Flexibility, New Technology Key To Attracting Young IT Workers
According to some industry executives and observers, the insurance sector is headed toward a major shortage of IT talent. Others profess that suggestions of such a shortage are widely overblown.
What is known, however, is that workers from the baby boom generation are getting older, and the first wave of boomers currently is approaching retirement. Meanwhile, insurance companies must compete not only with one another, but across industries to attract the brightest among the next generation of IT workers.
"If you look at insurers, they're running these massive legacy systems, and these legacy systems are being held up and resuscitated, if you will, by an aging workforce," relates Jonathan Steiman, a New York-based Datamonitor analyst who specializes in insurance technology. "As this workforce moves on into retirement, supporting those systems will become increasingly more difficult." >>
Whether this confluence of circumstances leads to a major IT workforce shortage for insurers remains to be seen. But in a way, the answer is irrelevant. That's because the importance of recruiting and retaining talented IT people, for many insurance companies, has always been a critical issue. With technology emerging as an increasingly critical competitive differentiator, the importance placed on recruiting and retaining top IT talent will continue to rise. The (very likely) possibility of a major shortage only will amplify that urgency.
"Relative to the urgency, that hasn't deviated," says Grange Insurance ($1.9 billion in assets) CIO Michael Fergang of the value that the Columbus, Ohio-based carrier has placed on finding young IT workers over the years. "The demand exceeds the supply. We're always aggressively trying to find talented people."
According to Barbara Ring, an SVP of human resources at the Chubb Group of Insurance Companies ($14 billion in revenue), the Warren, N.J.-based insurer also has placed a high priority on hiring new IT talent. "We are trying to take a more proactive approach to both staffing and recruiting" in anticipation of the retirement of an aging workforce, relates Ring, who describes her position as Chubb's human resources manager for IT.
Perhaps the issue, then, is not whether recruiting and retaining IT talent is a priority, but rather what are the best ways to attract and keep young IT professionals. After all, today's youngest workers have a different set of workforce expectations than do previous generations.
Naturally, many emerging IT pros express a desire to work with the latest technologies, which can be an issue for an insurance industry that, despite drastic improvements, still is encumbered by a fair share of legacy systems. At the same time, prospective employees from younger generations are far more likely to appreciate more-flexible, more-collaborative working environments. It's quite possible that the insurers most in tune with these expectations will be the same insurers that find success in replenishing their IT ranks with the most-talented individuals.
Legacy Systems: Finding a Balance
In a sense, the challenge of recruiting younger IT workers is a balancing act, and how a carrier deals with its legacy technology is the fulcrum. On one hand, an insurer needs to recruit younger workers to support legacy systems previously run by retiring baby boomers. On the other hand, a carrier will be hard-pressed to recruit and retain young IT professionals simply to support outdated technologies.
Rob Salkowitz, a consultant and author of "Generation Blend: Managing Across the Technology Age Gap" (2008, Wiley), a book about the Millennial Generation that has been espoused by Microsoft, says young IT professionals don't want to work with legacy technologies because it isn't a good career move. "If they come into an insurance company environment that is full of legacy technology, they don't really get to apply the skills that they've learned in their education or the skills that they know are going to keep them relevant in the job market," he explains.
Bill Hartnett, general manager of Microsoft's insurance solutions group, points to a study by Washington, D.C.-based KRC Research that found that 91 percent of Millennials surveyed said they would be more likely to consider job opportunities that provide greater access to newer and more innovative technologies. The study, which was commissioned by Redmond, Wash.-based Microsoft, also found that 38 percent of respondents said they would be "much more likely" to consider such a position. "It's a really telling statistic, and if you compare that against the typical infrastructure of an insurance company today and the kinds of technology they provide, the ability to recruit these workers and retain them is a very challenging task," Hartnett says.
According to Grange's Fergang, the needs of an insurer looking to improve technology workforce recruiting and retention dovetail in many ways with the needs of an insurer looking to improve business process. "[Millennial IT workers] are not going to want to do COBOL Assembler. They're going to want to do .NET and J2EE. We're just fortunate that what our business needs are and how we best service our customers dictate that we stay very current," Fergang says. "We attract people for that reason. If we were a mainframe shop, God knows where we'd be."
Most carriers, though, will still need IT professionals with legacy code skill sets, and Grange is no exception. Fergang acknowledges that the carrier still has some legacy mainframe applications, most notably an old PMSC administration system now supported by Austin, Texas-based CSC, which acquired PMSC in 2000.
For business reasons, Grange decided to keep the old system operational, which means it needs IT staff with COBOL and CICS (Customer Information Control System) expertise to support the application. To address that need, Fergang says, Grange set up a small IT operation, staffed by 12 employees, nearly five years ago in South Carolina, near CSC's Columbia headquarters.
"From a legacy perspective, we went to where the programmers were," Fergang comments. "If I was trying to hire a bunch of COBOL or CICS programmers out of schools and universities, ... it would be a challenge. But there is still a large number of companies that use the platforms we use. All we ended up doing was going to where they were."
Back at Grange headquarters in Columbus, Ohio, Fergang reports, the carrier has had great success recruiting skilled IT workers and currently boasts a year-to-year retention rate of 98.5 percent. That success, he adds, can be attributed to not only the kinds of technologies the company uses (Grange is specifically looking for .NET and J2EE programmers with three to five years' experience), but also to the kind of flexible workplace environment that has been established within the IT department.
According to Fergang, "a large number" of Grange IT people work remotely from their homes and the company is extremely flexible when it comes to the days and hours that an employee chooses to work. "If a manager is able to cover his demand as well as support, we allow programmers and other IT professionals to work four-day weeks," he says.
Such workplace policies, Fergang says, are supported by a virtual private network (VPN) from Cisco Systems (San Jose, Calif.), a VOIP system by Avaya (Basking Ridge, N.J.) and a Citrix (Fort Lauderdale, Fla.) application delivery infrastructure.
"The traditional 40-hour workweek doesn't always work for the Gen-Yers," observes Chubb's Ring. "They want to have more freedom in where they do their work, the hours they do their work and things like that. So we actually have a pretty flexible work environment here at Chubb."
Of course, flexible hours and days off have their limits. While truly talented and driven workers certainly appreciate such benefits, they are no replacement for career opportunity.
With that in mind, Fergang says, Grange leverages its research and development efforts as a way to get young workers involved in projects with specific technologies they otherwise might not get to work with. "If people express a desire to learn, we give them every opportunity," he asserts. "[The R&D efforts] are not necessarily sanctioned projects, but they are based on relatively new technologies and new business opportunities. A lot of young developers gravitate toward taking on initiatives on their own -- sometimes outside of the normal business day -- to be afforded the time to put their hands on some new technology."
At Chubb, the carrier's Ring reports, several programs have been launched around the concepts of engagement and recognition to afford younger workers opportunities to stand out, such as peer-nominated reward programs and an emerging leaders group. "Everything you read about Gen-Yers now is about instant gratification as opposed to 'being in it for the long haul,'" Ring says. "Some of the programs we're trying to introduce are around that instant gratification versus the longer, more traditional philosophy of recognition."
On Campus and Beyond
In addition to meeting new IT workers' expectations, Chubb also is working to ensure that the next generation of tech talent has the skills the carrier needs. The company has established partnerships with universities and colleges as well as internal programs to bridge the experience gap younger IT pros may have in working with certain technologies.
These programs, however, extend beyond legacy technologies, Ring stresses. "We have several niche technologies that we use -- for example, PeopleSoft (a 2005 acquisition of Redwood Shores, Calif.-based Oracle) -- and it's difficult to find people to work on those," she says. "It's not necessarily a generational thing -- it's more about which technologies people gravitate to."
For this reason, Ring notes, Chubb has had more difficulty recruiting new workers, but finds retaining that talent less of a challenge. "Chubb's turnover is relatively low," Ring reports. "We are not having a big problem from a retention standpoint."
Through partnerships with schools such as North Carolina Central University's School of Business and North Carolina Agricultural and Technical State University's School of Technology, Chubb is attempting to influence curricula. The goal is to more precisely equip college graduates with the skills necessary to succeed at Chubb. "It's so that we can hire people right out of the universities, whereas in the past we might not have done that," Ring says.
While such external education-centric efforts have helped Chubb expand its pool of potential IT professionals to include recent college graduates, an internal eight-week training program has helped the carrier expand that pool further to include potential workers who may not have a computer science degree. When recruiting, Ring says, the company looks for "theoretical matches," or potential employees who may not be computer science majors but have backgrounds that lend themselves to learning the craft. The training program then helps them assimilate into jobs outside their educational background.
Over the years, according to Ring, the company has found that certain majors from outside the computer science realm have proven especially adept at developing into IT professionals. "We find a lot of music majors and English majors," she relates. "We have found over the years that those two majors typically do better than others, obviously in addition to computer science majors."
The virtues of internal training programs also are extolled by many other carriers, including Cleveland-based Medical Mutual of Ohio and its Antares Management Solutions subsidiary (which does much of the insurer's internal IT work). Antares established a 12-week training "boot camp" for its newly graduated recruits.
"The thing we try to impress upon the recruits is that making the transition from the academic world to the business world is critical," says Jason Craft, an Antares HR generalist, in a press document on the training program. "We explain our core business. Executives like [VP, enterprise technology development and innovation,] Paul Apostle explain what we do as a company, not only from a technology perspective, but also from the viewpoint of marketing and finance. We teach recruits the business from a 'holistic' perspective."
Continuing IT Education
While such programs help insurers identify new IT talent, Grange Insurance's training programs don't stop with new recruits. According to Grange's Fergang, the company's IT training, though not rigidly formalized, offers IT employees access to thousands of online courses. Based on a worker's performance on aptitude tests related to each online course, he says, Grange compensates those employees for proactively building their skills.
One key value to the training program, Fergang suggests, is that workers are encouraged to take courses that may not directly relate to their specific job responsibilities. "Some [courses] are not even relevant to [a given worker's] current concentration, but to their interests," he says. "We put value on them taking their own time to improve their own skills."
Datamonitor's Steiman, meanwhile, warns that extensive training programs can be risky investments, as workers -- trained or otherwise -- always have the option of leaving the organization for another job opportunity. "There's a lot of talk [about] training and in investing in employees, and there is certainly a level at which to do that. But the level required isn't normally met because, from a business standpoint, it is too risky," he explains. "When you train somebody, they are mobile. You can invest hundreds of thousands of dollars into training somebody and, with two weeks' notice, they can be out the door."
In the end, though, the real risk isn't the training programs themselves, but what those programs entail and set out to do. The programs established at Medical Mutual of Ohio, Chubb and Grange serve not only to train incoming recruits, but to keep them engaged with each respective company.
The real risk emerges when those training programs are a mechanism to educate younger workers on an antiquated technology, Steiman suggests. "If you're going to set out to keep your old systems and develop a strong training program to teach those systems, you're running into a big problem," he says.
Steiman adds that he'd rather see an insurer finally move away from its last remaining legacy systems, rather than develop a whole educational program to continue to support it. Eventually, he contends, young workers will just go elsewhere. "If you get a degree in college, you want to be continually moving forward," Steiman says. "Working on a new technology you can take to another job, that's what is more valuable."