It's a situation that is giving the heads of the insurance brokerages fits. As the executives freely admit, good brokers, those sensitive, sharp individuals who have the talent and the experience to give risk managers and other insurance buyers the customer service they deserve, are increasingly hard to find.
And as risk managers we interviewed for our February Power Brokers issue shared, a lack of consistent contact with brokers who stay at the same company is one of their chief complaints in the customer service department.
But executives are feeling caught in something of a pinch. They, too, hear the same complaints from risk managers on the damaging aspects of employee churn. But on the other hand, they are trying to manage their own labor costs in a soft market.
The competition for top producers is creating something of a money storm, where some companies are throwing hefty paychecks at talent and creating a pumped up and expensive labor market. And the big bucks being offered by some is making it hard for managers to stop some employees from leaving. Completing the vicious circle is that, when prized employees do leave, it flies right in the face of brokerages best customer-service efforts.
"The most consistent complaint that I hear from clients is regarding the turn over of talent," said Mike Crowley, the president of Glen Allen, Va.-based Hilb Rogal & Hobbs, who said he is constantly seeking input from his managers on what his company can do to retain the best workers and create the best work environment.
"At the end of the day, it falls down to the quality of your leadership," said Crowley, who said he is pleased, but never completely satisfied, with his company's accomplishments in limiting churn.
Another top-level executive agreed.
"The best thing I can do at the top of the list is keeping the really good people that I have in the organization," said Don Bailey, the CEO for North America of the Willis Group Ltd.
But Bailey said keeping good people, and giving them a salary that won't blow his cost of labor number, is getting really hard to do.
"It has never been harder to do than it is right now," said Bailey. He said that, from where he sits, some companies are being driven by the talent competition to pay money that wins them the prized employee in the short term but will have a serious impact on their net income over time.
Ken Crerar, the president of the Washington, D.C.-based Council of Insurance Agents and Brokers said that the talent war in insurance brokering is no different than that going on in any number of industries.
"On the whole talent issue, and we are not alone in terms of this, there is a very competitive market out there for good quality people. The market is competitive and compensation is increasing for people who are really good at what they do," Crerar said.
But Bailey said he thinks the competition is reaching self-destructive levels.
"There are some public companies and some private companies who are sensing a moment in time and who are willing to do something of a short-term value but questionable on the long-term view from our perspective," Bailey said.
Maybe what's happening is that companies are realizing the long-term value of keeping their client's risk managers happy and are willing to do whatever they need to do in the short term, given the aforementioned premium that clients place on having a familiar face to greet them when they call with an insurance question or problem.
"In my experience the greatest cause to disruption that breaks down trust, the worst cause of that is employee attrition. That has always been the issue," said Warren Mula, the head of Aon Corp.'s brokerage service.
But until a hardening market has some influence on the pricing and the revenue side, Willis' Bailey said, the labor competition will put some brokerages in a perilous position before all is said and done.
"It has never cost more to be in this business from a labor perspective, and it is not getting any better," Bailey said.
And the resources being spent on talent are going far beyond the number that appears on the checks in employees' pay envelopes. Training initiatives, and time and money spent on outside consultants or staff members to study and report on employee satisfaction, is an additional cost.
"We spend a lot of time focused on what we can do to make this a better company," said HRH's Crowley.
DAN REYNOLDS is senior editor of Risk & Insurance®.
February 14, 2008
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