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But They Don't Wear Cleats: Wanna field a winning team? Keep the new players coming
Leader's Edge, July/August 2008
Fast Focus
- The most successful firms constantly scout new talent, making it an ongoing strategy.
- The traditional pipeline of carriers and competitors can grow stale, so nurture some homegrown talent.
- Recruiting takes a lot of work, but it saves a lot more in the long run.
What a season we're about to have! You've gone through spring training,
and you're ready to field the team. But if you're in the front office,
you can't just be focused on the next home stand, or even this season's
81 home games. There's also the competitive landscape, player
development, budget expectations—things with a strategic, long-term
element.
One of the biggest challenges, in agency and brokerage work as in the
ballpark, is figuring out whom to put on the field. Even if the rest of
your plans are solid, you've built a culture of empowerment and you're
focused on leadership improvement, the firm must have a bench full of
players who can step up to the plate and produce everyday and a bullpen
with a few aces who will win the tough games. It comes back to the basis
of this industry: on both sides of the insurance equation, it's all
about people.
One survey estimated that bad hiring decisions are responsible for 75%
of all business failures and overall losses of hundreds of billions each
year. But if bad hires cost you business, good hires have the opposite
effect. Brokerages with lower turnover have consistently higher customer
approval ratings.
Proactive Scouting
A pro sports manager rarely fields a winning team by simply replacing
players who get injured, retire or switch to another team. But in many
business situations, such "reactive hiring" is the norm. That's true for
many brokerages, and it's a dangerous way to run the business.
The worst time to start your recruiting process is when you need
someone. Recruiting has to be a key business strategy, one that is
ongoing and proactive. It's really no different than prospecting for new
clients. You don't just wake up one day and say, "Well, time to go find
a new client." The most successful firms are constantly scouting new
talent. In fact, insurance industry research has shown that a
high-growth agency typically has such an ongoing recruitment strategy,
with one-third of all producers hired within the last three years.
In Search of Excellence
Where do you find talent? Most would say from a carrier or a competitor.
While the traditional pipelines have been efficient, there are good
reasons to think about new strategies.
Today an employment agreement rarely exists without a non-solicitation
agreement, so luring your new hire away from a competitor could be
ludicrous rather than lucrative. You pay a high salary for experience
and get a person with a Rolodex they can't use. Not a good return on
investment.
Hiring from a carrier has its own risks. You may get a person who was
not the top of their class or who is not well trained. Or you get
someone who simply knows one way of doing business, so the re-training
curve is high.
Candidly, most brokerage owners place too much emphasis on looking for
industry experience. Personally, I love the model of Barney and Barney,
a firm that primarily hires people straight out of college. Yes, there
is a learning curve, but you get a person who's brand new to the
business, with no bad habits or traits.
Many great baseball teams are built not on the talents of one
high-priced free agent, but on the collective skills of home-grown
talents who have been nurtured in the minor league system while they
learned.
Some of the most successful brokerages I've worked with not only hire
from college but actually recruit college interns as a starting point,
and they have found the success rate of recruiting that way is
significantly higher than from other sources.
But what if the college approach doesn't work or provide enough talent?
In those cases, I like to find the 25- to 28-year-old person who's been
in a sales position for a few years. Doesn't matter what type of sales,
really. Have you ever tried selling copiers? Talk to people who have,
and you'll discover there can be few sales jobs that are harder. It is a
non-commodity, it takes many cold calls, the sales cycle is long and you
get lots of rejections before making a sale. Sound familiar? Whether
photocopiers or policies, a person who needs instant gratification by
ringing up sale after sale will probably not be a great producer.
Some recommended "best practices" also tout the college route, as well
as campus recruiting fairs, company employment Web sites, niche job
boards and employee referral programs. (If you don't currently have a
referral program in place, I suggest you start one today!) The point is
to get creative about recruitment, and you will be more successful in
identifying new talent. More importantly, the quality of your hires will
significantly increase.
Don't Be Fooled
Most people who've been behind the recruiting desk have experienced
recruits who seem like they have star power on first meeting. You may be
concerned that they're overselling themselves, or wonder if they'd fit
in with your organization. However, on top of the great attitude and
super confidence level you've seen is layered a stellar degree from a
prestigious school and great work experience, and you're persuaded. But
did you just buy a player with a steroid-injected resume and
fantasy-league stats?
One part of the employment evaluation process where a manager must be
more careful these days is in resume roulette. Too many people today are
gambling that an employer won't do anything beyond simply read (and be
wowed by) their resume. Beefing up the resume is one thing, but we have
entered a new age where resume padding is becoming resume fraud. Some
studies have shown that almost 25% of executive resumes have at least
one stated fact that is a non-verifiable statement or an outright lie. A
study by the Society for Human Resource Management (SHRM) shows that a
majority of applicants stretch the truth on resumes. Therefore, the
hiring process should, at a minimum, verify for all new hires education,
title, dates and salaries. Whether you require a steroid test is up to
your lawyers and your congressman.
Consider Profile Testing
While you don't think the resume is exaggerated and the prospect
interviews well, how confident are you when making an offer? Would it be
worth your while to take one more step if it resulted in a great new
employee? Well, then, you should make profile testing part of the drill
for each new hire.
A recent survey indicated that agencies used profile tests only 80% of
the time when hiring new producers and 60% for account manager and
account executive positions. I find it astounding, in a business where
your only asset is your people, that profile tests are not used for all
new hires. Here's a news flash: profile tests do not lie. They are very
close to being 100% accurate and will reliably tell you whether the
prospect's personality is geared toward sales or an internal focus such
as account management.
We all acknowledge that talent is our biggest issue, and we all know the
cost of a "wrong" hire. So why would anyone not take the extra step and
spend the few dollars it costs to have all potential hires take a
profile test before you make the hiring decision? It's a mystery to me.
Perhaps this is a clue: It has been shown in a study by SHRM that most
people will make a decision to hire within the first five minutes of an
interview. Why? Because of incomplete information. Our brains have been
trained to make decisions based on fragmented information, a situation
faced whenever an unknown employee prospect is sitting across the table.
Then, once our mind is made up, we are stuck like glue to that position,
and very resistant to change. Is that the way you would buy a new
building, a new technology platform, or even a new copier?
Run a Job Match
Profile tests that do not measure "job match" are generally not
effective. A Harvard Business Review study concluded that job match is
the most reliable predictor of effectiveness on the job. "It's not
experience that counts, or college degrees, or other accepted factors;
success hinges on a fit with the job," the study noted.
The 80/20 rule applies to producers: 20% will get 80% of sales. Your
task is to find those few with a perfect job match. It may vary slightly
by situation, but here is my basic list when using profile tests to
determine job match:
- Bright and technically astute
- Entrepreneurial
- Disciplined work habits
- Self motivated
- A relationship builder
- Good listener
- Confident
- Ability to close.
Hiring for the right job match can have a profound impact. You are more
likely to get top performers, people who will, in general, out-sell an
average producer by 150% or more.
Handshakes All Around
Your work does not end when you give the new employee a desk and shake
his or her hand. Too many agencies put all their efforts into the hiring
phase and not nearly enough into the integration phase. A professional
baseball manager doesn't just give a guy the uniform and send him onto
the field, he makes sure the rookie understands the system and becomes
part of the team.
Great brokerages have a formal integration process. Some of these
programs can take up to a week. I've seen some unique steps in the
process.
- The president or leadership team sends a welcome letter to the new
hire before the person's first day. A package sent with the letter might
include information about the firm, the culture and what is expected of
employees.
- An employee's first meeting is an introduction to the president or
other key senior managers. From these senior people, the employee hears
about the agency, such as its value proposition and what makes it
different, the culture, attitudes and values. You might explain the
history or the agency's strategy. In this way, the new hire gets
comfortable with the firm from day one.
- That senior leader walks the new employee around the firm and makes
introductions. Do not delegate this to someone else. Doing it this way
sends a message that the new employee is very important and that the
integration process is also important to leadership.
- The new hire meets with a group of employees who will explain their
perspectives on the firm: why it's special and why they like working
there.
- Maintain a place that has names, pictures and quick biographies of
all employees, and task the new hire with learning about the people on
the team. This may not be practical for a firm with thousands of
employees, but it can work with a hundred-plus people.
- At the conclusion of the integration process, the employee takes a
self-assessment test that includes all of the key items taught during
the process: people, culture, values, technology, strategy and goals. If
a person answers less than 100%, address the issues that did not get
through to them.
Addressing Gen Y
One final thought about hiring and recruiting: you will be working with
the next generation—Generation Y—and it is wise to keep in mind the
different perspective of young people entering the workforce today. We
must adapt to their needs, not try to change them to our ways. A few
things about hiring young professionals:
- Technology for them is a way of life. You need to provide effective
technology tools in the work environment.
- The Internet and its tools like Facebook and MySpace have made Gen Y
workers embrace a culture that has open and honest communications.
Provide that, too.
- Young workers expect to have more say about their work and their
career path than did the older workforce, who toiled under a more
controlled, structured environment.
- They value empowerment and, like youth of any era, are idealistic.
Managing expectations is critical.
- A balance between life and work is much more of a priority than it
was for previous generations.
- Many young people enjoy being part of a team or a group versus being
an island and working alone.
Recruiting and hiring in the agency world has one key difference from
signing a great ballplayer: Nobody wears cleats. Oh, another thing:
Great talent doesn't just show up in a draft. It comes to you through a
continuous, proactive process where you make recruiting a key business
strategy.
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