Better Pay Attracts More Qualified Candidates in the Insurance Industry

Abstract

This research proposal has centered on the dilemmas of more qualified candidates experienced when involved in the insurance industry and ensuing higher pay for future growth of the industry. Distinctively, it approaches the issue from the point of view of more qualified candidates those have to take the challenge of insurance job. The variables of apprehension are candidates that are more qualified, their better pay with job satisfaction, attraction in opposite to the uncertainty of job retention in the insurance industry, and communication between newly joined more qualified team members with the existing employees. Each of these four variables has a direct affiliation to the more qualified candidates in the insurance industry.

The motivation to conducting this research is to achieving an enhanced understanding of the strategy of attracting most qualified candidates in the insurance industry ensuring better pay for them and to assemble information in order to put on a framework that help future studies.

Hypothesis

It has hypothesized that more qualified candidates in the Insurance industry whose contribution supplements the insurance companies with significantly higher achievement than the existing employees in the same company. The more qualified candidates in the insurance company will have significant effect on the revenue growth by achievement of increasing customers and the companies would ensure better pay for them.

Null Hypothesis

The more qualified candidates in the insurance company will not have significant effect on the revenue growth by achievement of increasing customers and the companies may not ensure better pay for them.

Introduction

Career in the insurance industry is very uncertain and challenging, for which the advanced and most sophisticated candidates are not always interested to joining in the insurance industry’s job. The candidates of medium or inferior categories, those how are become unsuccessful to build career in any other risk free and secured gob, only that types of people goes to the Industry. Consequently, there is a long gap of most qualified candidates in the insurance companies and the industry leaders are eager to meet this gap with most qualified candidates. Thus to overcome this dilemmas of insurance industry the research proposal “Better pay attracts most qualified candidates in the insurance industry” has been initiated.

This research proposal has also addressed the recruitment and retention facilities in insurance industry and initiated its effort to finding the major issue, which may affect the jobs of insurance industry’s missions. There was particular concern about the pay systems of insurances industry, which may have number of inadequate number of existing employees to train according to information technology and its advancements with the practical evidence from Lloyds Insurances and HSBC Insurance.

Review of Related Literature

Vaughan and Vaughan (2002) argued that insurance careers have presupposed that the jobs in this sector are associated with risk of selling insurance policies as well as consigned premiums those have to pay for the relevant policies. The insurance careers affirm the measurement of lengthwise conditions of pay for each policy dealt. How much would awarded and the pays have not always fixed and varied with the criteria of the policy, client’s regularity of paying premiums, and the ranks of the employees and accurately it is unpredictable for which losses the insurance industry would provide compensation and for which not.

Anthony, Prrewe, & Kacmar (2002) have identified the contributory features of effective recruitment of qualified candidates, selection, and retention of workers and recommended that high-qualified employees’ enrolment, selection, and maintenance could be supposed to provide a triumphant work performance as the strong, active, faithful employees construct businesses competitive.

Compton, Morrissey & Nankervis (2008) addressed that selection is the process of choosing individuals who have the necessary qualifications to perform a particular job well and it is required to select that person who can perfectly take the responsibility. He also added that the selection process is differ from one organization to another for example, some organizations make a strategic decision to fill positions quickly and inexpensively by scanning over application blanks and hiring individuals based on this information alone and some try to choose the best person possible by having an elaborate and sometimes costly selection system.

Due to procedural difference, the definition of more qualified candidate is varying person to person. DeCenzo & Robbins (2008) argued that all organization should recruit dynamic, fit and competent person by interviewing the candidates but employers should scrutinize applicant’s resume before interview and considering academic background with other experience. Compton, Compton, Morrissey & Nankervis (2008) and Bratton & Gold (2007) mentioned that more qualified candidate has to ensure that they have high level of talent and experience that exceeds the expectations of all concerned departments.

Bratton & Gold (2007) argued remuneration is the payment made to an individual for the services that he or she provided to the organization. DeCenzo & Robbins (2008) stated that to get application from high-qualified candidates, it is essential to provide better payment by salary adjustments or incentives for working in particular organizations. Bratton & Gold (2007) also added that the organization should pay according to pay structure and the pay rates or ranges would be compatible with the ranks, classification, or points arrived at through job evaluation as employees may sometimes face unfair or discrimination of their payment specially women employees and disabled.

Montoya & Graham (2007) stated that in workplace like the insurance industry, the payment has based on the performance. This is a promising concept, which has the aim of fostering productivity at the workplace. To attract quality employee who have the skills and knowledge the performance based payment was designed which affected through coming out with helping the departments and agencies. To match the employee efficiency along with the organization goals ensure the retaining of quality employees, reward the positive performance and rapid response to the changes. However, these practices are facing some challenges.

Firstly, there is a significant amount of cost related with the monitoring program of the employees cuts some financial resources of a firm. Secondly, the designing of the proper apprising system, which has created for the measurement of the performance of the employee, are also costly. Thirdly, the organizations find difficulties to link the apprising system with the payment system. Finally, this system has some drawback like effect the output partially though it was unintended. For these reasons, it is impossible for many private firms.

Rather to spread the system to the public sector because of monitoring practice is almost inexistent in public sectors. Besides the employee of the public sectors, become less motivated by the payment. For this the payment for performance system if introduced in the insurance industry heavily, it may attract the quality employees who will maximize the contribution. In United States, the federal government failed to give a profitable and attractive shape to their payment system.

Kasturi (2006) argued that in the insurance industry, performance of the company is largely depends on the performance of the employees. Beside, the success of the insurance company depends on the four major functions, which has demonstrated in figure-1 in appendix.

These four functions work cyclically. Here identifications of markets helps to reduce the risk associated with any perils and hazards. Globally, the insurance is a growing concern, which keeps pressurized to identify the appropriate market. Market penetration is a concept here to assist the program. It is a concept, which can identify by the growth of the number of policies in any kind of insurance. Later the turnover or earning growth rate, the market share hold by the company, increasing the number of branches are also key aspects for the market penetration identification. Human, technology and materials are the three resources of a firm.

To get control over these three an insurance company has also depicted by the performance of the employees. Again, employee performance is also related with the control over the investment and expense which influenced by the management. Economic feasibility and sustainability can be the measurement criteria for the performance measurement. If these are being achieved the objectives of the insurance company can become long-term profitability oriented. Along with this, the objectives would diversify through following the expansion, growth, and achievement of market share.

Assumptions

From the hypothesis stated earlier, there can be some assumptions. These are:

• The more qualified employees engage their highest efforts, which results the highest possible benefit for the insurance companies.
• The more qualified employees have the higher level of achievements comparing with the existing employees.
• The insurance company who has more qualified employees, more they growth and earn more revenues.
• The more qualified employees can attract more potential customers by persuading them to lessen the customers risk associated with different perils and hazards.
• As the qualified employees are generating highest benefits for the insurance companies, the employees must pay well.
• The payment system must follow the performance based payment system where the employees have paid according to their performance.
• The global pattern of present insurance stated that the qualified employees are the best to serve for the insurance company.
• The employees prefer the performance based payment system, as there are some possibilities of getting higher payments if the performance is better.

It has not expected that all of these assumptions will be true but the further studies would discuss to find out whether these assumptions are true or not.

Methodology

In this paper, methodology is defining a set or system of methods, principles, and rules for regulating philosophical system, inquiry procedures, analysis, and evaluation of any specific subjects, or matters of related study. In this paper, methodology terms are holding subject, instruments, questionnaire, procedures, analysis, and limitations based on insurance industries and its employees for further discussion of this paper.

Subject

Under the subject of this paper, the existing and new candidates of insurance industry has selected as subject from public and private sectors of industries. Employees have selected as subject because they are main part of this paper, as their payment system is main issues to discuss. The subject or employees’ nature and conditions would vary in terms of culture and workplace differentiation. As the employees would be both current and new, so age may differ with long variation, but approximately, the age range would be 25 years to 55 years. Therefore, the study would focus on all types of employees in insurance industries.

Instruments

For making methodology for this report, survey is taking as sample method for further procedures of this study. To take survey, questionnaire has selected as survey instruments, which has taken for employees of insurance industries. It is an inexpensive way of gathering appropriate data from large numbers of employees, which is also helpful for taking statistically analysis of outcomes. In this study, an effective questionnaire can gather information about performance of employees and payment system of insurance industries (SPERC, 2007, p. 28). There are some steps involved in designing questionnaire, which are:

• Defining objectives of survey, which is to fulfill about the hypothesis of the study is whether true or not.
• Determining group of subjects, here current and new employees of insurance industries.
• Writing questionnaire, this is going through beginning to outcome of the study.
• Procedure and analysis questionnaire.
• Discussing and interpreting results of the questionnaire’s outcomes.

Questionnaire

The obtainable literatures do not make available the researcher with apposite tools to justify the impact of better pay for most qualified employees on the functional model of the company. Consequently, an apposite tool has organized to quantify this appraisal. The questionnaire has assembled in such a manner that has conserved the internal coherence and special care has imposed to make sure that every one question has centered to focus on a specific issue. The most powerful tools of Likert Scales (1-5) has adopted within the evaluation mechanism for a variety of attributes throughout this questionnaire. The entire responds have been setup on a scale of 1 to 5 by means of 1 stands for Excellent, 2 for Very Good, 3 carries Good, 4 for Fair and 5 for Poor.

Procedure

This research proposal would argue to investigate at least fifty candidates of two renowned insurance companies such as Lloyds Insurances and HSBC Insurance. The candidates would interview with same questionnaire and then to analyze the gathered data a T-test and Pearson’s correlation coefficient would conduct to finding the relation of better pay framework and the candidate’s attraction to the industry.

With the help of this questionnaire, the information would collected by surveying in different insurance companies in United States. Current and new, both employees are subject to fill the survey questionnaire for having unbiased studies according to different opinions. The questionnaire would fill by subjects themselves, which is representing honest answers from the employees. There is a small sample is selected to surveyed on employees and candidates of insurance industries. Total sample size is 100 to be maintained questionnaire, from these, 50 questionnaires are for employees, and other 50s are for qualified candidates, like recent graduate students, experienced and qualified employees etc to maintain similar results o be compared between them.

Analysis

For analyzing the data of questionnaire of insurance industries, t-test method is appropriate to measure the hypothesis of this paper, whether the hypotheses are true or not. T-test is systematical and bell-shaped distributions with mean of zero and standard deviation of one, where the employees are unknown, or when hypothesis testing has done with smaller group of employees (Zikmund 2003). There are two hypothesis developed from this study, which are:

• The more qualified candidates contribute supplements with higher achievement than existing employees,
• The more qualified candidates effect on growing revenue by increasing customers to ensure their better payment systems of them.

As the answers of these two hypotheses would list according with the help of questionnaire, the results of the survey would give in the appendix as a table and from the table here the number of ‘yes’ respond would counted and following calculation would done.

Therefore, sample mean is
Sample standard deviation for this study is
Therefore, standard error of mean is

Assume that, confidence level
So, significance level
(Degrees of Freedom T)

In this analysis, it would provide the percentage of confidence level, the populations mean of 100 employees and candidates are considering that better payment systems attract qualified candidates and according to t-test. So, this t-test analysis would proven that the assumptions of these two hypotheses, that better payment system attracts qualified candidates in insurance industries and bring greater success to the company.

On the other hand, if the results of candidates and employees, these two are considering statistically significant from their opinions about the questionnaire, then the results of t-test would differs. However, according to this study, it is not important to consider them as different means or populations, as the existing analysis is measured the appropriate results for this study.

Limitation

Every analysis and result has some lacking in terms of 100 percent assurance to be appropriate of the outcomes. This study is not up from this lacking, because as t-test analysis has taken to measure the results, so there are some error and degree of freedom, which may not measure appropriate results. On the other hand, one limitation is most common in survey method that, employees and candidates may not give honest answers according to questionnaire given to them. Last but not the least, the selection of specific insurance industries is also another limitation, because it is not possible to cover all insurance industries in United States, because of huge costs and lack of availability. Finally, 100 employees and candidates cannot represent all insurance industries about the better payment systems in global context.

Discussion

Gerst (2008, pp. 86) pointed out that the premium determined for the policy has based mainly foremost on the face value of the policy and the reward for the employees are linked with a certain percentage of the that paid premiums when in case of loss employees may not be paid. The insurance careers would in fact have to pay with the intention of to be competent when compensating the policyholders on behalf of their risk and occurred losses; the insurance companies endow the fund earned from the premiums and it would be burden for the companies to conduct similar pays at that situation. The insurance industry overcome this situation by establishing a portfolio of financial assets and income generating property market investment which earning could transform to pay off in the least future claims but the employees kept in risk. The basic categories of insurance career have framed as with direct and indirect risk and challenges for which the most qualified candidates are not willing to start their career in the insurance industry.

Schein (1996, p. 27) stated that the candidate’s in their career anchor design with self-concept consisting future motives and self-perceived talents including conveniences of basic values, progress of their sense of motivation and needs of their life style as they concern to the career. Their career path only evolves the gains of professionalism as well as life experience to make their future safe and secured. Nevertheless, the most qualified candidates form their self-concept with their talented outcomes of academic life and act as a steady force anchor self dreams with the organizational norms and values that ultimately lead to achieving the goals of that organization. The most qualified candidates may not shift their values and motives when they have forced to formulate their preference pertaining to self-development, family responsibilities, and career development.

Vaughan (2002, p. 264) argued that the individuals anchored on the question of security concern and stability that occurred from the most brutal dilemmas due to the change in the organizational strategies to ensuring employment and employability security within the organization. The employee’s turnover implies that the most significant issue that the career conscious candidates know how to expect an organization with the prospect of learning as well as getting bigger experience those almost certainly set up them for more employable in every section of the organization. It indicates that the more qualified candidates base on job security and look for sustainability. Consequently, where they get such dependence, they would be eager to comply with that organization for long term with dependence and trust.

Schein (2006) added that self-reliance as well as self-management have assessed as most of the overriding necessities for the more qualified candidate’s future career management and the candidates who leaning themselves to begin with a good job staying with satisfactory employers during their careers and willing to develop a new way of thinking. The more qualified candidate establishes a new external and internal framework on which they could dependent and engage their highest effort for the organization.

Kundu & Malhan (2007, p193) argued that in insurance transactions, there are some intermediaries who work in form of insurance agent or broker. Globally, the insurance is a growing concern, which keeps pressurized to identify the appropriate market. Market penetration is a concept here to assist the program. The positive economic growth and externalities in insurance industry that can be generated from the risk transfer, financial intermediation, and human resource activities. In the insurance companies, there are too many theories have now effectively applied to overcome dilemmas in practice. For instance, the workforce diversity, contemporary human resource practice, and competitive compensation have gained more popularity, but the necessity to address the requirement of more qualified candidates has not yet addressed widely. All the applied theories altogether implement the requirement for the better payment for the employees. Besides, as working with insurance companies means working with diversified risks, the employees expect possible better payment.

Traditional thinkers argued that employees are resources but the present insurance industry experienced that not all employees but only the satisfied employees are resources. These expected results of the research will drive the insurance companies to pay better to those employees who serve the company better. The insurance companies must take the performance based payment system to motivate the achievement oriented thinking of the employees. The companies can use the results of this research as evidence, which can deploy them to take better payment for the highly performed employees. Besides this research will facilitate the future research related to the topic by ensuring that the more qualified employees if paid better must become satisfied which leads them to work harder and bring highest possible revenue for the companies.

Reference List

Anthony, W. P., Prrewe, P. L., & Kacmar, K. M. (2002). Strategic Human Resource Management. (4^th ed.). The Dryden Press.

Bratton, J. & Gold, J. (2007) Human Resource Management. (4^th ed.). London: CIPD.

Compton, R., Morrissey, W. & Nankervis, A. R. (2008). Effective Recruitment and Selection Practices. (5^th ed.). CCH: Australia.

DeCenzo, D. A. & Robbins, S. P. (2008). Fundamentals of Human Resource Management. (8^th ed.). John Wiley & Sons Ltd.

Gerst, E. D. (2008). Vulture Culture: Dirty Deals, Unpaid Claims, and the Coming Collapse of the Insurance Industry. Illustrated edition. Publisher: AMACOM.

Kasturi, R. (2006). Performance Management In Insurance Corporation. Journal of Business Administration Online.

KPMG (2005). The State of the Insurance Industry. Web.

Kundu, S. C., & Malhan, D. (2007). Human Resource Management Practices in Insurance Companies Operating in India:A Study. Web.

Montoya, S., & Graham, J. D. (2007). Modernizing the Federal Government Paying for Performance. Web.

Schein, E. H. (1996). Career Anchors Revisited: Implications For Career Development In The 21st Century. Academy of Management Executive, Journal of Vocational Behavior. Volume 59, Issue 3.

Schein, E. H. (2006). Career Anchors: Self Assessment. (3^rd ed.). John Wiley & Sons, Inc.

SPERC (2007). Sample Questionnaire. Web.

USAID (2006). Assessment On How Strengthening The Insurance Industry In Developing Countries Contributes To Economic Growth. Web.

Zikmund, W. G. (2003). Business Research Methods (8^th ed.). United States: Thomson.

Appendix

Table: Results of Questionnaire (Surveying from 100 Questionnaires).

(Yes= , No= )