Agency Financial Management
Yes, Baby Boomers, the Millennials are knocking at your door
Whether or not you enjoy coming into the office every day, there’s one simple fact we all have to face: You can’t do it forever. There will come a day when you will stop working. Some insurance professionals plan to keep at it until their bodies and minds give out, but most have at least some image of that concept we call retirement.
Just as you advise your clients of the value of managing risk when it comes to preparing for the future, it’s important for you to plan for your retirement—not just for you and your loved ones, but also for the future of your business, customers and employees.
Just as you advise your clients of the value of managing risk when it comes to preparing for the future, it’s important for you to plan for your retirement …
No matter where you are in the life cycle of your business, planning for the future is a serious topic that requires much thought and preparation. It should not be avoided. And the sooner you determine what path you want to take, the better you can begin planning for success. While some may choose an exit strategy that allows their business to be acquired, others may want to build a legacy business that will serve their clients and employees for years to come. In the instance of the latter, succession planning is critical.
Value of succession planning
David Grau Sr., JD, the founder and president of FP Transitions, specializes in helping financial services providers build enduring and transferable value and is leveraging this experience to expand into the insurance space. Grau identifies three reasons for developing a formal succession plan. First, it’s the best way for you to realize the value of what you have worked so hard to build. Second, it offers a formal mechanism for recruiting the next-generation talent who will grow your business as you begin the long road to retirement. Finally, it’s the best way to preserve and protect one of the largest, most valuable assets you own.
“A succession plan is a gradual, incremental transition of ownership, leadership, and control from one generation to the next with the founder gradually throttling back and retiring on the job while the business is growing and getting stronger,” Grau explains.
Attracting young talent
Preparing in this manner requires you to look at your business in a different way. As you think about positioning the next generation to lead your business, you will need to focus on attracting, rewarding, and retaining them—a daunting task, perhaps, but one you need to embrace in order to achieve a seamless transition. And while crafting a plan for such a transition will demand plenty of time and energy, the rewards it provides for both you and the eventual owners of your business will be many and lasting.
So what should be taken into consideration when attracting the next generation of talent? Odds are that those future owners are going to be Millennials (or Generation Y, who are often seen as the same or very similar with birth years— roughly from the late 1970s through 2000). So how can you interest them in an insurance career and keep them engaged long enough to step up when you’re ready to step down? First, it is essential to understand what makes Millennials tick and also to realize that being different doesn’t automatically equate with being bad employees.
Millennials don’t like us. Why? As a society, we’re seeing profound shifts in our population. In just three years, 46% of U.S. workers—that’s nearly half of the workforce—will fall into the generational group that’s typically labeled Millennials.You’ve probably heard a lot of stereotypes about Millennials, poking fun at their perceived habits and flaws, but the reality is that they have a much different view of the world. They were raised in a different time and environment—from always being digitally connected to being unable to read cursive—so it’s no surprise that they don’t view things the same way that you and I do.
One example? They don’t like the insurance industry. It isn’t that they’re opposed to the concept of insurance. They see the industry itself as a relic of the past—far less appealing than being, for instance, an investment banker. When I ask the students I teach each year who wants to be in the insurance industry, out of 60 kids, I get a response of zero. Millennials like to work with their peers, but 71% of them think the insurance world is staffed primarily by older folks.
What Millennials want
So you’ve accepted that the next owner of your business will be one of those “hard-to-understand” Millennials. When you started your career, you probably had the attitude that you’d find an entry-level role, work hard, and move up to top management or ownership. You were happy to have a job and didn’t hesitate to hustle to prove yourself.
Millennials seek more than a paycheck. According to Jason Dorsey, who is chief strategy officer of The Center for Generational Kinetics, there are five top drivers that Millennials seek from a job. First and most important, they want to feel that they are valued in the organization. They want to have confidence in the organization’s leadership (that’s you). It’s important that they enjoy the work they’re doing— they don’t want to perform an unpleasant task today so that they have the potential to do something better tomorrow. They want to feel that they achieve progress on most of their workdays. And finally, they want to be treated as people, and not as numbers.
Dorsey’s group identifies companies that Millennials view as good employers. Through their research, they’ve identified four statements that employees at the top-rated companies make:
- I have a good understanding of how this organization is doing financially.
- Staffing levels are adequate to provide quality products or services.
- There is room for me to advance at this organization.
- Changes that may affect me are communicated to me prior to implementation.
Think about your own relationship with your employees. Would they be able to make those statements about your business? If you were an employee, wouldn’t you want to be able to say those things about your employer?
Recruiting Millennials
When you want to recruit Millennials, it’s just as important to talk about your company culture as about salary and benefits. Millennials are accustomed to marketing, since they’ve been a target of marketers since early childhood. They expect you to sell them on why they should work for you (what some are now calling “employment branding”). They want to have a clear sense of your purpose, the importance of your work, and the role they’re going to play. They want to know that you have a mission, that you take it seriously, and that their values and personal and professional growth are important to you.
Think of your job description as a marketing tool, and place it where Millennials are more likely to look. They probably won’t skim through the classified ads in your local newspaper, but they will look at the careers page of your website, postings on social media, and employment-related sites such as Glassdoor.com® and LinkedIn®.
Few Millennials have experience in the insurance or financial services industry, so instead of trying to hire for insurance know-how, hire for intelligence and personality. Any individual can learn about insurance and become licensed, but not everyone has a personality that attracts customers and puts them, as well as leadership, at ease. When you stop for your morning latte at the local coffee joint or have a meal at a nearby restaurant, look for employees whose service stands out. If they have strong people and service skills, as well as engaging personalities, get to know them and invite them to contact you if they would be interested in making a career change.
Make sure you’re using up-to-date technology. If a prospective employee walks into your office and sees outdated computers, or if you don’t have an engaging website and social media presence, that candidate is likely to walk right back out. Millennials expect access to technology when they shop and do business, and if you don’t offer the same to your customers, they won’t be enthusiastic about coming to work for you. The same is true if you have strict policies about cell phone use or accessing social media while at work. Keep the rules and boundaries fluid and you’ll be surprised how productive your Millennial employees become.
Finally, involve Millennials in your planning and give them opportunities to stretch and develop new skills. You may have your eye on a new CSR as a potential owner, but if you don’t tell her what you see in her future, she may move along to another job. When planning, seek their input and show them how they can help the business meet its goals. Communicate the end goals before going through the steps to get there. If you do all of that well, you will discover that your agency will attract Millennials without much effort on your part—and that’s the first step in bringing your succession plan to fruition.
The author
Rick Dennen is president and CEO of Oak Street Funding, which provides commission-based lending for insurance agents who need capital to buy, build or sell their agency. Dennen is a licensed agent in the state of Indiana for Life, Accident & Health products and a licensed Certified Public Accountant in the state of Indiana. In addition, he holds an MBA in finance and is an instructor of venture capital and entrepreneurial finance at the Indiana University Kelley School of Business. He can be reached at rick.dennen@oakstreetfunding.com.
