%.Agencies can use sales velocity and its relationship to growth tocalculate the number of producers they need to hire.

Generational capacity relates to thenumber of producers in each age band (up to age 35, 36 to 45, 46 to55, and over 55), and the contribution to new business by each ageband.

Producer investment centers on the NetUnvalidated Producer Payroll (NUPP) metric, which is a measure ofan agency's investment in developing producers. NUPP is thedifference between what an agency pays its developing producers indirect payroll versus what the producers would earn under theagency's normal commission schedule. A NUPP of 1.5% to 2.5% for netrevenue represents a healthy level of producer hiring.

2. Consider recruiting fromoverlooked sources

Most agency producer hiring still comes from within theindustry—65%, compared with only 35% from external sources, only 6%of which were college hires, the Reagan study finds. This is unsurprising because mostagencies want experienced producers who can hit the ground running,instead of having to train a newcomer.

But this short-sighted strategy isn't recruiting, just agencies“stealing from each other,” says Anita Bourke, executive vicepresident of The Institutes, Malvern, Pa. “And that can't continuebecause we're going to end up having an even bigger gap tofill.”

More disturbing is the fact that in spite of dramatic shifts inU.S. demographics, 79% of all new producer hires (85% of personallines, 74% of employee benefits, and 45% of personal lines) weremen, according to the Reagan study.

Agencies that are successful at recruitment look for leads in asmany places as possible, including a strong internal referralpipeline, and working through “centers of influence” such ascarriers, local trade partners, and social media (41% of firms useit as a recruiting tool), according to Reagan.

They also work closely with schools to build a pipeline offuture hires, says Mattis of InVEST. Agencies such as Eaton &Berube in Milford, N.H., work with the InVEST program to developclose relationships with area high schools and colleges,essentially “adopting” the schools by providing volunteers to teachinsurance classes. In turn, they develop relationships with thestudents, who often approach them for internships and jobs. It's asymbiotic relationship that works out well, especially at the highschool level, where students land internships to work with accountmanagers on non-licensed tasks like social media and marketing, shesays.

Along with recent college grads and sales people from otherindustries, agencies should consider nontraditional recruitmentsources that are sometimes overlooked. A few industry initiativesinclude the Disabled Veterans Insurance Careers (DVIC), whichconnects returning veterans with insurance jobs; the MilitarySpouse Corporate Career Network; Work at Home Vintage Employees(WAHVE), and community college graduates.

3. Have a process in place for screening, interviewingand hiring

Recruitment is too important to leave to chance. The Reaganstudy finds that op-performing agencies have a systematic producerselection process, from interviews, testing, reference checks andinternships, and finally, selling the opportunity to thecandidate.

Like any other business process, it's good practice to designateone person to be responsible for the selection process. This can bea human resources leader, branch leader, sales manager, COO, oranyone other than the agency president or CEO with the authority tooversee and execute the plan.

4. Tune up your technology

Millennials are the most sophisticated users of technology inthe workforce, with the generation coming up right behind them evenmore tech-savvy. If an agency's technological sophistication islagging, it's unlikely to attract younger workers, Bourke says.

“Millennials want to use the latest tech tools in a highly wiredworkplace,” she says. “Firms that have invested in technology andis socially networks are the ideal and should promote the fact.”

5. Be a mentor—and make mentoringpart of your company's culture

Although the concept of mentoring gets bandied about a lot inadvice on recruitment and retention, true mentoring is more thanmere lip service. Wired columnist and human behavior writer EricBarker observes that true mentors provide objective careerguidance, including suggestions on assignments or an advantageouscareer path. They also provide emotional support when times gettough, such as recommendations on work/life balance or how to dealwith a difficult boss. Finally, they act as effective role models,demonstrating appropriate behaviors for different situations.

The Reagan study finds that 57% of producers in commercial linesare mentored, typically by senior producers and sales leaders.Forty percent of firms provided some type of compensation formentoring to provide additional incentive.

Mentors are especially useful for new hires straight out ofschool, who need one-on-one coaching and someone to “give them aclear picture of what success looks like,” Bourke says. The mosteffective mentors are close in age to the young hires they'rementoring, and must also be accountable for the hire'sperformance.

Best of all, mentoring is a two-way street, as mentorsfrequently learn a lot from their mentees.

6. Provide a clear careerpath

Professional development is essential for new hires. Researchshows that among other things, millennial workers want to know thatthey will progress in the workplace, and expect to receive regularfeedback from management on their job performance, Mattis says.

Providing a clear career path should start long before a recruitis hired, Bourke says. Even in the interview process, the employermust be clear about what they're looking for in the position andwhat activities and outcomes are expected from the new hire.

Many firms, especially carriers, provide rotational training fornew employees, which exposes them to different areas of thecompany, Queen-Hubert says. “Students are going where theopportunities are most attractive and the ability to develop theircareer path is present,” she says. “The idea of a job that has nofuture ability to move up is a turn-off. Students like theidea of a training program that is rotational so they can see whatthe best fit is for their interests and abilities.”

7. Offer more than just the Benjamins

Research around millennials suggests that when it comes tocareers, young workers focus on intangibles such as job security,long-term development and a sense of purpose and greater meaning,Bourke says, with work/life balance trumping a six-figure salary.

8. Tailor training programs to thehire

Once a promising candidate is hired, the firm should providethem with the necessary training and development. Specialization isa growing trend; producers with a specialty have a higher successrate than those who do not. The most successful firms in the Reaganstudy require a higher percentage of their producers to specialize;nearly half of their commercial producers and more than a third ofbenefits producers are required to specialize.

Match the training program to the needs of the candidate—forexample, a recent college grad will need more training than a salesperson from another industry, or someone from another sector of theinsurance industry, Bourke advises. Industry veterans suggest thatnew producers identify and develop a specialty area early in theircareers that will give them a jumpstart on gaining credibility inthe marketplace.

For complete industry newbies, carrier-sponsored producerschools can be invaluable, although they're usually skewed towardthe carrier's products and services, Bourke says. Chubb, CNA,Hartford and Zurich all have good programs.

New hires ideally need a combination of sales, technical andcultural/behavioral training in order to succeed, she says.

9. Engage young employees withteamwork

Millennials have been on teams since their kindergarten days,and encouraging them to continue this practice in their careers isa great way to engage them.

In the past, agency producers operated on the “lone wolf” pathin sales. Today, more agencies, recognizing that millennials preferto work in teams, are promoting team selling and othercollaborative techniques that encourage cooperation toward a goal.Team selling helps disseminate knowledge and provides for smoothersuccession of client relationships when the current generationretires.

10. Grow your charitableculture

Many studies show that businesses that are engaged in communityservice gain more than they give—in name recognition, positivebranding, even customer leads. Socially responsible businesses areattractive to young workers, who want to make a difference in theworld and respect businesses that are similarly inclined.

11. Be an ambassador for the insuranceindustry

It doesn't seem like much, but getting out there and telling theworld about the great opportunities in the insurance industry—andencouraging your staff to do the same—is a very personal way youcan debunk the “insurance is boring” myth. Agency employeesinvolved in the InVEST program get to spread the word at the highschool and college levels, and often get students approaching themon how to launch a career in insurance, Mattis says. Sharing thegood news one story at a time is a simple but effective thinganyone can do, and if enough people in the industry do this, it mayeventually turn the tide on insurance's lackluster image.