Next Generation: The management gap—what to do when boomers retire

Even if your agency is bringing in plenty of young people, who will lead them? This broker addressed the issue early with great success.

Insurance News

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The impending talent gap in the insurance industry has directed a lot of attention towards attracting, hiring and retaining younger generations of workers to eventually fill leadership roles and perpetuate the business of insurance.
However, when Baby Boomer-aged principals are ready to retire, these new hires may not be ready to take over such heavy responsibilities. Instead, current employees—perhaps those that fall into Generation X—will be the natural group to assume leadership responsibilities.

Training up these individuals is difficult and often risky, however, says Dan Menzer of financial consulting firm OPTIS Partners.

“Hiring, developing, training and mentoring a producer into an agency owner—that’s hard and expensive,” Menzer told Insurance Business. “And it’s not a high success rate. [Succession planning] is something most agency principals are well aware of, but it can be a financially difficult process to work through especially for a smaller agency.”

Menzer estimates that roughly a quarter to a third of management training “works out”—i.e. the trained producer goes on to take over the agency as owner and manager when the principal retires. And because perpetuating internally is less financially rewarding for agency owners, many baby boomers are hesitant to invest their time and energy into training up a successor.

Alan Jay Kaufman, chairman, president and CEO of Kaufman Financial Group, believes that is a mistake. Investing in talent is of prime importance for KFG’s Burns & Wilcox, which is why the wholesale broker implemented the Kaufman Accelerated Management Program (KAMP).

The highly competitive program accepts 20 people every rotation with the goal to groom them for future management roles. The KAMP participants work in teams for six months on company projects, which are presented at the manager’s meeting, evaluated and implemented.

“The whole focus is what you can contribute and how to build a leadership team with the vision of the chairman, CEO and owner,” said Renee Lerche, Corporate Senior Vice President of Human Resources of Burns & Wilcox.  “This work is intended to impact the entire company and lift participants from their immediate concerns to thinking about how to grow the company together.”

While small agencies don’t have the resources of a company the size of Burns & Wilcox, Kaufman believes they can learn from his company’s example.

“Many of these small shops are not investing in talent,” Kaufman said. “But hiring one very talented employee is better than hiring a few average ones.”
 

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