Nationwide: Insurance as an Information Industry
BackBy Daniel Margolis — July 2007Insurance might not automatically strike some as an information technology industry — selling and administering policies aren’t obviously technical pursuits.
But with computers handling almost all forms of financial transactions, insurance companies find they need IT staffs as large as some software companies.
Nationwide Insurance, for example, employs 6,000 IT professionals, which makes IT the second-biggest department in the company.
“My company doesn’t have an assembly line for which a widget comes out at the end,” said Randall Stevens, director of IT recruiting for Nationwide’s talent acquisition department. “Our stock in trade, what we really are, is an information technology company.”
Stevens said there are two major divisions of Nationwide: the property and casualty insurance operation, which mainly covers homeowner and auto insurance, and the financial services operation, which covers investment, retirement, life insurance, annuities and pensions.
“Both of those involve nothing more than zeros and ones in a database somewhere,” Stevens said. “Risk is expressed as a function of information inputs and outputs, investments are bank balances and discounted future cash values, and so on. Really, it’s all information.”
As a 75-year-old company, Nationwide has seen the transition from employing a simple data-processing department to a large IT staff. In that time, it’s used technology ranging from legacy mainframe systems to the latest in Web servers and everything in between.
“If it has existed in the history of IT, we have had or currently have it as a technology,” Stevens said. “And every IT job role ever designed, my group has recruited at least one of those in the last couple of years.”
Hiring a range of IT professionals on this scale, Nationwide can’t confine itself to just professionals with experience specific to the insurance industry. Stevens said Nationwide would only limit itself to IT pros with insurance experience when it needed someone to design an information infrastructure for a group of products starting from scratch.
“Except for that, IT abilities are industry-unspecific,” Stevens said. “Your information knowledge is a fungible commodity and easily transferable across industries.”
In addition to technical know-how, Nationwide (as with most employers) places a premium on soft skills, particularly innovative thinking and flexibility. The reason for this, Stevens said, is the nature of the insurance industry.
“Because we’re in a mature industry, most of the inefficiencies have been run out of the system,” he said. “Therefore, strong increases in profitability and revenue growth have to come from innovation because you can’t rely on improved efficiency anymore.”
Stevens said flexibility is an important trait because much of the IT’s department’s work is project-driven.
“Many of those projects are time-limited — it is frequently the case that in 10 years, you might work on six different projects, so that requires a flexibility of mindset to be willing and able to learn new technologies and skills, to be able to be deployed in multiple projects, one after another,” Stevens said. “I can hire you for the job that I need today. That doesn’t do me any good when I deploy you to a new project.”
Head Out of the Clouds
When IT hires with little to no experience come into Nationwide, they embark on one of two paths. They likely begin as developers, in tech support or as junior database administrators. As they grow in their careers, they can go up the individual contributor track, becoming more technical and strategic in their thinking, which moves them toward a senior architect role. Or they might go into the line management track, which moves them through manager, director, officer and vice president, culminating in CIO.
“Those two tracks are equally compensated at any given level and equally highly regarded,” Stevens said. “So, it’s not the case that the architects are in an ivory tower with their head in the clouds — they’re really an integral part of the business application, design and development. Their management skills are transferable across function.”
With its career tracks this thought-out and well-managed, Nationwide obviously pays particular attention to employee development. Ongoing development is a requirement in objectives for the company’s managers, and it’s an ongoing opportunity for associates.
“You are measured by how well you develop your staff,” Stevens said. “And that means not only providing them the technical training to be able to do their next job but how well you are exposing them to other parts of the business. Because we will deploy you project to project to project, there’s an ability to learn all the aspects of a $20 billion-a-year company. You may be on a project on our financial services side of the house one year, and then the next year, you may be in our property and casualty company, and then the year after that, you might be in the office of investments, managing a $75 million portfolio.”
To foster the development of its IT employees, Nationwide subsidizes learning and certification. It offers $5,250 worth of benefits to each associate annually. This can be used for either formal university training or for any job-related certification or skills augmentation.
Insured and Certified
Certification does play a central role in Nationwide’s recruiting and developing of IT professionals, although not necessarily right off the bat.
“It is less important to have that credential in place at the beginning,” Stevens said. “Your technical abilities and experience are slightly more important at the beginning of your career.”
Rather, the company views certification as part of an IT professional’s ongoing development. As such, Nationwide monetarily supports the pursuit of certification among its staff.
In hiring more-senior-level people, certification tends to be less of a factor, but only because those people come in with the relevant certification and training.
Of course, there are certain job roles — such as network servicing — for which certifications are crucial and almost required at Nationwide.
“For network administration roles, what certifications do is allow us to have a stronger comfort level that the people have driven themselves to gain additional knowledge and are confident enough to pass certification tests,” Stevens said.
The company also weighs project management certifications, including the Project Management Institute’s Project Management Professional credential.
“It demonstrates to us that you understand how a formalized project management methodology works and that you’ve got multiple kinds of methodologies,” Stevens said. “We figure you’re even more flexible because you understand multiple ways to skin the same cat.”
Stevens deems Nationwide’s approach “agnostic” with respect to vendor-neutral versus vendor-specific certifications. The company has such a variety of platforms and technologies that no matter what type of certifications people have, Nationwide likely can place them somewhere.
In fact, Nationwide tends to avoid using certifications to match a person with a position.
“I wouldn’t say that if I’m comparing one candidate versus another candidate that the candidate without the certifications doesn’t necessarily stand the same chance of getting the job if they have other demonstrable talents,” Stevens said. “Now, if the two are equal in each way, then clearly I’d lean toward the candidate with the certifications. What it would say to me is that the person has demonstrated the willingness and the competence to be able to get that certification.”
A big point of pride for Nationwide is its IT department’s high rate of retention — the average tenure of the company’s IT associates stands at 10.3 years. Stevens said average tenures are more like two-and-a-half to three years at other companies.
“Based on the resumes that my recruiters see cross their desks every day, three years tends to be the sweet spot that we see people making the job change,” he said. “Clearly, we’re not in the top 1 percent of compensation, given our geographic location — we’re in the middle of the Midwest [Columbus, Ohio], and we have a low cost of living, so we’re not going to lead the pack in compensation.
“There has to be a reason that our average tenure is 10.3 years, and I would argue that it’s our commitment to associates’ development and engagement. It shows you that we grow a lot of our senior leadership in-house, so even while I’m hiring at the lower level — the doers of the world — I look for that spark of future leadership ability.”
– Daniel Margolis, firstname.lastname@example.org
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