John Lennon once famously wrote, “life is what happens to you while you’re busy making other plans.” In some ways, this captures a challenge many insurance carriers have faced as the pandemic continues to evolve and extend its impact on virtually every aspect of their business models.
Companies having been handling issues as they come up; the uncertainty of the pandemic has necessitated an array of rapid responses to deal with things like return-to-office plans and long-term technology strategies under circumstances none of us have previously experienced, and only truly planned for in a hypothetical context.
At Aite-Novarica’s recent Innovation Advisory Board meeting, we reflected on the impact all of this has had on innovation. In many ways, the uncertainties of the pandemic have made innovation even more important as carriers have been forced to use more agile thinking and rapid decision-making to both take advantage of new opportunities and avoid adverse outcomes. Innovation focus has largely pivoted toward tactical initiatives, rather than strategic ones, because the need to see short-term results (e.g., quick advances on digitization efforts) has been so acute.
Generational Innovation
While innovation is frequently framed around technologies and capabilities deployed, our most recent group session took an interesting turn when it focused on a key component of future success: the human capital available to insurers across all lines of business. Once-theoretical issues such as demographic shifts used to come up with regard to long-term planning, but suddenly they are demanding near-term attention.
For example, baby boomers have long been a dominant force in labor and consumer markets. Now, with the youngest members of the cohort approaching retirement eligibility and early retirements accelerating due to the pandemic, carriers are scrambling to address a potentially significant loss of institutional knowledge. This generation, which was known for the longevity of its tenure at specific companies, is being replaced by a younger cohort that is both more mobile and more interested in developing broader professional skill sets, partially to help mitigate the adverse effects of downsizing/rightsizing events they saw impact older peers and parents.
Compounding all of this, younger talent is on the move, too. The so-called “Great Resignation” has created a challenge which carriers need to address quickly. The role of innovation in this regard became the focal point for this most recent Advisory Board session.
Talent Retention
Increasingly, highly talented employees are being picked off and enticed by larger salaries and remote work. Many companies in areas with traditionally higher costs of living, like the Northeast and Silicon Valley, are discovering a plethora of talent available in areas like the Midwest. These employees are accessible now in a way they haven’t been previously, thanks to remote work. What’s more, innovative companies outside of insurance may be able to offer a mutually advantageous situation: a higher salary for employees that is still cheaper than average.
The challenge of talent retention will be an ongoing conversation for insurers. Compensation adjustments are certainly one way to mitigate this issue. Enabling greater flexibility for remote work and keeping employee morale high may be another admittedly challenging way to boost employee retention. Part of this may require a careful inspection of what is driving the increased mobility.
For example, one issue that younger employees are grappling with is daycare arrangements for children. Early in the careers of baby boomers, some employers chose to have on-site daycare facilities to attract and retain talent in tight labor markets. Returning to a point where companies understand some of the drivers of dissatisfaction, and proactively move to address the issues, can have a material positive impact.
Talent Pipelines
An outside-in perspective could be advantageous for insurers in considering how to attract and retain talent. Many companies outside of insurance are willing and able to make an offer to college students well before they graduate. Insurers may find it beneficial to follow the lead of other companies and get in on this talent pool early. This may mean formally partnering with colleges and universities to get access to talent.
Insurers may also find it valuable to tap into university innovation resources and accelerators. Many technology companies (e.g., Microsoft) have formalized programs to become connected with promising students early in their college careers, or even late in high school. As the competitive landscape for talent surges, increased innovation and creativity around how to connect may be the key to success.
Some tech companies have also tapped into community/junior college programs as a way of getting access to lower-cost talent at a time when they can also influence the curriculum they are exposed to, perhaps accelerating the onboarding process.
As the industry continues to navigate unforeseen challenges, conversations like these are important. Business models are built on the combination of people, process, and technology. Innovation can impact all three, an insight that some companies have not yet fully embraced. Reach out to me at [email protected] if you’re interested in discussing retention strategies and how insurers can future proof their talent plans. Aite-Novarica clients and Research Council members interested in continuing this conversation can also join us at our October 28th Special Interest Group meeting focused on innovation.
Add new comment