15 Feb 2007

Insurance Day Article - Poaching is not the only way to assemble a team

Marcella Cronin outlines different strategies that businesses can employ to attract new teams.

"I’m going to start my own business!" These seven words are modern capitalism’s eureka moment. Every day, individuals make the bold decision to go it alone. The reasons behind these decisions are as varied as the entrepreneurs themselves - an innovative idea; disenchantment with an employer; the freedom granted by newly acquired capital - but however varied their motivations, almost all founding directors must deal with one fundamental issue: the realisation that they can’t do it alone.

The insurance market is one the most entrepreneurial sectors of the UK’s financial services; the list of recent start-ups stand as testament to this. But as we’ve already established, new underwriting and broking businesses need people - and not just one or two of them.

Unlike many hi-tech industries in which transactional websites can be run by just a handful of individuals, insurance businesses remain heavily reliant on the knowledge, skills and relationships of a reasonable-sized management team supported by practitioners in specialist fields. But where to find these people? Many start-ups face considerable pressure to be up and running as soon as possible. Once capital starts burning, the clock is ticking.

Lock, stock and barrel

Faced with the need to begin trading quickly, one solution is to look for an existing team that can be transferred lock, stock and barrel from its current employer to the new vehicle. It’s the practice we’ve all come to know and love as poaching, which has made lawyers wealthy as employers call on their services to draft allegedly cast-iron non-solicitation clauses. But grabbing a team from an existing insurance business is not the only way of populating a new insurer or broker.

The other approach is to build an entirely new team by selecting people from a range of different businesses. True, this process is unlikely to be as quick as poaching a team - particularly if the team being poached is coming from the founding director’s former employer. But building a totally new team allows the founder of a business to create a truly bespoke management function to meet the start-up business’s needs. This team will take longer to grow together and function properly - indeed it may need some external help to do so - but the benefits to the fledgling business could be considerably greater.

Transplanting an existing team does have some more subtle drawbacks. When you move a team from company A to B, not only do you bring the people, but you bring their relationships with one another and the culture of their former employer. Granted, this may not necessarily be a problem, but relationships forged over years in another environment may not be the most productive for the new business.

Transplanted culture

It’s the same with the culture that’s transplanted with the team; the culture which exists in a business which might be decades old may well not be the most effective one for a start-up in which infrastructure and processes are sketchy at best.

While some start-ups seek to replicate existing business models, others are looking to generate real innovation or a step change in their particular niches. The question then is, what type of team will be best equipped to take that giant leap forward?

Rows of empty desks

Successful teams can look attractive to the entrepreneurial eye when faced with rows of empty desks, but the risk is that the team functions well because the organisation in which it is based also functions well. Remove the team from the organisation and clearly it introduces an element of unpredictability.

What’s critical is that the industry’s movers and shakers remember there is more than one way to skin a cat: poaching an existing team is certainly the answer to a time constraint; assembling a team will deliver benefits of a different order in the slightly longer term.