Counting heads

As you’ve likely heard, demographic factors pose an imminent challenge to Canadian businesses. Most industries are expected to feel a staffing pinch as the large “boomer” segment of the population retires from the workforce. Strategic workforce planning can help independent adjusting firms prepare to face this challenge.

Demographic research from the Insurance Institute of Canada suggests that the labour pinch may be felt strongly in the p&c sector, where up to a maximum of 28 per cent of the current industry workforce – and up to 43 per cent of those at management level – could potentially retire by 2022. The Institute’s latest research report, A Demographic Analysis of the P&C Industry in Canada 2012-2022, draws on surveys conducted in 2011 and 2012 with employers, employees and HR professionals across Canada’s p&c industry.

The industry’s overall entry-to-exit ratios remain poor: for every person who can potentially leave the industry through retirement, less than one new person enters it. At the same time, demand for the industry’s products and services is expected to increase, resulting in additional pressure to recruit and retain staff.

Claims crunch

The research findings suggest that independent adjusting firms will be in the thick of the coming workforce challenges. About one in three of the industry’s employees work in claims overall; similarly, one in three of the employees who retired between 2007 and 2012 worked in claims. In addition, some of the highest median ages are seen in claims roles, pointing to a high potential for further retirements over the next 10 years. Based on these trends, the report projects a maximum potential reduction of 29 per cent in claims occupations nationally by 2022.

Claims roles are already facing challenges in both recruitment and retention. From the employers’ perspective, claims staff are among the most difficult and urgent roles to recruit. Roles such as accident benefits adjuster and claims adjuster/examiner tend to require experience, and survey respondents indicated there are too few qualified candidates available. Compensation levels can also be a hindrance in recruiting, as can failing to accommodate work-life balance issues.

Management roles at all levels are another area of concern. Across the industry, front-line managers have a median age of 44; middle managers, 47; senior/executive managers, 50; and the average retirement age is 60. These data point to a high potential for retirement over the next ten years – one in five employees who retired between 2007 and 2012 were managers.

Among HR professionals surveyed, those employed by independent adjusting firms ranked retention as their most important human resource management issue. Accident benefit adjusters, claims adjusters/examiners and casualty adjusters are all perceived as difficult roles to retain. At the same time, the need to retain people in these roles was perceived as urgent. A high degree of worker mobility within the industry, uncompetitive compensation levels, and poor fit with corporate culture were the most-frequently cited factors making retention difficult in the p&c sector.

Talent tactics

Under these circumstances, managing the talent pool will be a critical strategic issue for leaders of independent adjusting firms in coming years. Leaders will need to be clear about their firms’ strategic talent requirements; and firms will need to focus on recruiting new people to the industry and on retaining and developing current workers. Managing performance effectively will be key.

According to the Institute’s research, flexible work arrangements and accommodation of work/life balance are among the top five aspects of an ideal job for employees of all age groups (though with differing definitions at different life stages), so these two factors should be considered when designing both recruitment and retention programs.

When human resources are scarce, it becomes particularly important to distinguish between talent (people who are good at what they do) and strategic talent (people who are good at doing things that are strategically important for the organization). This requires clarity about the firm’s strategy, about the specific capabilities needed for the strategy, and about which jobs express or support those capabilities. An adjusting firm facing numerous imminent retirements can identify key positions and prioritize its efforts in recruitment, retention, and succession planning according to the strategic value of the positions.

Motivation and retention

Motivation and retention are closely linked: motivated employees are more likely to stay with the firm. One cluster of motivational approaches involves making jobs more interesting and satisfying. A few examples:

• Analyze the career aspirations and training needs of part-time employees (a group in which turnover tends to be high) and then create more attractive employment options for them.

• Explore younger employees’ reasons for leaving and incentives for staying, and adjust practices accordingly. For example, if younger workers are eager for advancement, involving them in project work or stretch assignments can give them an opportunity to learn and grow.

• Restructure positions to accommodate work-life balance issues and offer more flexible employment patterns, such as job sharing and phased retirement plans. These options can particularly appeal to employees with family responsibilities and to older workers looking to transition gradually out of the workforce.

• Establish cross-training and mentoring roles to transfer knowledge from mature workers to younger ones, so that knowledge is retained within the firm even after the mature worker retires.

As with recruitment and selection, retention efforts can be approached strategically. Employees who are performing well and hold strategically valuable positions are particularly important to retain. Other employees might need training or coaching, cross training and redeployment, or replacement with stronger performers.

In the current demographic climate, retention programs should target two key cohorts: workers in their 30s, who are the most likely to leave an organization through voluntary or involuntary means; and mature workers, who are the most likely to leave through retirement. For workers in their 30s, training and development, cross-training and mentorship opportunities may be effective motivators. For mature workers – many of whom expressed a preference in the surveys for continuing to work on a part-time basis – consider creating phased-retirement options and post-retirement roles that will allow them to share their experience by mentoring younger managers.

Succession planning

Across the industry as a whole, the results of the survey of human resource management professionals show increased use of four tools associated with strategic workforce planning: retirement forecasts, demographic profiling, exit interviews and succession planning. Independent adjusters reported being less likely to use succession planning than most other types of companies.

As a component of performance management, succession planning is about trying to maintain a steady supply of qualified strategic talent throughout the organization, not just in the upper management ranks. Like other components of performance management, it can be aligned with strategy and reflect an understanding of the competencies the firm wants to maintain and develop. Elements include

• focusing on the longer term, not just on immediate needs

• identifying key positions and the knowledge and skills they require

• identifying employees with potential for those positions; creating development plans; and providing training, coaching, mentoring, and job assignments accordingly

Large organizations often make succession planning an ongoing part of their performance manag
ement activities. When an organization of any size expects to face hiring and retention challenges – as many independent adjusting firms do today – succession planning can be a valuable complement to other workforce management initiatives. _

This article is based on the Insurance Institute’s Demographic Analysis of the P&C Industry in Canada 2012-2022, the third in a series of research studies produced in response to industry concerns about human capital issues such as recruitment, retention, succession planning, and training; and on material used in F510 Strategy in the P&C Insurance Sector, the first course in the Institute’s FCIP program for current and future insurance leaders.

Additional research findings

• The industry may see higher levels of retirement over the next ten years as all members of the baby-boomer cohort move past the age of 55.

• Across the industry overall, two-thirds of senior managers are men; and two-thirds of senior managers (both male and female) are baby-boomers.

• Claims adjusters have a more balanced age profile and sex profile than other claims roles.

• Casualty adjusters have an older age profile than other claims roles.