Multiple sectors of the UK economy, not least general insurance, are having to work harder and often pay more to attract talented people with the skills they need to compete and win in a fast-changing commercial environment.

It’s a situation that has been referred to as the war for talent. This article looks at what is happening, and why, and suggests some routes forward for insurance providers keen not to lose out in this war.

The phrase ‘war for talent’ was originally coined in the late 90s, with specific reference to managerial talent. One influential book on the subject defined this as ‘some combination of a sharp strategic mind, leadership ability, emotional maturity, communications skills, the ability to attract and inspire other talented people, entrepreneurial instincts, functional skills, and the ability to deliver results’.

There’s no doubt that having talented people in top roles, people who combine all the attributes and capabilities listed above, is a huge asset for any business. But I want to use the word ‘talent’ in a much broader sense. Because a war for talent really does seem a good description for the increasingly fierce competition we’re seeing in the insurance sector for individuals with well-developed skills across a much broader spectrum of roles.

It’s not just brokers and insurers, incidentally, who are finding it harder to acquire and retain the right talent. If recent press reports are to be believed, sector regulator the FCA has some issues of its own in this regard. Financial services supervision is a talent-intensive field, and the FCA now finds itself exposed, not simply because the many talented people it employs could usually be earning significantly more in the private sector, but also because of ‘cultural’ issues.

Staff morale at the FCA is said to be low. Given the central role of culture in the regulator’s supervisory approach, it seems ironic that one recent FCA leaver was quoted in the press confiding that ‘I’ve never worked in such an unhappy place’. With dissatisfaction particularly focused on recent changes to bonus structures, there are reports now that demoralised staff are considering unionisation.

No doubt these reports may have been over-egged, and most insurance firms will hopefully not be experiencing such acute pressures. But, with human capital increasingly at a premium and a strong expectation that many insurance staff have only been waiting for the pandemic to subside fully before activating plans to shop around for a new role, the war for talent is a strategic challenge no organisation, large or small, can afford to duck.

The experience of spending long periods working from home or on furlough has fundamentally shifted the outlook and expectations of many current and potential employees. Many have had a similar amount of money but less to spend it on. Many have had commuting time freed up to invest in personal interests, family, and leisure pursuits. These changes have left a lasting impression – often instilling a keen new appreciation of the benefits of a healthy work-life balance.

Some employees have taken the disruption of the pandemic as their cue to hasten their retirement or to start up that business they’d always dreamed about. Many workers from overseas have returned home, with Brexit and Covid-19 diluting the UK’s former appeal as a place to live, work or settle down.

The net effect has been that, with the economy rebounding strongly, the balance of power in the employment market has swung decisively in jobseekers’ favour. Younger people in particular – acutely aware of the many challenges they face in a world where former assumptions are rapidly falling by the wayside – are far less shy about pressing any advantage that comes their way.

In a buyer’s market for jobs, companies need to adapt fast or lose out. With other opportunities thick on the ground, firms can no longer expect to get more for less out of employees fearful of risking a secure position. Today it’s all about the carrot, not the stick. Employees are less and less prepared to tolerate an uncongenial work environment – particularly the more talented ones, who recognise that their skills are in demand.

Even for firms who feel they can afford to, throwing money at the challenge of competing in the war for talent won’t fix the problem for long. It’s worth bearing in mind that how remuneration is structured can often be at least as important as the overall salary amount – as my earlier aside about the FCA’s challenges in retaining talent illustrates. In reality, employees today are looking for more than just money from their work lives. Money alone won’t inspire loyalty or generate a sense of shared endeavour. There’s a huge amount insurance firms can do to compete successfully for the skills they need without reaching for their cheque books.

It may be helpful to think in terms of your firm’s employee value proposition. This encompasses not just salaries and financial incentives, but also recruitment, training, opportunities for career progression, flexibility and work-life balance, support for physical and mental wellbeing, and even issues around diversity and representation.

The starting point for any successful recruitment policy is understanding and mapping your firm’s evolving talent needs in a coherent and progressively updated way. HR has an essential role to play in identifying present and future gaps in the pool of talent a business has at its disposal, and intelligently orienting both recruitment and training around the task of filling or preventing any gaps.

If you haven’t already done so, now is the time to revisit your recruitment processes – including the platforms you rely on to source potential candidates. If you are not advertising vacancies in the right way through the right channels, you won’t attract the talent you need. Consider using social media in a way that creates a narrative around the attractions of working within your business in terms of job satisfaction and career opportunities etc.

Any managers and other staff members involved in the recruitment process need to be fully up to speed with the firm’s overall priorities, with the state of the employment market, and with candidates’ changing needs and expectations. For example, it is far more important for employers to move fast if they don’t want to risk losing out. If promising candidates lose patience and accept another offer this simply wastes time and money.

The surest way to recruit successfully in a buyer’s market is to look at things from the candidate’s perspective. Bear in mind that there’s a much greater onus on would-be employers now to ‘sell’ their firm and the role they’re seeking to fill to the candidate than in previous phases of the market. You may find you need to be more flexible and adapt recruitment expectations around the skill sets of talented individuals you come across.

It is also worth looking at the other side of the recruitment coin. Firms considering scaling back some aspects of their operations or closing particular teams or departments down, need to focus on whether talented individuals affected could be redeployed and so avoid needlessly losing their skills and the institutional knowledge. It is usually quicker and less expensive to train up a redeployed employee for a new role than an external hire.

As we move on to the topic of training, it’s worth stressing that career development and redeployment, up-skilling and re-skilling, can be just as effective as recruiting in the war for talent.

Referring back to the idea of talent mapping mentioned above, training is more than ever a moving target these days. Developments like big data, algorithmic analysis, telematics, driverless vehicles and the internet of things are all transforming the world of insurance. Younger insurance customers have radically different expectations and ways of interacting with financial services providers than previous generations.

Process automation and the need to transact through new online channels means technological skills are increasingly at a premium. As are ‘socioemotional’ skills. As a recent insurance-focused report from McKinsey & Company put it, ‘As machines automate more knowledge work, the workforce will require more creativity, critical thinking, and social intelligence to shape and steer them.’

Any learning and development programme needs to reflect and anticipate your firm’s changing skills requirements. It’s also increasingly important in the current climate to take the development part of L&D seriously. Talented people will be more inclined to stick with an employer if they have a clear understanding of where the business is heading and how they fit in to its future plans. Giving talented employees the resources, support, and tools they need to continue developing new skills and taking on new responsibilities can be crucial to keeping them on board.

HR also has a role to play in avoiding situations in which employees whose skills and talents have made them successful in the past promote resistance to the acquisition or development of different types of talent more relevant to the firm’s current and future needs. There is vital work to be done at the confluence of people management and skills acquisition. In an era of unprecedented change acceleration, there is a job of interpreting to be done between new and old modes of working, and resistance to change needs to be tactfully but effectively neutralised.

Before wrapping up, it may be worth referring back to a couple of other articles IHRS has recently posted. The first of these concerns flexible working – something talented candidates are increasingly looking for in any role they consider. One survey recently conducted in the U.S. found that one in three American workers would not consider an employer who required them to be onsite full-time. It’s a fair bet that UK workers have a not too dissimilar outlook in the emerging post-pandemic landscape. Flexible working covers everything from hybrid working, job sharing and compressed working weeks, to offsite working and flexible hours. It also encompasses things like days off for reasons of mental health, and a sympathetic approach to childcare and other care commitments.

Finally, a nod to another recent post – this one on the topic of diversity and inclusion. There is a clear cross-over between the need to attract new talent and the need to drive diversity. Updating your talent pool provides an opportunity achieve this. As a recent report from McKinsey noted, ‘A more diverse workforce creates a more dynamic culture that incorporates broader perspectives, facilitates more collaboration, and fosters more creativity. Such an environment is also more appealing to millennials and improves the industry’s ability to attract new talent. Customers increasingly choose the companies they trust and do business with based on how well these companies demonstrate prosocial values such as social equity. Diversity planning must be an integral part of talent strategy and workforce planning, which is often not yet a reality at many insurance companies today.’

All the above really only scratches the surface of the many ways insurance firms can protect themselves from the negative effects of the ongoing war for talent. If you would like to know more about how IHRS can help you compete in this challenging new environment, please don’t hesitate to get in touch.

Email HRhelp@ihrsolutions.co.uk or call 01604 709509.