Briefing: Consolidation could cause culture concerns for broker staff

By Editor Katie Scott

One topic that seems to be permanently on my radar at the moment is broker consolidation.

Yes, broker consolidation itself is not new, but as the Covid-19 pandemic has worked to accelerate digital adoption, technological innovations and greater acceptance of home or flexible working, it has also appeared to ramp up consolidation activity across our marketplace with what feels like unprecedented speed.

In some respects, this could be a futureproofing tactic as smaller brokers look for the financial comfort blanket that a bigger broker could provide amid an economic climate tempered by the coronavirus pandemic.

Similarly, GRP’s chief executive Mike Bruce told Insurance2025 delegates last week that consolidation can ease the transition job for smaller businesses looking for an exit.

However, he added that there must still be a “coherent strategy” around M&A.

Talking to SRG’s chief executive Warren Downey earlier this month, he told me that broker consolidation is “something of a concern” for him because it “reduces client choice”, especially as he believes an influx of startups is not immediately forthcoming due to higher “barriers to entry”.

Also during the Insurance2025 conference last week, Insurance Times content director Saxon East interviewed Partners& chairman Stuart Reid on the topic of broker consolidation.

One issue he raised that has perhaps been overlooked within the broader discussions so far is the impact consolidation has on broking staff.

Over the past year, expecting and managing change has been the new normal at some level within everyone’s personal and professional lives – throw in a business merger on top of this base layer of pandemic-related change and it’s bound to be an even more stressful time for staff as they learn new business processes and practices at their new owner, or – if the shoe is on the other foot – as employees undertake integration work on a near constant basis.

Consolidation also means that staff could end up being employed by a firm they never even chose to work for, Reid added – this could be problematic as increasing numbers of job hunters research a company’s culture and values before applying for a job.

For example, research conducted by employee review website Glassdoor in 2019 found that around 77% of adults across the United States, UK, France and Germany consider a company’s culture before responding to a job advert.

Meanwhile, 79% would take into account an organisation’s mission and purpose before applying for a job at the company and over half of the survey’s 5,000 respondents stated that company culture is more important than salary when it comes to job satisfaction.

Employees are now going to greater lengths to find their perfect employer – and consolidation could certainly throw a spanner in the works of their carefully researched career plans.

Q1 has been a busy one for acquisitions. While the foot may have been taken off the consolidation pedal very slightly so far as we enter 2021’s Q2, I’m sure many firms have plenty of M&A plans in the pipelines.

As Reid told attendees last week, consolidation is a cyclical trend, so it will be interesting to see how things in the market land when broker consolidation does eventually slow down – what shape will the industry be in? Will the big players remain the same?

Companies comprise of people, however. For the resulting mergers to be successful long-term, integrating and maintaining organisational culture is a must if staff are to remain engaged and productive, come what may.