Conclusion
Attracting new talent is good. Building bench strength is better.
Identifying critical recruitment needs and attracting the right people is only the first step in a holistic talent-management strategy. Insurers need to focus much more closely on articulating key skills for their operations, and on reviewing the way they manage and develop them. Too often, companies have little idea of the real value of effective talent management—or of the risk of poor performance in the management of core skills. Only with a consistent and coherent approach to the whole talent issue can the return on human-resources expenditure be evaluated.
As we have seen, the right answers will depend on the specific circumstances of each company. In recent years it has become more generally accepted that an evidence-based approach to human resources issues, such as these, coupled with exploitation of new technology and data methodologies, can generate important insights into recruitment, retention and succession planning.
A move to future state will require a different mind-set, capability and culture:
Customer-oriented: The move from transactional services to customer-focused will require greater customer-service experience, such as graduate fast-track programs focusing on building customer relationships.
Analytical expertise: Attracting, developing and retaining employees with deep analytical skills that go beyond structured data to also include unstructured data will be critical. Greater predictive and prescriptive analytical skills are required to garner the full value of the data and unearth the tangible business insights that drive action.
Innovative mind-set: Client expectations have increased exponentially in recent years. As insurers and reinsurers strive to remain competitive, they are being squeezed by tech-savvy and more nimble new entrants and capital markets solutions. To remain relevant, innovation will need to become part of insurers’ organizational DNA—a transformation that will impact the entire insurance value chain—and require a workforce encouraged to experiment and supported by leadership.
Legacy knowledge: As is the case with many insurers, core legacy systems and technology are still critically important to day-to-day business. As the architects of these systems begin to retire, knowledge must be passed to the next generation. Formulating an appropriate response to these challenges requires the development of a holistic talent-management strategy. Unfortunately, there is no silver bullet or “one-size-fits-all” solution.
Addressing the five key talent risk categories—the “5 Cs”—is critical:
Capability: Risks associated with building the skills an insurer needs to compete now and in the future—the breadth and depth of skills and capabilities present within a workforce, and how well-aligned these are to the insurer’s needs.
Cost: What is the risk of a workforce becoming unaffordable? What will it cost an insurer to recruit and retain the people it needs? Will it be able to afford the overall cost of its workforce?
Compliance: Risks relating to employee behavior, regulations and laws. This category covers both the need to ensure talent processes, comply with local laws and regulations, as well as whether talent management is seen as a business-critical process or an administrative process simply to “be complied with.”
Capacity: Risks around the succession into critical roles, and retention of critical people and teams. In other words, will an insurer be able to create and maintain the size and shape of the workforce needed to deliver its business plan?
Connection: What is the risk of an insurer’s top talent becoming disengaged? In addition, will an insurer’s talent-related processes remain sufficiently joined-up? Will it be able to share talent between units in the way it needs to? Is it able to connect groups of high-potential people together? Are leaders able to create an emotional connection between high-potentials and the business?
Meeting the challenge: It is no surprise that insurers with the most innovative approaches tend also to be those with the most advanced talent management strategies. The insurance sector is vulnerable to competition from new entrants using new technologies and innovative approaches to marketing and distribution. Google, Facebook and other companies with an innovative platform for product distribution or other insurance-related services than underwriting will represent significant competitive threats in the insurance market. They are even today attracting and nurturing high-flying young talent.
Talent management is now a business-critical process for every organization. Insurers need to isolate and address a much broader array of talent risks, taking into account the critical need to connect their people to each other and to leadership; to forecast and manage costs. They must move away from an outdated approach of simply ticking the box on performance reviews. Beyond tackling the 5 Cs, insurers must also hardwire talent risk into their wider enterprise risk-management framework—thereby placing human capital risk firmly on the radar of the right people at the right level.
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The article is written by Mark Spears of KPMG in the UK, Harold de Bruijn of KPMG in the Netherlands, Mary Trussell of KPMG in Canada and W Jean Kwon of KPMG in the US.
R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.