Dealing with the issue of talent acquisition is like facing anapproaching steamroller: You have plenty of time to sidestepdisaster, but you'll get flattened if you don't.

Unfortunately, many agency owners still do not make hiring andretaining new talent a priority. Every year the needle creepshigher on the age of the average agency owner—which is currently ataround age 56, according the Big I's 2014 Agency Universe study.

Reagan Consulting's recent Producer Recruiting & Development Study asserts that alltoo many agencies have not properly assessed the level of hiringneeded to sustain their growth objectives or to perpetuate privateownership, adding that when agents and brokers do hire, “thesuccess rate is far less than it could be.”

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: “Agencyprincipals can't wake up at age 60 and say they will sell orperpetuate the agency, because by then it's too late.”

David C. Marlett, Independent Insurance Agents of North Carolinaprofessor of insurance at the Department of Finance, Banking andInsurance at Appalachian State University in Boone, N.C., agreesthat the insurance business faces a serious issue in its inabilityto attract more new recruits. He believes that a generally negativeperception of the industry and a lack of diversity within it dolittle to help matters.

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.

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 nearly 60% of agencies and brokerages are not hiring enoughproducers to support their growth and perpetuation objectives.

“The top 25 of these firms will hire 10 producers to end up witheight successful hires,” the study notes. “To end up with eightsuccessful hires, the bottom 25% will have to hire more than fourtimes as many producers.”

Reagan identified three measurements that firms can use toestablish the right level of hiring: sales velocity, generationalcapacity and producer investment.

Sales velocity is calculated by dividing this year's total newbusiness by the prior year's total commissions and fees. If anagency with $10 million in commissions and fees in the prior yearthen generates $1 million in new commissions and fees, it will havea sales velocity of 10%. Agencies can use sales velocity tocalculate how many producers they need to hire.

Generational capacity relates to the number of producers in eachage band (up to age 35, 36 to 45, 46 to 55, and over 55), and thecontribution to new business by each of these age groups.

Producer investment centers on the Net Unvalidated ProducerPayroll (NUPP) metric, which is a measure of an agency's investmentin developing producers. NUPP is the difference between what anagency pays its developing producers in direct payroll versus whatthe producers would earn under the agency's normal commissionschedule. A NUPP of 1.5% to 2.5% for net revenue represents ahealthy level of producer hiring.

2. Consider recruiting from overlooked 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 isunsurprising because most agencies want experienced producers whocan hit the ground running, instead of those who require training anewcomer.

But this shortsighted strategy isn't real recruiting. Rather,it's simply agencies “stealing from each other,” says Anita Z.Bourke, executive vice president of The Institutes, Malvern, Pa.,and a member of NU P&C's editorial advisory board. “Andthat can't continue, because we're going to end up having an evenbigger gap to fill.”

More disturbing is the fact that in spite of shifts in U.S.demographics, 79% of all new producer hires (85% of personal lines,74% of employee benefits, and 45% of personal lines) were men,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 Diane Mattis, executive vice president of theIndependent Insurance Agents & Brokers of America's InVESTprogram. Agencies such as Eaton & Berube in Milford, N.H., workwith InVEST to develop close relationships with area high schoolsand colleges, essentially “adopting” the schools by providingvolunteers to teach insurance classes. In turn, they developrelationships with students, who often approach them forinternships and jobs. It's a symbiotic relationship that works outwell, she says, especially at the high school level, where studentsland internships to work with account managers on non-licensedtasks like social media and marketing.

Along with recent college grads and salespeople from otherindustries, agencies should consider nontraditional recruitmentsources that are sometimes overlooked. A few industry initiativesinclude the Disabled Veterans Insurance Careers, which connectsreturning veterans with insurance jobs; the Military SpouseCorporate Career Network; Work at Home Vintage Employees, andcommunity college graduates.

3. Have a process in place for screening, interviewing andhiring

Recruitment is too important to leave to chance. The Reaganstudy finds that top-performing agencies have a systematicproducer-selection process, starting from interviews and movingtoward testing, reference checks, internships and finally towardselling the opportunity to the candidate.

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 tech sophistication is lacking,it's unlikely to attract younger workers, according to Bourke.“Millennials want to use the latest tech tools in a highly wiredworkplace,” she says. “Firms that have invested in technology andsocial networks are the ideal and should promote the fact.”

5. Be a mentor— and make mentoring part of your company'sculture

Although the concept of mentoring gets bandied about in adviceon recruitment and retention, true mentoring is more than mere lipservice. 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 provide additional incentive by offeringsome type of compensation for mentoring.

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 whom they arementoring, 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 charges.

6. Provide a clear career path

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, the employer must beclear about what they're looking for in the position and whatactivities and outcomes are expected from the new hire.

Many firms, especially carriers, provide rotational training fornew employees—which exposes them to various areas of the company,says Jody Queen-Hubert, director of the Ellen Thrower Center forApprenticeship & Career Services at St. John's University'sSchool of Risk Management, Insurance & Actuarial Science, NewYork. “Students are going where the opportunities are mostattractive and the ability to develop their career path ispresent,” she says. “Students like the idea of a training programthat is rotational so they can see what the best fit is for theirinterests 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-figuresalary.

8. Tailor training programs to the hire

Once a promising candidate is hired, the firm should provide thenecessary training and development. Specialization is a growingtrend; producers with a specialty have a higher success rate thanthose who do not. The most successful firms in the Reagan studyrequire 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 asalesperson from another industry or someone from another sector ofthe insurance industry, Bourke advises. Industry veterans suggestthat new producers identify and develop a specialty area early intheir careers that will give them a jumpstart on gainingcredibility in the 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 excellent programs, she adds.

9. Engage young employees with teamwork

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 charitable culture

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 who respect businesses that are similarly inclined.

11. Be an ambassador for the insurance industry

Getting out there and telling the world about the greatopportunities in the insurance industry—and encouraging your staffto do the same—is a very personal way you can debunk the “insuranceis boring” myth.

Agency employees involved in the InVEST program, for example,get to spread the word at the high school and college levels andoften get students approaching them on how to launch a career ininsurance, Mattis says. Sharing the good news about theseemployment opportunities in a still-recovering economy is a simplebut effective thing anyone can do—and every bit helps in the effortto replenish the industry's ranks.