Hire education: demographics, analytics and health care reform are changing the way insurance recruiters fill jobs.

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Bob Baxter, chief executive officer of Dryden Mutual Insurance Co., a 50-person firm in Dryden, N.Y., has a 25% success rate for recruiting new personnel--and he does it by not trying to recruit anybody.

Baxter planned only to conduct a "good will" recruiting effort in this tiny upstate community, but instead created a model recruitment program gram that is now being looked at on a national level. A member of the Independent Insurance Agents and Brokers of New York, Baxter also serves on a committee board of the national chapter, known as the Big I. It's there that he receives the biggest accolades for his success--which he often downplays.

"It would appear that the program we have here is a very interesting model," Baxter said.

Interesting? Yes: An average of one in four employees at Dryden Mutual came into the firm as a student intern via the InVEST program, a Big I national education initiative.

INVEST gives high school and college Students a look at the insurance, financial services and risk management industries. Baxter thought it would be a good way to grow his small-town insurance company--by giving the locals a sense of what Dryden Mutual is, and what it does.

Over the past 15 years, many of his students became interns, and many of those interns turned into employees. "At this point, out of 50 employees, I believe 25% have been students in this program," Baxter said. "Some came right out of high school. Some went to college a year or two first, then came to work for us."

The INVEST program doesn't try to divert students into the insurance profession, but to show it as a viable option, he said. Meanwhile, several of Baxter's student interns are building careers and beginning to move into management positions.

Invisible Option

"Insurance as a viable career choice is so invisible," Baxter said. For example, he noted the Westfield Insurance Group, which employs about 1,800 people in an Ohio village with just 1,050 residents. Yet a recent survey of the townspeople showed that few locals even knew the company was there. "How can the biggest employer in Medina County be there, and nobody knows about them?" Baxter asked.

"That's the challenge that insurance recruiting faces. We're an invisible industry," Baxter said. "If we have a perception, it's a negative perception, and people view it as a necessary evil."

Insurance industry recruiters may not be having the same success rate as Dryden Mutual, but the need is the same: They, too, want more folks to think about the insurance industry as a viable employment option.

Trends in recruiting these days range from pipelines and branding to business intelligence and analytics, and of course Baxter's example of community involvement.

"There are some unique and different things going on right now," said Shane Graham, a managing partner with executive recruiting firm Kaye/ Bassman of Plano, Texas. Graham has been recruiting exclusively for the insurance industry since 2000.

"I've seen a lot of trends and a lot of hard and soft markets," Graham said. What he's seeing now is the burgeoning trend of cross-selling--of employees, not products.

Graham concentrates on retail and wholesale brokers, third party administrators and reinsurance. "We're taking professionals and putting them together and talking about what's going on in each sector," he said.

For example, KBIC had a recruiter on the carrier side working on a chief underwriting position in marine and energy. Then, at the weekly recruiters' meeting, another employee noted how a Houston firm is in need of an engineer-type adjuster that specializes in marine and energy. A match was made.

"A few years ago, job boards and corporate Web sites were hot. That's fully deployed at this point. It's not exciting," said Steven Landberg, managing director of Claymore Partners in Greenwich, Conn. What is hot right now, he said, are talent pipelines and employment branding.

"Talent pipelines are about, 'How do I get these people into my system ahead of time, so I just don't need to find them and actually have to search?'" Landberg said. It's a way to identify outstanding industry stars before they're ready to join an organization.

That's particularly true in the health care consulting arena, where he said most companies will know who are the good health care consultants, and will continue to watch them grow. "You want to know who they are and stay in touch with them," he said.

Margaret Resce Milkint, a managing partner with the Chicago-based Jacobson Group, agreed.

"There's always a demand for top talent," Milkint said. "There is a misnomer that people see a dip in the economy and they think that times are bad. For us, our clients are hiring. In this space there's a lot of activity in insurance, health care and financial services."

Milkint said Jacobson Group is always on the lookout for talented pros who seem "happy and successful--those are the people we want, the people our clients want. Innovators, leaders, people who are on the rise in their careers or who have made a name for themselves. Those are the people we really target."

Graham has a Kaye/Bassman client who works off a "hit list," or pipeline, he said.

"Whatever you want to call it, it's a spreadsheet that we trade back and forth," he said. Graham uses 30-day, six-month and one-year follow-ups to see how those on the hit list are doing, and make sure they're still there and still happy.

Graham chooses his targets based on "explicitly chosen source companies." From those source companies come clients who are over-performers and who may not be in the right place at the right time.

"I have certain clients with individuals that have a tendency to perform above the industry average, but I don't believe in their overall prospectus in where they're going or how they're getting there," Graham said. "I go in and take their top performers."

Employment branding, on the other hand, is just the opposite--reviewing a possible employer beforehand from a job candidate's point of view.

"Employment branding is about, 'How do people perceive you as an employer?" Landberg said. "A lot of people are pushing that. It's your company's reputation, what it's like to work there, what the image is all about."

Equally important are "the compensation, benefits, career opportunity, and training and development I get there," he said.

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"What's hot right now is everybody is pursuing the employee benefits stuff. In my opinion, it is just one part of the value proposition to bring a new employee on board or to keep you on board" Landberg said.

Jacobson Group's Milkint said, "I think that professionals are taking a very holistic approach to their careers and are not only looking for the right position, but the right company. They are looking for the company that syncs with their core values, the employer of choice."

She said insurance professionals are looking for a company that has a "balance initiative" between work and family, is active in the community, and is a good corporate citizen.

"Those are the things that are on the 'me' focus," Milkint said. "What do they stand for and do I want to be affiliated with that company? An employer is not only an extension of the people they hire. Employees are also aware that they are characterized by the type of organization they chose to work for."

Twenty-seven years in the business and a vast network of contacts enable Todd Mitchell, president and CEO of Todd Mitchell Associates of New Hyde Park, N.Y., to hand-select best-in-class candidates, he said.

"It's a matter of networking and branding my firm, and having the reputation we have with our four offices and 11 recruiters that we are a major boutique firm in the marketplace," Mitchell said.

R-e-s-p-e-c-t

One thing prospective recruits are looking for in an insurance company, agency or brokerage is not new technology--everybody has some degree of that by now--but fair treatment, Landberg said.

It's one of today's biggest recruiting lures. "They're finally talking about improving the candidate experience," Landberg said. "Do you treat them with dignity and respect? Do you get back to them? Do you let them know what's going on?"

Landberg routinely handles high-end executive recruitments ranging from $150,000 to $800,000 in base salary. "Amazingly," he said, there are companies that do not return calls to such candidates.

"This is not high tech, this is treating them with dignity and respect, communicating with them, giving them the opportunity to ask questions as well as you," Landberg said. "That I see as the biggest challenge, especially in a talent-short environment"

When a candidate is turned down, the folks at Claymore Partners get back to the candidate as soon as possible, Landberg said. "'No' is an acceptable answer. No answer is not acceptable," he said.

For Milkint, one of the biggest issues in recruiting is demographics.

"The aging work force--boomer retirement--is so critical in the insurance industry because basically we're losing knowledge and expertise in the insurance industry," Milkint said.

Solutions include keeping mature workers on part-time or flexible schedules, or on hand as consultants, she said. Jacobson Group refers to these retiring employees as "next-chapter people," she said.

"There is a place for those mature workers and employers when they think creatively and find ways to use and tap that knowledge. Those are going to be the leaders out there," she said. "That's the knowledge gap we're facing in the next five to 10 years. Especially in insurance, we see it. It's very acute in insurance, health care and financial services. All of our clients are focused on it."

Recruiting has become "very hard" for property/casualty companies because there's been little training available for new generations in "more than a dozen years," Mitchell said. Therefore, recruiters are looking at more experienced and tenured candidates, "which means all the companies keep pirating from each other," he said.

The other big recruiting trend Mitchell sees is insurance companies that either have set up standing centers or have hired a recruiting manager to cut costs. These firms do their own "inventive networking" using job fairs, online boards such as Career.com or Monster.com and advertising on Internet job boards.

"What I see in that is your happily employed employee is not posting their resume in those venues, and the use for search firms is still there," Mitchell said. "For the most part we're trying to identify candidates who are seeking a better and more exciting opportunity."

Compensation and the way it's being recorded is another change in the recruiting process, Graham said. Candidates are now being offered earn-outs to come aboard, similar to a company acquisition.

"Right now there's an upfront understanding of either a sign-on bonus, which everyone does, or they're taxing it to individuals that bring that business over," Graham said.

But some employers are offering a pipeline candidate compensation that's tied to a business plan. "ff you do what you say you will, we'll give you another bonus in six months or two years," he said.

A typical earn-out would be motivational: a three-month, one-year or three-year contract with an earn-out bonus at the end of each period, Graham said.

It's also better to hire the recruit than to acquire the entire shop, he said.

"The contact, if he comes, the clients are coming with him," Graham said. "It's cheaper to overpay an agent, a prospective producer, than it is to acquire an agency. It is more efficient, more consistently successful, than if you pay them either industry average or above."

It's really a mini-acquisition, Graham said. It's been done for less than a year in the industry "by a few aggressive clients of mine," he said.

Other clients are offering job candidates ownership and equity in their companies, Graham said. "You see a lot of equity-driven offers right now, but they're usually with privately held companies that are fairly new organizations," he said.

It's more of an organizational approach. "But you're acquiring clientele. It's almost like an acquisition but it's not costing them the money of an acquisition," he said. "And it's earn-out, so they're getting what they want."

Mitchell is seeing the same. "Many companies are making candidates 'bonus babies,' offering them signing bonuses much as they do in Major League Baseball," he said. "It's all about wealth building--equity shares, stock shares. It's really changed a lot in my years of doing this."

Bringing Back 'Sexy'

The industry has to pull younger workers in, engage them and train them alongside mature workers, Milkint said.

"We have to find a way to get new talent in this industry to really make insurance, health care, financial services feel sexy," she said.

"Our own paradigm of retirement has to change. It's not '65 and out' anymore," she said. "You get those two generations working together and some real magic can happen. We are seeing it happen."

Health care reform is another key area, Milkint said.

"There's a spotlight on health care reform in this election, and post-election into 2009, that will cause a continued demand for talent," Milkint said. "We're seeing it already--an increased demand for health care payor professionals, both on the payor and the provider side," she said.

"We know there are going to be changes in 2008 and I think our clients are getting ready for it. They're hiring the classical disciplines: actuaries, underwriters, claims professionals," Milkint said.

The Hispanic movement is another huge growth area for recruiters, she said.

There's been "a tremendous rise" in the need for Spanish-speaking or Spanish-bilingual executives in the insurance industry, Milkint said, as well as claims, health center and call center professionals.

There's also a movement among insurance, health care and financial services companies toward business intelligence or analytics--assisting organizations that are trying to capture data to help them set strategies, Milkint said.

"There's a rise in the use of predictive modeling--that's a hot area--and how it flows into business intelligence," Milkint said.

Companies are looking for people with a balanced outlook who can understand the business, and also understand the analytics and quantitative side. Those that do "can write their own ticket, and that's exciting," Milkint said.

* The Situation: Insurance recruiters face three hurdles: market conditions, the retiring boomer generation and insurers' negative image as viable employers.

* The Solution: Though methods differ, recruiters are finding common ground in making the industry more attractive to talent in other fields.

* The Result: Innovations and competitive recruiting are giving the industry a more positive image as a challenging, rewarding career choice.

Learn More

Dryden Mutual Insurance Co.

A.M. Best Company # 01908

Distribution: Independent agents

For ratings and other financial strength information visit www.ambest.com.

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Got Talent?

Top seven challenges facing
companies in recruiting talented
employees:
                                     Cited as Most
                                         Important
Issue *                                        (%)

Knowing talent's needs in advance                88
Finding top quality talent                       82
Enhancing employment branding                    59
Improving recruitment process                    47
Cost to acquire                                  29
Candidate unwilling to relocate                  29
Candidates' rising pay requirements              18

* As of November 2007

Source: Claymore Partners LLC