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Wednesday, 24th April 2024 |
| Rewards continue to increase in insurance |
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| Traditionally by-passed by college graduates and young professionals for more exciting careers in computers and finance, Francis Levy says that the insurance industry has learned from this experience and now offers very attractive remuneration packages. |
The recent sharp fall-off in economic growth is leading to changes in corporate strategy across the Irish economy as firms attempt to realign their own activities to the macroeconomic climate, and focus on cost-containment and profitability. The insurance industry, particularly non-life insurance is already operating in a difficult competitive environment. While the challenges facing line managers may have altered somewhat over the last 12 months or so, the need for focused and competitive remuneration is key to ensuring sustainable business success.
Up until very recently certain industries, in particular the dot.com sector, were very successful at attracting large numbers of job applicants, and were perceived as the ‘sexy’ sector among college graduates, the insurance sector was seen as the traditional and ‘boring’ industry. The dramatic trend away from computer related courses that we saw when the CAO figures were published this week, are quite obviously a reaction to the problems that this sector has experienced over the past 12 months
Far from being complacent and self-congratulatory, the insurance sector as a whole learned a lot from this era in terms of pay and benefits and has developed a balanced approach to reward and retention. A recent insurance sector survey conducted by PricewaterhouseCoopers indicated that retention was the key human resources challenge currently being faced, out-ranked only by career development. In other words, motivating and keeping staff in the insurance sector continues to be a very real business issue despite a subdued employment climate. Employee turnover has reduced dramatically over the last two years and we expect to see this trend continue.
Average salary increases in this sector last year were 10 per cent. The highest increase was enjoyed by supervisor level roles and sales professionals saw the lowest salary increases. So far, average increases for 2002 are lower and are currently running in the region of 7 per cent overall. Sales staff are not doing too badly in total remuneration terms as they can earn substantial bonuses based on performance - sometimes the amounts can even be multiples of annual salary. However this is not guaranteed income and in lean economic times the cash earnings of sales staff can be very modest.
Generally speaking, the amount of ‘at risk’ money does not need to be as significant in order to successfully motivate employees, but it is important to have some ‘at risk’ money in addition to base salary. While we don’t tend to see variable pay as a significant part of the reward package for entry-level roles in Ireland, much of the insurance sector offers some form of short-term (cash based) incentives to all employees, including entry-level. Company-wide profit-sharing schemes are in operation in two-thirds of insurance companies here in Ireland. This helps to create a work force with a common purpose and source of motivation.
In the competitive period of attraction and retention that we experienced over the last number of years we saw the introduction of special ‘perks’, such as concierge services, games rooms, telecommuting, etc. The insurance sector has always offered remuneration packages that include valuable benefits packages in addition to base salary and incentives. The average value of benefits packages for entry-level employees in this sector is about 14 per cent of the total package and the insurance industry has begun to communicate the value of these packages more clearly and more often to employees. Annual remuneration statements and benefits ‘road-shows’ have helped employees understand the value of their benefits package. Increased education regarding pension schemes and more emphasis on saving for retirement has increased the awareness of the value of a good pension scheme. A significant thirteen percent of insurance companies surveyed by PricewaterhouseCoopers offer financial counselling to all levels of their staff.
The value of the package in financial terms is higher for more senior employees. The most significant differentiator is the company car. A manager in an insurance company can expect to have a ‘perk’ car worth in the region of •25,000 and a senior manager can expect the value of their company car to be in the region of •37,000. Most insurance companies now offer a cash alternative, which is in the region of •7,000 to •10,000 per annum.
Below is a quick run down of some of the benefit offerings within the insurance sector:
• 40p.c. have formal retention policies
• 13p.c. have flexible benefits
• 80p.c. offer flexi-time
• 47p.c. provide job sharing
• 93p.c. provide part-time work options
• 87p.c. provide a casual dress programme
• 80p.c. pay 100p.c. of the employee’s salary (less social welfare payment) during the first 18 weeks of maternity leave
• 47p.c. offer paid paternity leave
• 60p.c. have a telecommuting programme in place
• 74p.c. offer subsidised health insurance
• All offer a company pension scheme
• 80p.c. provide life cover
• 87p.c. have subsidised canteen
• All allow employees to ‘earn’ more holidays through loyalty (length of service).
Insurance companies have known for quite some time that a balanced remuneration package that combines competitive base salaries and benefits, cash bonuses and stock ownership is critical.
If you are reading this and thinking of jumping ship - remember that it is important to consider the total package and all elements of reward. Base salary and benefits are more or less guaranteed, but cash bonuses and long-term (usually equity-based) incentives are not. They are usually linked to performance - yours! |
Frances Leavy (Grad CIPD) is a senior manager at PricewaterhouseCoopers.
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| Article appeared in the September 2002 issue.
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