It’s training, training, training
At a time when our industry is only getting more complex, … it seems we’re looking at training and education as an expense while considering technology as an investment.
By Cheryl Koch, CPCU, ARM, AAI, ACSR, AFIS, and Mary Belka, CPCU, ARM, ARe, RPLU, CIC
Years ago, we came up with what we thought was a witty retort to the age-old question put to us by so many agency owners when discussing professional development for agency employees:
Q: “What if we train them, and they leave?”
A: “What if you don’t, and they stay?”
Well, perhaps it wasn’t so witty after all; perhaps it was sadly true. We gathered data from the Independent Insurance Agents & Brokers of America’s (IIABA) Best Practices study. Over the last 14 years, the average amount spent on employee training and development (excluding technology training) was less than $1,000 per person across every revenue category. In fact, it was far less: $651 to be exact, or about three-and-a-half-tenths of 1% of revenue.
We don’t know that there is any magic number that should be spent, either as a percentage of revenue or a percentage of payroll, but less than 1% of revenue seems to be on the low side, especially considering this must include mandatory continuing education (CE) training for nearly all agency employees who are licensed.
To put it somewhat in perspective, spending on information technology (IT) was about 10 times higher, across the board, coming in at right around 3% of revenue over the years. At a time when our industry is only getting more complex, and demands on employees are ratcheting up, it seems we’re looking at training and education as an expense while considering technology as an investment.
If we want to have the best people—which we are quick to say we do—it’s likely going to take more than this anemic spending on training and professional development to get them where we need them to be to better serve our clients and where they will want to be in terms of their individual growth and development. Some important facts to consider:
- Younger people, Generations Y (millennials) and Z in particular, consider opportunities for advancement a key workplace motivator. According to a recent study, making more money was cited by only 28% of Gen Z participants as a top motivator, while 34% said advancement was most important.
- Learning and development are seen as the keys to their advancement in their careers by Gen Z-ers. They have a natural desire to learn and see it as a perquisite, not a chore. Rather than “sending someone to training,” they will actively seek those opportunities.
- If we satisfy the needs of the youngest employees, those born after 1996, who consider robust learning and development as a non-negotiable workplace need, you will likely satisfy the older generations as well, who are less likely to speak up and ask for what they want.
- The old methods of delivering training will not satisfy the needs of younger people. Learning will need to be more like a video game and less like a traditional classroom. The “spray and pray” method used in the past, where attendees drank from a firehose and employers prayed that the learning would transfer to their daily performance, will no longer get the job done.
Perhaps most surprising in many of the reports and studies on education for Generation Z is that they would prefer it to be in person. This is the group of young people who were most impacted by the COVID shutdowns and, by their own admission, say they did not learn as well in the virtual environment. They also cite a lack of social skills as one of their biggest workplace challenges, which supports the notion that, to achieve the maximum value, much training and education will need to be delivered in person.
Generation Z has a healthy skepticism about what they are told. They want to see the action that’s taken that supports what’s being said to them about the possibilities for advancement. They will quickly connect the dots between learning more and achieving more—unless those dots fail to come into view.
Training and education in this new world of work will have to be more deliberate and intentional than ever before. Especially tricky will be the balancing act employers will have to achieve to have flexible work arrangements and remote employees while also offering the kind of social interaction and learning environment that produces the best result for all concerned. Some specific things agencies can do to ensure a steady supply of highly skilled and knowledgeable workers are:
- Step up recruiting efforts. The good news is that Generations Y and Z consist of about 100 million people in the United States. They will be the most ethnically and racially diverse workforce we have ever seen. But they won’t just “fall into” insurance the way many of us did. They will want to know what’s in it for them, and that’s where we can proudly shout from the rooftops of high schools and colleges across the country that what we do matters! They have an opportunity to be part of a wonderful industry, to serve people in a meaningful way and to prosper personally from their efforts.
- Create more robust onboarding programs for new employees. From day one, agency owners need to engage with new employees, tell them the agency’s story, give them a glimpse of what the future holds and show them how they can be a vital part of the success of the organization, regardless of their position. And we hate to say it, but to become truly enculturated, it will probably require people to be in the office more than remote for at least the first six to twelve months on the job.
- Develop an educational career path for every employee. Remember that we judge ourselves by our intentions, but others, particularly young people, will judge us by our actions. Spell out for them what they will be learning throughout their career with the agency. The emphasis should be on accomplishing milestones that serve the clients better, not merely compliance with mandatory CE. For that, they can dine at the $9.95 all-you-can-eat CE buffet. The good stuff is harder to attain and, yes, more expensive, but so much more rewarding.
- Increase the training and education budget. That $651 is not going to go a long way toward creating the master-level employee needed now and in the future. Figure out what you can afford and incentivize people to use their education stipend on courses that will benefit them, the agency, and the client, even if there is no continuing education credit attached. Reward the attainment of professional designations, especially those that require months or years of study and rigorous national-level exams. And consider allowing people to study on company time, or at least contribute equally to the amount of time required. Not everyone has the same opportunity to read and study outside of work hours.
- Hold people accountable. Everyone can be an expert at something, and we all know the best way to demonstrate what you know is to teach others. Don’t just subsidize people’s attendance at industry events or classes; have them make a presentation when they return. And that goes for the agency owners as well. If you attended a presentation, convention, or meeting, share with everyone what you learned on their behalf. What’s important to owners will be important to them and it’s a fair question for an employee to ask: “What have you learned for me lately?”
- Create capacity for learning. It doesn’t really matter how much money you throw at training if people don’t have the time to learn. If a few days out of the office to attend a program or class is going to mean they’re hopelessly behind when they return, most people won’t feel comfortable taking that time away from their daily routine. Being a staff member “fat” as opposed to “one lean” means we can have people out of the office for education and not have to worry about what’s not getting done and how they’ll have to work like a beaver when they return.
Think of what our organizations might look like if we doubled or tripled that investment in professional development. If you’ve ever stayed at the Broadmoor Hotel in Colorado Springs, you’ll notice the experience is unlike any other. Curious about what made that hotel both a five-star and five-diamond property for so many years, it turned out the answer was staff training. Every new team member receives over 175 hours of training in their first year with the hotel—that’s about a month of training. In some agencies, people are lucky to receive one or two days. Staff development is part of the Broadmoor culture. Stated one executive:
“If one of our department heads gets a call from either our CFO or president who says, ‘Can you tell me why you’re over budget?’ All they have to say is, ‘I did this many hours of staff training,’ and that’s the end of the discussion. They recognize that there is an ROI on training and education.”
Now that’s something to which we can all aspire.
The authors
Cheryl Koch is the owner of Agency Management Resource Group, a California firm providing training, education and consulting to producers, account managers and owners of independent agencies. She has a BA in Economics from UCLA and an MBA from Sacramento State University. She has also earned several insurance professional designations: CPCU, CIC, ARM, AAI, AAI-M, API, AIS, AAM, AIM, ARP, AINS, ACSR, AFIS, and MLIS.
Mary M. Belka is owner and CEO of Eisenhart Consulting Group, Inc., providing management and operations consulting to the insurance industry. She also is an endorsed agency E&O auditor for Swiss Re/Westport. A graduate of the University of Nebraska, Mary holds the CPCU, ARM, ARe, RPLU, CIC, and CPIW designations.
