As a property and casualty agent, you think about risk.

Day in and day out, you’re focused on the various threats thatyour clients face and what you can do to help them avoid theserisks.

Insurance agents keep on top of these threats by making surethey are aware of the latest regulatory and industry trends andswitched on to the insurance products that will protect theirclients’ businesses. But there’s one huge risk management factorthat might have evaded your business radar screen: good HRpractices.

At its core, an effective, comprehensive HR program isrisk management. As such, you need to talk to your clients aboutit. Even better, cement your relationships by providing them withthe knowledge, tools and support they need to help them strengthentheir HR capabilities and reduce their risk exposure.

When we talk about good HR as risk management, it’s not onlyabout reducing Workers' Compensation or Employment PracticesLiability Insurance claims.

A good agent provides risk management solutions to help clientssolve real problems. A great agent also offers insights into howclients can make their businesses more successful. The correlationbetween business success and HR success is undeniable. Attracting,hiring and retaining great employees are at the core of everymanager’s job.

Many studies show that the biggest reason that employees leavejobs is because of bad management and the resulting culture andmorale issues. And, we all know that when employees are consideringleaving companies that’s when claims happen. Regardless of whetherclaims happen or not, high employee turnover typically equals lowproductivity and high stress. It’s why a hot technology companysuch as Jet.com has emphasized worker happiness above everythingelse.

We all instinctively know that keeping top-performing employeesmakes good business sense, but what we often fail to recognize arethe substantial risks of not doing so.

High turnover rates hurt company culture, which can lead to ademotivated workforce. Longstanding institutional knowledge isimpossible to replace. And then there’s the actual hit to thebottom line.

According to the American Management Association, the costs toan organization of an employee leaving can range from 30% to awhopping 150% of the employee’s salary, totaling $11 billion lost annually in the UnitedStates.

Related: 4 keys to managing a multi-generationalworkforce

Employees leave for all kinds of reasons, but too many abandonjobs because of poor HR practices, including not hiring the rightpeople in the first place. According to the Harvard BusinessReview, 80% of employee turnover is because of bad hiringdecisions. Too many companies also fail to properly train newemployees. The SHRM Foundation has reported that 35% of companiesspend nothing on training new employees.

And then there’s what goes on in the course of an actualworkday.

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Periodically check in with your clients about their HRprograms and provide relevant HR information that keeps you in therisk management conversation. (Photo: iStock)

Providing employees with clear goals and objectives and ongoingtraining to develop their careers is necessary and something thatshould be occurring on a daily basis. Additionally, providing asafe and healthy work environment free from harassment, bullyingand discrimination is a responsibility of the HR department,strongly supported by senior management.

Companies face significant and potentially very costly risks ifthese problems are not appropriately addressed. The WorkplaceBullying Institute reports that 48% of American adults havereported experiencing workplace bullying. Needless to say, when anemployee has to put up with bullying on the job, it is highlylikely they will file a lawsuit through the Equal EmploymentOpportunity Commission. Consequently, the chances of him or herremaining at that organization are greatly diminished. Effective HRpractices play a critical role in helping companies to mitigate andavoid those kinds of serious workplace problems.

So, how can you turn these HR challenges and risks intoopportunities to strengthen your value to existing clients as wellas prospects?

• Start with a conversation. Just as you may nothave considered the correlation between best HR practices and riskmanagement, your client may not have either. Start with aconversation to bring it to the attention of your clients andprospects. This is especially important if your client is a chieffinancial officer or small to medium-size company owner, who maynot have considered the connection between good HR and riskmanagement. Reminding him or her that HR is a substantial elementof their risk profile is an important first step.
• Make it tangible. For many clients, theconcept of “good HR” can feel ambiguous and hard to wrap their armsaround. What every company will respond to, however, are hard hitsto the bottom line. Come to any conversation armed with facts onthe financial repercussions of ignoring HR needs and associatedrisks. One that is particularly valuable is the cost of lawsuits.Workplace discrimination lawsuits alone cost U.S. businesses anestimated $64 billion annually. HR trainings on workplacebehavior coupled with good management practices and trainedmanagers can go a long way towards mitigating that risk. And, thesesteps are obviously a fraction of the cost of legal fees resultingfrom a lawsuit. Putting this into financial terms will make thisconcept clearer and more actionable for your clients andprospects.
• Be a resource. For small and mid-sizecompanies, the executive who manages HR can also be thepresident/owner, office manager or finance person, none of whomnecessarily have specific HR expertise. The best insuranceprofessionals are those who not only sell insurance, but act asadvisers and provide expert resources for their clients. To helpthem manage their HR risks, offer to provide expert HR resources,such as compliance trainings and trusted knowledge and advice. Themore you can help your clients solve their full range of riskrelated issues and other business problems, the more you cementyour relationship with them.
• Follow-up. Don’t just have one HR-relatedconversation and then leave it at that. Continue to check in withyour clients about how their HR programs are going and provide asteady stream of relevant HR information that keeps their risks andopportunities front of mind and keeps you in the risk managementconversation.

Remember, there is a direct connection between successfulbusiness and effective HR. Empowering your clients and prospects toimplement good HR practices will not only help to mitigate their HRrisks and grow their business but also strengthen the value of yourrelationship.

Pete Yozzo is the founder and CEO of Pleasanton,Calif.-based human resources knowledge solutions and learningcompany, ThinkHR.

Related: Make your insurance business more profitable withPEO relationships

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