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

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

Reagan Consulting's recent Producer Recruiting & Development Study asserts that all too many agencies have not properly assessed the level of hiring needed to sustain their growth objectives or to perpetuate private ownership, adding that when agents and brokers do hire, “the success 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 long before retirement age, says IIABA Chairman Dave Walker: “Agency principals can't wake up at age 60 and say they will sell or perpetuate the agency, because by then it's too late.”

David C. Marlett, Independent Insurance Agents of North Carolina professor of insurance at the Department of Finance, Banking and Insurance at Appalachian State University in Boone, N.C., agrees that the insurance business faces a serious issue in its inability to attract more new recruits. He believes that a generally negative perception of the industry and a lack of diversity within it do little to help matters.

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

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

1. Always be Hiring

One of the major findings of the Reagan recruitment study was that nearly 60% of agencies and brokerages are not hiring enough producers to support their growth and perpetuation objectives.

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

Reagan identified three measurements that firms can use to establish the right level of hiring: sales velocity, generational capacity and producer investment.

Sales velocity is calculated by dividing this year's total new business by the prior year's total commissions and fees. If an agency with $10 million in commissions and fees in the prior year then generates $1 million in new commissions and fees, it will have a sales velocity of 10%. Agencies can use sales velocity to calculate how many producers they need to hire.

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

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

2. Consider recruiting from overlooked sources

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

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. “And that can't continue, because we're going to end up having an even bigger 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 as many places as possible, including a strong internal referral pipeline, and working through “centers of influence” such as carriers, local trade partners and social media (41% of firms use it as a recruiting tool), according to Reagan.

They also work closely with schools to build a pipeline of future hires, says Diane Mattis, executive vice president of the Independent Insurance Agents & Brokers of America's InVEST program. Agencies such as Eaton & Berube in Milford, N.H., work with InVEST to develop close relationships with area high schools and colleges, essentially “adopting” the schools by providing volunteers to teach insurance classes. In turn, they develop relationships with students, who often approach them for internships and jobs. It's a symbiotic relationship that works out well, she says, especially at the high school level, where students land internships to work with account managers on non-licensed tasks like social media and marketing.

Along with recent college grads and salespeople from other industries, agencies should consider nontraditional recruitment sources that are sometimes overlooked. A few industry initiatives include the Disabled Veterans Insurance Careers, which connects returning veterans with insurance jobs; the Military Spouse Corporate Career Network; Work at Home Vintage Employees, and community college graduates.

3. Have a process in place for screening, interviewing and hiring

Recruitment is too important to leave to chance. The Reagan study finds that top-performing agencies have a systematic producer-selection process, starting from interviews and moving toward testing, reference checks, internships and finally toward selling the opportunity to the candidate.

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

4. Tune up Your Technology

Millennials are the most sophisticated users of technology in the workforce, with the generation coming up right behind them even more 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 wired workplace,” she says. “Firms that have invested in technology and social networks are the ideal and should promote the fact.”

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

Although the concept of mentoring gets bandied about in advice on recruitment and retention, true mentoring is more than mere lip service. Wired columnist and human behavior writer Eric Barker observes that true mentors provide objective career guidance, including suggestions on assignments or an advantageous career path. They also provide emotional support when times get tough, such as recommendations on work/life balance or how to deal with 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 lines are mentored, typically by senior producers and sales leaders. Forty percent of firms provide additional incentive by offering some type of compensation for mentoring.

Mentors are especially useful for new hires straight out of school, who need one-on-one coaching and someone to “give them a clear picture of what success looks like,” Bourke says. The most effective mentors are close in age to the young hires whom they are mentoring, and must also be accountable for the hire's performance.

Best of all, mentoring is a two-way street, as mentors frequently learn a lot from their charges.

6. Provide a clear career path

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

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

Many firms, especially carriers, provide rotational training for new employees—which exposes them to various areas of the company, says Jody Queen-Hubert, director of the Ellen Thrower Center for Apprenticeship & Career Services at St. John's University's School of Risk Management, Insurance & Actuarial Science, New York. “Students are going where the opportunities are most attractive and the ability to develop their career path is present,” she says. “Students like the idea of a training program that is rotational so they can see what the best fit is for their interests and abilities.”

7. Offer More than Just the Benjamins

Research around millennials suggests that when it comes to careers, 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 the hire

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

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

For complete industry newbies, carrier-sponsored producer schools can be invaluable, although they're usually skewed toward the 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 is a great way to engage them.

In the past, agency producers operated on the “lone wolf” path in sales. Today, more agencies, recognizing that millennials prefer to work in teams, are promoting team selling and other collaborative techniques that encourage cooperation toward a goal. Team selling helps disseminate knowledge and provides for smoother succession of client relationships when the current generation retires.

10. Grow your charitable culture

Many studies show that businesses that are engaged in community service gain more than they give—in name recognition, positive branding, even customer leads. Socially responsible businesses are attractive to young workers, who want to make a difference in the world 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 great opportunities in the insurance industry—and encouraging your staff to do the same—is a very personal way you can debunk the “insurance is boring” myth.

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

Special Reports /

Ways to Attract & Keep Young Talent

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