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Insurance CIOs Must Focus on Retaining Top Talent During Downturn

In rough economic times, top-tier IT professionals remain the most mobile. Insurers that can afford to should aim at beefing up their organizations; all CIOs need to work harder to hold onto the quality people they already have on staff.

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An economic downturn can create more of a buyer's market for employment just as it can for software and services. However, the most highly skilled IT professionals are still in high demand — a fact that can constitute either a weakness or an advantage for CIOs, depending on their reaction. Furthermore, while IT staff may be less inclined to seek greener pastures today, CIOs need to be prepared to both retain and attract new talent when the economy turns around.

At a time when banks are failing, automakers are going bankrupt and the financial markets are in shambles, most IT professionals are inclined to stay where they are, and many don't have a choice, notes James Kerr, president and senior practice leader, Best Practices Enterprise Group (Hartford). However, this same situation presents an opportunity for financially stable insurers to cherry-pick high-quality IT professionals from weaker carriers.

"Stronger businesses have an opportunity to stack the deck with talent they would talent that they may not have otherwise attracted if more firms were positioned to compete," Kerr says.

Given that the best-and-brightest know they can command what they're worth, insurers do not enjoy a buyer's market for top-tier IT professionals Kerr says. However, he adds, "talented staff can be lured away for the right price."

The key is phrase is "lured away," affirms Kevin Phelps, financial services practice vice president of Baltimore-based staffing solutions consulting firm TEKsystems. At about 5.3 percent currently, IT unemployment is below that of the general population, according to Phelps. That means that despite some well-publicized cuts, about 95 out of 100 IT professionals are still working. "We've seen fat cut from organizations but not muscle," Phelps comments. "Top talent is not out in the marketplace today—we have to recruit those people out of what they're doing."

Given higher levels of unemployment insurers who can afford to invest in talent have an opportunity to "top-grade" their IT organizations, both through recruiting high-performers and removing dead wood, Phelps counsels. "They can ask 'Who are my keepers? Who are the people that I want to ride out this storm with,'" he recommends. "When you're riding 2.5 to 2.7 percent unemployment you don't have the pick of the litter that you might today."

However, Phelps cautions, insurers must not lose sight of longer-term staffing needs. Even today, many talented IT professionals are looking to other industries because of their perception that financial services may not represent the best career choice. Once the economy turns around, carriers will face the perennial challenge of attracting talent to the insurance field. "The employee value proposition doesn't have to be as strong now, but as soon as things pick up, culture will again take a very high priority," Phelps predicts.

If CIOs want to retain their talent pools over the longer term, they need to recast their work environments today, advises Best Practices Enterprise Group's Kerr. Among the most important steps they can take is developing an employee engagement program, which Kerr defines as the process of gaining personnel buy-in and commitment as a way of improving both morale and execution. "Employee engagement activities are essential in shifting the culture and making insurance companies more vibrant places to work—and so to attract younger talent," he says.

Joel Matthies, CIO Jeweler's Mutual (Neenah, Wisc.; about $100 million in direct written premium) and a client of Best Practices Enterprise Group says that the first principle of employee engagement is making sure employees feel connected to the organization's business goals and the value proposition to the end-customer. When Matthies arrived at the carrier in 2005, the IT had a 93 percent uptime performance. Today it's at 99.96 percent. Matthies attributes the success in part through the formal connection of IT realms with business realms through an approach he calls the IT Architecture Framework, drawn from Kerr's thought leadership. "Our IT employees now have a bigger picture and feel more connected with the business," he comments.

Jewelers Mutual has also changed the way it recognizes employees' contributions, according to Matthies. In the past, IT professionals typically achieved distinction through heroics at a time of crisis. "In the new world you get rewarded when no outages occur in the fits place, versus coming in at 1:00 a.m. to fix something that could have been avoided if you'd been proactive," he explains. In addition to recognizing the right kind of work, IT leaders need to maintain a relationship with staff aimed at both individuals' ongoing satisfaction and their professional development. The leader's responsibility is to develop a win for the organization and a win for the employee," he states.

That isn't always easy to do in larger IT organizations, and particularly in tough economic times when organizations may have to make decisions about who stays and who goes. Decisions to add or shed IT staff are typically made under "fire drill" conditions in response to mandates from senior management, says Larry Dunavan, vice president, global human capital management, Lawson Software (St. Paul, Minn.). The problem is that IT leaders lack objective, readily available measures of the relative value of employees. Unable to distinguish between the best and the rest, managers fail to apply effective retention measures.

"In an unstable economy, hiring is often for critical talent, and the people most likely to move are the top performers," Dunavan asserts. "You need to be able to measure with confidence who those people are and hold the organization accountable for creating opportunities for them."

Dunavan points to three levels of maturity in managing human resources. The lowest level is characterized by nothing beyond efficiently hiring and managing staff and driving out cost. At the second level, a company delegates human resources work to the managers and employees themselves, exemplified by capabilities such as automated performance appraisals or the ability for a hiring manager to open a requisition for employment without the intervention of the HR department. At the highest level, managers have rich data about a given employee from time of hiring to present; combined with useful information about a development plan that will take a given employee to the next level, and also point-in-time data about which employee is ready for critical positions in the organization.

With a large, well-maintained repository about people, it can be easy to ensure that employees are given appropriate attention, assignments and compensations to keep them engaged and happy with their role, according to Dunavan. "The systems have to enable that interaction between the employee and the manger," he says. "Using techniques developed by HR, systems can both guide and also enforce interactions, and even automatically suggest options for dealing with high-potential employees."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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