Compensation trends in the insurance industry (1)


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Presentation to the National Association of Mutual Insurance Companies HR & Finance Summit August, 2013 in San Antonio, TX.

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  • TimConversation with employees that’s fact basedHit on our business model—we crowdsource data and that’s why we’re huge! Tee up index data
  • Tim3% calm veneerMasks huge variation in individual jobs, markets
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  • Karaka Make a list of the top three things that have affected compensation practices or or your labor market in the past two years. Break-Tim collects or raise hand with responsesChatWhat we want:-salary rising-war for talent-harder to find good people
  • Karaka explains indexBecause of our ever-fresh robust database, PayScale has the ability to publish a Compensation Index that shows macro trends in pay. Using 2006 as a baseline we measure the % change in pay quarter over quarter.You’ll see this published in NY Times Business Week Huffington PostOur index is broken down by geography, company size, industry and job family. We’ve pulled some highlights from the index as we thought it would benefit our audience today. First, a high level.
  • KarakaBig volatility between 2006 and today. And individual volatility as well. We’ll look at each of these separately in a moment but we thought the following would interest you. As you can see and we all felt this at the end of 2008, our index shows the % decrease in pay overall due to the recession. Now, what this measures is not decreases to individual’s pay but a change in the total pay of employed workers. Meaning, when people lost their jobs due to RIFs and layoffs, our index measured it. This is critical to understandiwhen attracting and retaining the right talent for your business are what the changes are to pay for your jobs and your labor market. for example IT trends
  • Karaka explains Tim commentInsurance took a harder hit in 2008 but has steadily recovered nicely above pace with the national trend.
  • Karaka explains Tim commentThis is very interesting to see. One always thinks that larger companies can afford to pay more so they do and that has historically been the case but what we are now seeing just in the past quarter is that trend changing. Smaller employers in this example have outpaced large companies when it comes to increase in pay over the past two quarters. You’ll see data later that supports this as well with respect to their optimism. Competing for talent small guy versus big guyInverse as well, what it means for large companies
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  • KarakaCannot tell you how many times I’ve heard our customers say that their jobs are unique. It is so very true. Especially now when we are all doing more with less. As such, it is critical to understand the market for your important jobs so that you are not at risk of losing talent to a competitor. Our Story of cisco networking. Our Lead Data Economist has been quoted several times in saying “For white collar jobs, there are only a few ways to improve your pay and certifications are a top way to do that”We hear this often when people are recruiting and they are looking for that perfect candidate. We call this the Purple Squirrel. This slide is a representation of those unique positions that are out there.
  • There’s been a dance between these two job families over the past few years. Accounting/Finance saw an earlier recovery to wages than HR counterparts and is steadily outpacing HR jobs. Both of course are critical.HR jobs are ahead of “Administrative/Clerical” “Legal” “manufacturing jobs” “construction jobs”
  • Percentage Pay Growth: Using a methodology similar to the PayScale Index ( we calculate the percentage growth in pay over time, all other things equal. This isolates changes in labor market demand for a given title, skilll,or certification. The time-frame for this is growth is from Quarter 2 in 2011 to Quarter 2 in 2013.The average pay growth across all top jobs in insurance is 5.20%, across top skills in insurance is 4.40%, and across top certifications in insurance is 6.90%. All pay growth is specific to skills, certifications, and job titles within the insurance industry.Operations Manager27.30%Claims Adjuster / Examiner / Investigator17.90%Insurance Broker16.70%$61,000Insurance Agent14.40%Senior Business Analyst13.60%Personal Lines Manager (Insurance)13.60%Customer Service Supervisor11.60%Actuarial Analyst11.50%Financial Analyst10.60%Claims Processor9.00%Insurance Appraiser, Auto Damage8.60%Business Systems Analyst8.20%
  • Encourage you to think of your purple squirrel. Collect ideas in the beginning and price at the end.Worksheet 2-we’ll do it at the end
  • TimThis is the other side of payscaleresearh, this is what companies say theyr’re doing
  • Karaka—small companies are more optimistic.We saw the index support this feeling when we looked at the comparison between small companies and larger companies from a change in pay perspective. This result from our survey supports that.
  • Karaka7% expect it to weaken, 26% expect it to stay the same
  • Tim Optimisim is playing out in the market
  • Insurance is a little higher than the average at 51%
  • Retention is a top priority for many organizations that we talk to and the data shows this to be the case as well.When you factor in the cost of turnover (sometimes equaling to 6 months of salary) there is no question this is a concern for most companies. The days of employees being lucky that they had a job are over and employees are starting to look elsewhere.
  • #1 reason for employees leaving?“Seeking Higher Pay Elsewhere”The same was true in other industries such as mining, o&g, retail and manufacturing
  • KarakaSigns point to optimism. We can certainly see this coming to fruition with the conversations we are having with our customers. After some tighter years, companies are starting to award increases this year. We’ll talk a little later on about trends for allocating increases as well. Tim comment
  • When asked to who in their workforce, the insurance industry cited to an average of 78% of their workforce.Karaka Tim Comment
  • KarakaWhen crafting next years budget vs. this year the use of Across the board increases down by 50%Use of Variable Pay has increased 300%
  • Names in the drawerVideo: 12 names
  • TimRevenue per employeeGoes against the idea of fairness, equity which is akin to HR’s nature
  • Fill out last sheet & share
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  • Purple Squirrel
  • Compensation trends in the insurance industry (1)

    1. 1. PayScale Tim Low, VP Marketing Karaka Leslie, Business Development COMPENSATION BEST PRACTICES Trends in the Insurance Industry
    2. 2. 14,000 Positions 2500 Customers 40 Million Salary Profiles 250 Compensable Factors 11 Countries
    3. 3. The Market is Volatile o The recovery of the economy and profits and the compensation lag o The latest trends in HCM & compensation o The on-going war for talent and the impact on compensation o Results of the PayScale 2013 Compensation Best Practices Survey
    4. 4. Macro & Insurance Industry Trends
    5. 5. *University of Wisconsin Center for Cooperatives Research Mutuals: $2B in Direct Wages $26B in total Wages $2B X .05 = $100,000,000
    6. 6. Where Mutual Co Employees work: Lots of places…
    7. 7. Exercise #1 Guess the Trends
    8. 8. PayScale Index Labor Market Trends
    9. 9. Compensation Volatility ‘07-’13
    10. 10. National vs. Insurance ‘07-’13
    11. 11. Small vs. Large Companies ‘07-’13
    12. 12. Job Trends
    13. 13. HR Jobs vs. Finance Jobs ‘07-’13
    14. 14. Hot Jobs in the Insurance Industry Q2 2011-Q2 2013 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Operations ManagerClaims Adjuster / Examiner / InvestigatorInsurance BrokerInsurance AgentSenior Business AnalystPersonal Lines Manager (Insurance)Customer Service SupervisorActuarial AnalystFinancial AnalystClaims ProcessorInsurance Appraiser, Auto DamageBusiness Systems Anal
    15. 15. Exercise #2 What’s Your Purple Squirrel
    16. 16. • Surveyed over 4,000 respondents • Themes: – Financial Performance – Hiring Practices – Retention Concerns – Wage Growth – Managing Increases • Company size breakdown: – Small: < 100 employees - 45% – Medium: 100 - 1,000 employees - 34% – Large: >1,000 employees – 21%
    17. 17. General Trends: Financial Performance
    18. 18. 67% of respondents in Insurance industry expected financial situation to improve in 2013 Insurance Trends: Financial Performance
    19. 19. General Trends: Hiring Practices
    20. 20. Insurance Trends: Hiring Practices
    21. 21. General Trends: Retention Concerns
    22. 22. 67% of respondents from the Insurance Industry cite retaining top employees as their primary compensation objective in 2013 Insurance Trends: Retention Concerns
    23. 23. General Trends: Wage Growth
    24. 24. 87% of respondents from the Insurance Industry gave raises in 2012 90% of respondents from the Insurance Industry say they will give raises in 2013 Insurance Trends: Wage Growth
    25. 25. Market Trend: Ongoing Shift Toward P4P Source: Hewitt Survey – U.S. Salary Increases 2009/2010 and Impact on Org Spend for 2010 When crafting next years budget vs. this year the use of Across the board increases down by 50% Use of Variable Pay has increased 300%
    26. 26. Insurance Trends: Performance 67% of respondents from the Insurance Industry planned on performance being the primary reason for increases
    27. 27. Prioritized Treatment Not all individuals, process, functions and business units have the same impact on results We need to prioritize jobs, key employees and business units and then allocate the greatest portion of its resources to those high priority areas. Ideas: o Recruitment o Base Pay o Incentive Pay o Perks & Fringe benefits o Recognition
    28. 28. 12 Names in Drawer
    29. 29. Pay Spread at Most Profitable Companies
    30. 30. Exercise #3 Top Comp Priorities
    31. 31. Elementary • Know your jobs • Have an understanding of the market Intermediate • Discuss a compensation strategy with leadership • Know what you want to reward and what you value • Build guidelines that reflect a compensation strategy that works for your business Advanced • Find new and creative ways to incorporate performance pay • Know how your pay practices stack up against your exact competition for talent • Communicate your pay strategy with management • Develop a strong compensation structure Takeaways
    32. 32. Q&A
    33. 33. o Ever-fresh Compensation Data o Subscription Software to Create and Manage Comp o Compensation Plan Design Karaka Leslie, Business Development Tim Low, VP Marketing Thank You!