Canada’s war for talent during the pandemic saw P&C employees leave for greener pastures, while others left the frontlines for retirement, leading insurance executives to discuss the need for better retention strategies.
But can a retention rate be too high? Yes, say experts at Reuters’ Future of Insurance (FOI) Conference in Toronto, particularly if retaining employees hinders innovation.
“I think there is real risk in having retention too high, in creating a culture that is resistant to change,” says Brady Aarssen, vice president of operations, strategy and transformation at Canada Life. “But by the same token, you, of course, would not want retention to be poor because there’s real cost to that as well.”
Most HR professionals would agree there is a sweet spot for employee retention, but that rate could depend on various factors.
“They say a good attrition rate is about 11 to 12%,” says Maryann Besharat, vice president of claims at Intact.
It might be obvious why low retention rates are bad. If a company sees a perpetual revolving door of talent, that could lead to increased costs, loss of specialized knowledge, employee dissatisfaction, and decreased productivity.
But higher retention rates also come at a cost, say experts during the Friday panel discussion. For example, by not bringing new people into the company, the workplace may be losing out on fresh skills. Or it may rely too heavily on the specialist skills or knowledge of particular employees, thus exposing the organization to a skills gap if those employees leave or retire.
Mitigating retention risk
High retention rates could also signal an impending employee skills gap.
For example, if certain employees have stayed for a long time and garnered specialized knowledge, overreliance on their expertise could create holes when they eventually depart or retire.
Specifically in claims, high retirement rates lead to employee skill gaps, says Mylene Cote, vice president of claims at Everest Insurance.
That’s not a one-off occurrence. The P&C industry is seeing large-scale retirements of experienced workers. (22% of the current workforce will be eligible to retire by 2026, and 8.5% have plans to retire by that time, according to demographic research by the Insurance Institute of Canada.)
To reduce risks associated with abnormally high retention rates — resistance to change, or complacency among team members, for example — companies must ensure they’re constantly developing their workflows, strategies, or goals.
“The more dynamic and rotational you can make your work within your organization really gets rid of the retention question altogether, because if you’ve got a really dynamically moving workforce, who cares?” says Aarssen.
Why retirement isn’t the end of the road
There are ways to retain retiring employees, even as they wind down their insurance careers, say experts. That’s critical for preventing widening skills gaps.
“Many progressive carriers in our industry are treating retirements as almost soft retirements, and respectfully working with their well-knowledged, seasoned staff to find a way forward,” says Vinita Jajware-Beatty, president and board chair of the Toronto Insurance Women’s Association.
A soft retirement (or semi-retirement) could mean seasoned employees work on a contract basis or work part-time instead of full-time hours as they look to transition out of the job market.
That can give firms time while they begin upskilling less-tenured employees. And flexibility is key, says Besharat.
“Could we meet them on their terms?” she says. “They may not wish to adjust claims, but could we say to them, ‘You tell us, what is the day that you want to work? And, ‘Do you want to work on Tuesdays? Do you want to start at 11 am? No problem. Do you want to work at home? No problem. Do you only want to mentor? No problem.’”
Aarssen says his company has first-hand experience with soft retirements.
One team he managed had 75 of 500 employees retire during the first two years of the pandemic.
“Thirty of those 75 have worked for us on some type of contract basis over the last few years, as we’ve tried to fill the skill gap.”
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