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The Actuary The magazine of the Institute & Faculty of Actuaries

Retaining high-value talent

The concept of managing career planning and development may have been relatively alien to actuarial consulting firms until recently. In many ways, for consulting firms, as well as the consulting actuaries themselves, careers took care of themselves. However, for a number of reasons, the situation is changing. If firms are to retain and achieve the optimal return from their investment in high-value talent, they need to adopt more creative approaches to career development and management. In particular, they need to find more creative ways of aligning the goals, aspirations, and skill needs of talented individuals with the goals, aspirations, and skill needs of the firm.

Traditional career planning
The traditional model of actuarial career planning is based on trainee actuaries joining firms and then receiving high-quality technical training and experience, together with professional education over a number of years. Following qualification and a number of years’ post-qualification experience, they may become partners. If they do not achieve this, they tend to move to another firm to pursue their career plan.
This model is based, consciously or subconsciously, on a number of particular characteristics.
– Technical ability is the prime determinant for successful actuarial consulting.
– The actuarial consulting market is fairly stable in relation to client needs and the structure of the UK market.
– Barriers to entry into this market are high owing to the demands of technical qualifications and the time taken to achieve the technical skill needed.
– Technical skills are not widely perceived as being transferable to other consulting environments.
– Partnership, with its rewards of significant remuneration and influence over the development of the firm, is a realistic goal for good actuaries.
– There is a relatively low supply of new entrants to the profession.
From a human resources point of view, the traditional model of career planning and development has served the consulting actuarial profession well until relatively recently. In addition to producing a stream of high-quality graduate recruits who translated into high-quality technical actuaries, it has ensured that, broadly, retention of that talent has not been a significant problem for firms or for the profession.

Challenges to the traditional model
However, changes are taking place in the market which should make firms consider a different approach to career planning and development if they are to optimise their return from the talent they recruit and train. Some of these are as follows.
– There are widening career opportunities for actuaries beyond traditional actuarial consulting. Previous articles in The Actuary demonstrate that actuaries are in demand elsewhere, particularly in general management consulting, and illustrate the attractiveness of broader careers in terms of personal career development for good consulting actuaries.
– Mergers and acquisitions of actuarial consulting companies make partnership less of a ‘career carrot’ than it has been. Larger companies inevitably mean longer promotion hierarchies and fewer positions of influence. Even if achieved, for many actuaries partnership will not offer the opportunity for real influence that it previously did.
– There has been a rebalancing of the traditional actuarial benefit consulting market, from defined benefit to defined contribution pension schemes. To maintain and develop business is increasingly challenging, requiring new ideas, products, and consulting approaches, and possibly a move into non-traditional actuarial consulting markets. Implications for consulting actuaries relate to the prospect of growing competition from non-actuarial employee benefit consultants and also to the changing skills needed to be successful in this market. Technical excellence is the minimum requirement for access to clients the real skills for success will be the broader consulting and inter-personal skills.
The traditional career planning and training model is unlikely to be sufficient to deal with the demands arising from the above challenges. Firms must find more creative means of committing, developing, and retaining their talent. Particular aspects of this are managing retention and also developing non-technical consulting skills to ensure competitive advantage.
Turnover costs firms money. For example, a skilled, highly trained consultant leaving after only one year can cost upwards of £50,000 through recruitment, training and integration of a replacement. This does not include the costs of lost fees, potential lost clients, and lost experience of the leaver moving to a competitor. The real cost is significantly higher.
Aligning career goals, aspirations, and skill needs
A different approach focused on identifying and aligning the career goals, aspirations and skill development needs of key individuals around those of the business would go far to increase retention, while increasing motivation and commitment of consultants. Using a simple process, companies can move from figure 1 to figure 2 for key staff.
In figure 1 the career goals, aspirations, and skills of key individuals are not aligned with the business and, in fact, are often unknown to those who run the business. Indeed, talented individuals will be pursuing their own career goals within those of the organisation. Without the carrot of an influential role in the partnership, these key staff are vulnerable to moving on. Offering more money to encourage them to remain can be only a partial and short-term solution.
Figure 2, however, creates a more open winwin situation. The goals, aspirations and skill needs of both the individual and the firm are integrated. Since key individuals are achieving their wider personal career development and training needs, they will be more committed and motivated and more likely to stay. Through this approach, the firm is more likely to retain its key talent and skills.

Developing non-technical client management and consulting skills
To obtain the maximum value from this alignment, it should be integrated into a wider training and development strategy focused on high-quality client management, consulting knowledge and skills, and technical expertise.
Traditional excellence in technical training and expertise must be maintained, since this signifies the client’s minimum expectation of an actuarial consultant’s competence. However, in an increasingly competitive market, the successful consulting actuarial firm will be differentiated not by the quality of its technical expertise but by the quality of the client relationship, project management, business and consulting skills of its consultants.

How does this approach work?
The key to achieving this alignment between individuals and their firms is the openness of career discussions between them. In this respect, traditional appraisal and performance management discussions have limitations. Their focus tends to be predominantly backward- rather than forward-looking, and work- rather than career-based.
One thing is clear: given the challenges facing the actuarial consulting market, the traditional model of actuarial career planning will increasingly fail to deliver the types and number of consultants needed to meet the challenges. I hope that this article will stimulate firms to consider how to align their changing needs with those of their employees, if not for career reasons, then certainly for reasons of competitive advantage.