Eoghan Trehy, Division Director, Macquarie Bank
Thursday 25 May 2017
4 ways to re-think your staffing strategy
Eoghan Trehy, Division Director, Macquarie Bank
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Insurance broking is essentially a people business. Excellent brokers are also excellent salespeople – with natural relationship management skills and the ability to have compelling product conversations.
“It’s much harder to disrupt a business with a strong service mentality,” comments Eoghan Trehy, National Head of Insurance Broking with Macquarie.
“Disruptive technology typically flourishes when customer needs aren't being met. If your brokers are meeting or exceeding your clients’ needs, you have a stronger foundation for future growth.”
As Macquarie’s 2016 Insurance Broking Benchmarking Report revealed, there has been a shift in the role mix in Australia’s broking firms – along with an overall reduction in the number of staff employed.
In 2016, the average firm had 16 staff, including two directors or principals and 4.8 client service brokers. Of those planning to hire, 30% are looking for client servicing brokers and 18% for authorised reps.
Finding and retaining the right people, however, is still a challenge. These four tips may trigger alternative ideas for finding, retaining and rewarding your people.
1. Look outside the industry
Two in three firms say it is still difficult to find and employ new staff. For 73%, that’s because it’s hard to find the right skills and qualifications. But for almost half (46%) cultural fit is also an issue.
“We’re seeing some firms look outside traditional sources for the client service staff,” says Trehy. “Sure, you can hire someone with great experience from a large international firm. But they can be set in certain ways of doing things and may be culturally aligned to an enterprise mindset.”
Within small to medium sized brokerages, communication and collaboration skills are highly prized – and these can be found in any sales environment.
“For example, a few firms have told me they’re hiring from the retail sector. If they find someone with natural sales skills and the appetite to learn about insurance products, it can be far more cost-effective than matching salary expectations from a major competitor.”
No matter what industry pool you’re fishing in, your current staff may be the best way to attract your next great hire. For 59% of the benchmarking respondents, word of mouth referral is the most successful method in finding new staff – compared with 31% depending on direct advertising through LinkedIn, Seek and other platforms.
2. Re-adjust remuneration expectations
With revenues under pressure, firms are firmly focused on efficiency and cutting costs – and staff remuneration still accounts for a third of total revenue. Tying rewards to performance is one way to ensure those costs are sustainable.
Salary plus defined incentives is the most widely used option for firms in 2016. It’s interesting to note firms have been able to increase the median revenue per staff member – from $158,068 in 2011 to $181.750 in 2016.
At the same time, high profit firms are more likely to provide defined bonus structures for specific staff (41% of high profit firms versus 19% of low profit firms). This ensures the staff responsible for bringing in revenue are rewarded accordingly.
3. Pay attention to retention
Loss of key staff was the main reason for decreased revenue for 13% of firms, and staff resourcing issues contributed to reduced profits for 17%. So how are some firms keeping their high performing staff?
Non-salary benefits play an increasingly important role in retaining talented staff. Flexible working leads the way here, followed by training and development. Three-quarters of high profit firms already offer flexible working options, and 66% provide training and development – both of which bring benefits back to the business as well.
“Where staff are able to work from home to balance their family commitments, they are typically more loyal and engaged – and also more productive,” comments Trehy. “Whether they have a sales role or are responsible for back office tasks, it’s now possible to do that from anywhere.”
More than half of all firms now operate from an online platform, so that technology is already in use. Processes and policies are also needed to ensure everyone’s expectations are aligned.
4. Outsourcing is an option
Not all essential business tasks need to be carried out by in house staff. Six in ten firms currently outsource IT and one in four outsource accounting.
“It’s now commonly accepted to outsource your technology – everything from IT support to servers and platforms, storage in the cloud,” says Trehy. “But we’re also seeing smaller firms outsource key functions such as marketing – with great results.”
Paying an experienced consultant a fixed fee to develop and implement a customer acquisition strategy can be more cost-effective than hiring a full-time (but less experienced) marketing graduate. Currently, just 15% of insurance brokers outsource marketing but 57% are considering it.
“The idea with outsourcing is that someone can get the job done for you for slightly less than it would cost you to do it yourself. Bookkeeping is a great example,” says Trehy.
But it’s also worth considering offshoring, which is quite different. “You could access the skills of a double-degree qualified accountant overseas for significantly less – especially when you consider the cost of desk space, technology and superannuation.” he adds.
People are clearly a key ingredient in a high profit insurance broking firm. But just as the industry continues to evolve, so do the skills required to grow your business. This may be the ideal time to think a little differently about the roles, responsibilities and remuneration structures you need to successfully pursue sustainable growth.
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This material has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 ("Macquarie") for general discussion purposes only, without taking into account your personal objectives, financial situation or needs. Before acting on this general information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service.