How the brokerage talent shortage fuels M&A activity

Brokerage candidate shortages are one of the major drivers of M&A activity — but there’s still a way for small brokerages to compete in the talent war, one P&C recruitment expert tells CU. 

As competition for talent upticks across Canada, so does M&A activity, Stefan Rolfe, director of insurance at Impact Recruitment observes. According to Impact’s 2024 Insurance Salary Guide, there were 54 acquisitions in Ontario alone in 2023.

“We’re seeing leaders and owners of businesses that have a staff shortage get involved in some of the lower level [tasks],” Rolfe says. “They’re getting tied up in that area, when they should be managing the wider teams, bringing in new business or doing their job function as a higher leader, owner or upper management.

“We are seeing teams being stretched at the moment, with one- to three-person gaps in some departments,” he says, “and they’re just tired of having those issues.”  

When brokers find their resources stretched thin, that can snowball into retention issues for current staff, thus worsening the effects. It’s why some small brokerages are finding reprieve by joining forces with bigger firms. 

“Through M&A, they can resolve that and receive good support on internal recruitment, financial support, and added manpower,” says Rolfe. “M&A activity allows for small brokerages to pull together their resources and operations and enhance their competitive position in the market.” 

But smaller brokerages that aren’t keen on selling their operations may find they have one advantage over their larger peers: They can more quickly and agilely interview and hire a candidate. 

“The most important thing now is speed to market. And that is the one edge smaller firms have against bigger competitors,” says Rolfe.  

“When [small brokerage] hiring managers and owners see a candidate that they like from us, they could interview the next day, or within 48 hours. And that really, really helps,” says Rolfe.

On the other hand, candidates who’ve applied at big firms often go through more rounds of interviews, and hiring recruiters need approval from managers before an offer is made.

“And that can take a while — up to a week sometimes — and by the time we’ve heard back to interview, these candidates may already have a job secured or an offer elsewhere.” 

Nevertheless, bigger firms tend to have more robust or comprehensive benefits packages than their smaller competitors. And that’s often a major draw for candidates.  

But smaller firms might have the ability to mentor and promote team members more quickly, and with less red tape compared to their larger peers. As Rolfe puts it, small firms have “growth opportunities to excel and learn directly from a business owner or a senior mentor.”

 

Feature image by iStock.com/alashi