Management skills - Back to school

In April 2008, the Chartered Insurance Institute's second annual skills survey revealed a worsening skills shortage in the financial services sector. Three quarters of the employers surveyed reported shortages of technical skills, representing a 5% increase on 2007.

The report claimed that the issue had become so critical that it was on the agenda of four out of five boardrooms, while more than half of all the employers surveyed (57%) accused the education system of failing to meet the needs of the industry. These findings coincide with a massive increase from 14% to 73% of employers that believe employees will need higher qualifications in the future.

CII president Lord Hunt warns: "The results of this survey provide a wake-up call, if one was needed, that we all need to play an active part in raising skills levels; the increase in those reporting such gaps is a particular worry."

It is not just an issue of a shortage in the specialist skills of insurers that is of concern. A report released in May by Taleo Research, in conjunction with Business Intelligence, showed that talent management was becoming even more critical for UK businesses as well; it said that there was a particular issue when it comes to top performers and employee retention. Of those surveyed, 89% indicated that talent shortages are having an impact or a heavy impact on leadership development in their organisations, with 76% expecting the current talent shortage to remain the same and 40% predicting an increase over the next 12 months.

The research report, called Unified Talent Management: Critical to UK Business, revealed that 74% of respondents saw an increased need to retain top performers by driving the focus on performance management and career planning, while 67% think that succession planning and internal mobility programmes can maximise the value of current employees.

Alice Snell, vice president at Taleo Research, comments: "Companies realise how important employees are in enabling them to reach their business goals, especially if they are to prosper in more testing times. Companies are looking for better ways to gain a competitive advantage through talent management processes."

Insurance broking is no different from many other sectors; changes in the last decade have really brought the issue of recruitment and career development to the fore and, for brokers especially, it has been a time of consolidation and increased demands.

The days of the one-man band on the high street have all but disappeared with the exception of a few survivors and niche players. Instead, many firms have opted to join networks or simply merge into regional or national groups. Much of this change has resulted from increased regulation, which has not only affected the size of businesses but also demanded improving efficiency and professional standards as well. As a result, the brokers emerging as the business leaders of the future are recognising that it is no longer enough to understand specialist insurance skills - they need to be agile business people too. Leading on from this realisation is the recognition that one of the best ways to get the most out of your expanding workforce is to lead from the top and show that bosses are prepared to retrain too.

There is an understanding among some broker owners that they have never learnt the skills required to run what have become multi-million pound businesses. As a result, many are going back to school: some firms have chosen to bring in management consultants to help develop across-the-board training packages, while other bosses have taken themselves off to do management courses part time. There are also those that take a year out to do a full-time course.

Selection

For those with plenty of experience under their belts, a Masters of Business Administration is the preferred choice, while those with less post-graduate experience may choose to read for an MSc.

The choice with MBAs is huge. Firstly, students need to consider whether to give up a year of employment to take a full-time course or to squeeze a part-time option into their schedule.

Often, part-time students are supported or even sponsored by their employers and many of the universities look for an active relationship between employer, student and college.

MBAs were once considered the pinnacle for business people but, from a peak in demand in the 1990s and early in this decade, demand has slackened slightly. Simon Lilley, director of postgraduate studies at the University of Leicester School of Management, says that "an MBA still has kudos" and advises that students pick their business school carefully.

Jeanette Purcell, chief executive of the Association of MBAs, echoes Lilley's words. Purcell explains that the UK alone is home to 120 business schools offering MBAs, though only 45 of these are accredited formally. She adds: "Most employers will look for the accredited courses to give them confidence that the programme will have met expected standards."

Purcell says that there is increasing diversity in the way in which courses are run too, allowing potential students to find the best option. Some schools offer very broad management training skills while others offer students the opportunity to specialise. Purcell has seen an increasing number of thoise taking MBAs that have their own businesses, as well as those that would like to launch one. Students include insurance brokers, architects, lawyers and other professional advisers, all of whom face many of the same challenges in their particular sectors.

Purcell believes that the real benefits of MBAs come from the leadership skills that students learn. Stefan Szymanski, professor of economics and associate dean and director of the MBA programme at Cass Business School, agrees: "People that are already in financial services are not necessarily interested in quantum techniques; they want management skills and are interested in things like change management strategies and leadership.

"Insurers need technical skills, though without the softer skills you are not much use. We see it as a way in which the market is changing. At Cass, we used to have a very specialised MBA in finance but that has really been replaced by an MSc. Now, the MBA concentrates on those management skills."

With tricky economic times threatening, the business school is expecting a surge in demand. "If people lose their jobs, they see it as an opportunity to take time out and earn a qualification that will put them ahead of the pack for the next job," Szymanski says."People see it as a personal makeover, particularly if they become immersed in the full-time course. A part-time course is more of an 'MBA to go' - these students want all the relevant skills in the fastest time possible.

"Traditionally, an MBA was a corporate qualification that geared students for jobs in companies like Coca-Cola or Ford. Now, I see aspects of change including a move towards more entrepreneurial ambitions. Look at how small businesses turn into giants these days: people look for different qualifications and have different aspirations. These entrepreneurs see a route to making a fortune in developing their own businesses."

Another trend is the way in which employers are becoming involved in the education process, often in a bid to ensure that the student stays with the company once the training has been completed. Sri Srikanthan, senior lecturer in finance and accounting at the Cranfield School of Management, is among those who prefer to work closely with employers where possible.

Cranfield has had a direct tie-up with Miller Insurance, which sent students to the school for a week at a time with some also doing more specialised training. It still receives staff from Aviva.

Srikanthan says: "An MBA is a general management qualification in the purest form but we do work with employers. I have worked with a number of insurers such as Aviva and Zurich and see some significant changes going on in the insurance market.

"Direct selling by insurers is having an influence on brokers. Clients are now much better informed and so are putting pressure on their brokers; they want to know what they are paying for and brokers need to display their added value.

"In that environment, a successful leader of a broking organisation has to be a manager that is also skilled in finance. Cost control is a key factor in success."

Srikanthan remembers short meetings and long lunches with managers at Commercial Union but says that those days are long gone: "It is not an old boys club any more. Broking is really a process business, so understanding logistics, the supply chain, managing cash and document flows are all important. Take distribution, for example, where dropping leaflets through letterboxes was acceptable in the old days but now that is totally passe. Companies are having to learn new ways of marketing themselves. All of these things put pressure on broking businesses and managers have to be nimble to face up to these challenges."

Srikanthan believes that an MBA brings all these skills together and that an added bonus for brokers is the other course members, who may well prove to be useful business contacts for the future; he stresses also that learning about other sectors helps brokers better understand their client needs. The package works, according to Srikanthan, who points to Mark Hodges - a past student - who went on to become managing director of Norwich Union general insurance.

Cranfield is a small business school, which Srikanthan believes is an asset in allowing close relationships to form and for the school to work closely with the employers. Srikanthan refers to Coca-Cola's sending a candidate to the college with a specific job in mind: the student was able to work on dedicated projects that enhanced his aptitude for that particular role. The same was achieved with two senior managers from travel wholesaler Hogg Robinson.

Whatever the course, a broker may take the message that enhancing business skills can only benefit them and their company. As one industry figure summed up: "It would be interesting to do a straw poll of those retiring now to see how many have business qualifications and to do the same in 20 years time. The business is changing and we need to change with it."

GILES: THE EUREKA MOMENT

For Chris Giles and his brother Nicholas, the chance to complete an MBA came when their local university launched a course to serve the local business community. The University of Paisley recognised that there was demand among local business people to improve their management skills.

Chris and Nicholas, who had bought their father's broking business a few years earlier, were among those that felt they could do more in terms of managing their business.

They already had 11 years' broking experience when they started the course but had their eyes open to many other sectors through the other students. The brothers embarked on the part-time option, allowing them to continue running their business. Chris admits that there were a few sacrifices to be made along the way but says: "The course allowed us to use our work and we used the MBA to complete some of our projects; it was highly influential in the way we then developed the business and gave us the opportunity to put down huge planks of strategy."

Chris completed a specialist paper on entrepreneurs and, although they joined the course to learn more about the financial side of running a business, it is the strategy lessons that proved the most influential.

"It was my moment of epiphany, if you like," Chris says. "I realised that I did not want to be one of those entrepreneurs who built a business, sold it and started again. I wanted to build something and keep building.

"I came to understand that, if you are going to build a business, you have to bring in people with experience; I realised how vital they are to the business. Now, I have good people that report to me in a clear and concise way. For me, all of that came from the MBA."

Chris also encourages his staff to develop their own skills at whatever level: "We have specialist training available for the insurance industry but I would also encourage people to take an MBA." One constraint, Chris says, is time. In an industry that is consolidating and changing fast, it can be hard to make the time for college work, though he believes firmly that it is worth the effort.

"Our industry has a problem in that it does not train the young. We have a missing generation. In 1988, I was one of the few young people joining. Good young people went into banking and the law but didn't join brokers."

He adds that, while the large international brokers are managing to attract talented young recruits, "they simply are not joining the 'mom and pop' businesses".

MBA FACTS

- The MBA is the world's most popular postgraduate degree. Around 90,000 MBAs graduate in the US each year. The UK, with more than 10,000 graduates annually, produces the highest number of MBAs outside North America.

- The first MBA programme was established in the US in the early 1900s and was introduced to Europe in the 1960s with the founding of the Instituto de Estudios Superiores de la Empresa (Institute of Higher Business Studies) in Spain. London Business School and Manchester Business School followed shortly after.

- Students on an accredited MBA course will usually bring five to ten years' of postgraduate experience with them. For those without such experience, a Masters in Business and Management may be more suitable.

Source: Association of MBAs

CENTOR: FROM MOTIVATION TO FINANCE

Neil Walton, of broker Centor Insurance and Risk Management, says that the MBA helped Centor with both hard business and the softer skills too. "We covered a long list of topics including finances, motivation skills, leadership, understanding human nature ... the list goes on.

"There was also the technical side of company law, planning, marketing, strategy and handling competition. It was comprehensive and very detailed."

For Walton, the most influential part of the course was learning strategy: "It gives you a helicopter view of the business, allowing you to break it down to think about all the separate parts, plan well ahead, work out who is responsible for what and bring it all back together."

Since launching its first strategy map in 2004, Centor has achieved its £3m turnover goal a year ahead of schedule. The firm launched a second strategy map and is reportedly on target to meet a £4m turnover target by September this year, once again a year ahead of schedule.