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Skills shortage or smoke screen?

01 October 2007 FAnews

Despite the national debate regarding the existence of a skills shortage in South Africa, industry players are in agreement - there is a critical shortage of skills threatening the financial services sector. FAnews asked those in the know about the extent of the problem and what is being done.

The chairperson of the Commission for Employment Equity, Jimmy Manyi, caused a national uproar when he suggested at the National Assembly's labour committee briefing in May that skills shortages is mere urban legend and linked directly to racist employment practices.

While his comments were dismissed by many senior South African business executives as well as prominent personalities such as Maria Ramos, chief executive at Transnet and Reserve Bank governor Tito Mboweni, perhaps there is a glint of truth.

One of our readers commented on the FAnews Online article regarding the skills shortage, saying "I have some 20 years experience in the Employee Benefits field dealing with Corporate/Group Pension Funds and Provident Funds. I have approached the big insurers and just about every recruitment agency I could find. The answer over the last two years has been consistent - my skin colour (white) is wrong and I am too old (now 51)! It seems they are not interested in my knowledge and experience at all. Some say outright that they will rather employ two non-white people, with no knowledge and experience at all, for the same price and get their numbers up at the same time!"

Between a rock and a hard place

This highlights the fact that the skills shortage is not simply a matter of finding skilled people. Companies find themselves in a regulatory and legislative minefield, a critical and immediate skills shortage that looks set to become worse, increasing competition, and more demanding consumers. The requirements of the Financial Services Sector Charter and Employment Equity legislation cannot be ignored, but companies who struggle to find the skilled employees they need to comply with FAIS, FICA, and the rest, risk losing their licences. In addition, employees without the knowledge to add real value to clients, means a serious risk of losing clients and slipping against the competition.

The insurance industry is fully aware of the pressing need to attract and upskill more black individuals, as well as women. Despite this, more than half of all insurance sector employees are white (according to an INSETA report), placing even greater pressure on companies.

The extent in the insurance industry

Rob Glenister from Celestis says that the skills shortage is most evident in areas where prior learning or experience is required. "However," adds Mike Cownie, Financial Director for CIB Insurance Solutions, "the shortage is across the board from commercial and domestic underwriting to claims technicians. This is compounded by the fact that those working in the industry now need to be "qualified" to give advice.

Sanlam Glacier says that the shortages they are encountering are limited to the designated group. "Both investment and sales professionals from the designated group are hard to come by, prolonging the recruitment process."

Johan Brits, Manager: Training & Development at Santam concurs. "There is a shortage of Previously Disadvantaged Individuals (PDI) candidates who can fill positions as motor assessors, junior, middle and senior managers, marketers (broker consultants), telemarketers, claims clerks, risk engineers and project managers.

Conrad Backeberg, Managing Director, RGA Reinsurance Company of South Africa says that the issue of skills shortages in the insurance sector lies in two key areas, namely with a lack of human resources, especially in terms of PDIs, as well as a lack of relevant training for certain fields, such as claims assessors.

Judi Reid, head of Hollard's Learning and Development division, says particularly that there is a skills shortage in the insurance industry of staff with NQF Level 4 (approximately 40%) and staff with NQF Level 5 and above (approximately 30%).

The reasons

Ben Tonkin of SAFSIA says that the industry is not generally seen as a first choice by most graduates when it comes to picking careers and many wind up in it by default.

In addition, explains Freda du Toit, Executive Director of SilverBridge, the changing focus in financial services - from low-cost labour to trained professionals who can service clients with one call - is compounding the issue.

Backeberg adds another dimension, saying that South Africa has experienced a ‘brain-drain', with many qualified actuaries leaving the country to take up positions overseas. "This has resulted in a lack of the expertise and experience necessary to effectively operate in middle to executive management level. In general, the politically governed market forces, such as BEE, has also meant that an already small pool of qualified PDIs are targeted by an ever growing number of corporate players, further adding to the issues of supply and demand in a sector that struggles to retain qualified staff."

According to Caroline da Silva, head of Portfolio Management at Santam, training is generally also quite expensive because there are few providers, leaving it up to organisations to hone the skills of their own employees. In addition, there are very real challenges in terms of basic numeracy and analytical skills that are in increasingly short supply.

What is being done?

Tonkin says that the industry is in desperate need of an image overhaul that will attract highly-skilled individuals. Efforts to attract people to the industry centre mostly around image management and graduate-recruitment programmes.

"In 2002, INSETA engaged with the University of Cape Town's Graduate School of Business (GSB) to develop two leadership and executive development programmes for the industry, one aimed at senior leadership and the second at middle management," says da Silva. "Teaching insurers more about everything from diversity to Black Economic Empowerment, globalisation and systems thinking, helps raise the bar within the industry, making it more attractive to skilled outsiders."

Learnerships are another key. Successful learners are often offered a temporary or permanent position in the company. Some companies have established their own inhouse training solutions. RGA, for example, launched the Claims Professionals Programme, an Inseta supported training programme specifically aimed at claims assessors and administrators.

The Hollard Skills Training Academy offers nationally recognised qualifications, leadership development and a functional syllabus. This skills training capacity is available to the Hollard broker network and partners, as Hollard has recognised the fact that intermediaries rarely have the time or manpower to handle training programmes.

Retaining the investment

The general consensus among the industry players is that ongoing training for employees in their specific fields is critical, especially in areas where there is rapid change in processes or technology. All the players we interviewed have an employee retention programme in place, to counter the cost of training and then losing an employee to another company. Especially where skilled PDIs are concerned, head hunting and poaching staff seem to be rife in the industry.

The bottom line then, is that in the insurance industry, the skills shortage is a reality. Companies need to create their own skills pool for the future by implementing learnerships, attracting and retaining the best staff and providing them with ongoing training and innovative retention strategies.

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