19th Annual Global CEO Survey: Key talent findings in the financial services industry

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Shifting demands, competing priorities: Adjusting to the new talent realities in financial services

Volatile markets have shaken asset management CEOs’ confidence in economic growth. Yet in spite of this they remain confident about the outlook for their businesses.

Seventy per cent of financial services (FS) CEOs see the limited availability of skills as a threat to growth, making this a bigger concern than the disruptive shifts in consumer spending and behaviour and competition from new market entrants. Yet only 28% are changing their focus on the skills and adaptability of their people.

If skills shortages are such a concern, why isn’t this backed up with more action? Is it because there are no simple solutions (increase hiring or invest more on training, for example), FS CEOs see bigger threats to growth including over-regulation (86% see this as a threat) or they’re finding it difficult to realise the return on investment in talent?

Balancing different priorities and developing the adaptive, diverse, digitally-savvy and relationship-driven workforce needed to compete in today’s fast-changing marketplace requires a new mindset as much as a new skillset.


Changing demands heighten skills gaps

FS organisations are facing the immediate challenges of economic and political uncertainty and the longer term impact of new technology, more exacting regulation and shifting customer expectations. Some long-established business models are struggling to sustain competitive relevance in the wake of these developments. But today’s market shake-up also opens up significant opportunities for reinvigorating growth and re-engaging with customers, employees and society as a whole.

Survival and success within this fast-changing marketplace demands people who are creative, digitally-savvy and can adapt quickly to constant change. The search for new opportunities and changing nature of FS organisations also calls for people with the cultural insight to work in fast growth markets and lead more diverse and multi-generational organisations. And while your business is facing all these new and increasing demands, familiar talent shortages in areas ranging from insurance actuaries to operational risk and compliance personnel in banking haven’t gone away.

Competition to attract the type of talent your business needs is coming from all sectors – it’s no longer possible to simply talk of an FS talent market as boundaries are now increasingly blurred, if not non-existent.

Given this combination of changing skillsets and mounting competition, it’s little wonder that 70% of FS CEOs see the limited availability of skills as a threat to growth. The real surprise is the paucity of the response. Less than 30% of FS CEOs say they’re changing their focus on the skills and adaptability of their people. It would appear that many organisations are still relying on short-term tactical responses rather than trying to develop a clear-sighted and sustainable long-term strategy. 

Talent Trends

Responding to changing employee expectations

Given the fact that FS CEOs see a skilled, educated and adaptable workforce as the number one priority for the societies in which they operate, it’s perhaps surprising how low employees rank in the list of influential stakeholders. Employees want to feel that they have an impact – it’s dangerous to assume that they’ll just go along with what the board says.

Many FS organisations are beginning to rethink their employee value proposition. Looking five years’ ahead, 60% of FS CEOs say top talent will prefer to work for organisations with social values which are aligned to their own – among insurance CEOs this is 75%, more than any other sector in the survey. This reflects the perspectives of the new generations coming into workforce. Since 2008, we’ve been carrying out periodic surveys into what people born between 1980 and 1995 want from the world of work. The findings consistently show that millennials want their work to have a purpose, they want to feel they contribute something to the world and they want to be proud of their employer. The ability to build and communicate meaning and social value will therefore be an increasingly crucial employer brand differentiator.

What impact do the following wider stakeholder groups have on your organisation's strategy

Diverging sector priorities

The survey reveals considerable variations in the priorities and direction of different FS sectors. Sixty five per cent of asset management CEOs expect to increase their headcount. But only 43% of Banking and Capital Markets (BCM) CEOs and 49% of insurance CEOs plan to take on more staff. Overall, 20% of FS CEOs plan to reduce staff numbers, though a much higher 31% of insurance industry leaders and 29% of BCM CEOs anticipate cuts.

The agenda for change in talent strategies also varies. BCM CEOs put the leadership pipeline at the top of the list. This may in part come down to the extent of the change and restructuring within BCM and hence need to forge different capabilities within the executive team.

Asset management CEOs are focusing most closely on pay and performance management. Insurance CEOs are the most likely to focus on culture and behaviour. This corresponds with the fact that more than three-quarters (79%) say that their purpose is centred on creating value for wider stakeholders, more than any other sector (only 20% say that their primary purpose is creating value for shareholders).


The way forward

There are no clear-cut answers within this complex and fast-shifting talent landscape. But we believe that a combination of innovation and pragmatism can help to broaden your options for addressing skills needs and enable you to respond quickly to changing demands. And to make this work, we believe it’s time to go back to basics in determining what talent your business needs and how it can be hired, built, motivated and retained within the constraints on skills availability and financial resources.

Key steps to defining and refining talent strategy

Engage business leaders to understand and anticipate future business priorities and business models. 

Participate in strategic and business planning processes and define alternative scenarios for the future.

Identify and prioritise gaps in current talent programmes including long-term workforce planning, targeted hiring, leadership development and enhancing performance management.

Clearly define the required mindset and specific behaviours needed to deliver on desired purpose and values.

Determine what capabilities are core to the strategy of your business and require investments in recruitment or talent development versus capabilities where alternative sourcing (alliances, vendors, contractors etc.) would be more appropriate.

Define an integrated talent portfolio

To ensure clear targeting of resources, it’s important to analyse and map the current portfolio of ‘change’ and ‘business as usual’ talent initiatives.

Prioritisation is critical. By designating and concentrating most closely on the high value/low-medium complexity programmes, you can begin to rationalise the demands on time and finance by eliminating low value/high complexity initiatives.

Successful execution depends on effective governance, clarity over roles and accountabilities across all stakeholders (managers, employees, external stakeholders) and a clear understanding of competing demands on management time and financial resources.

Monitor and evolve

It’s important to monitor, manage and adjust to take account of changes in the internal and external environment. For example how does a new regulatory requirement factor into changes in incentive compensation plans or what is the HR strategy for integrating a new acquisition?

A key element of this is the development and monitoring of an effective talent portfolio dashboard. In addition to ensuring robust management of the different programmes in train, it’s important to define and track the key talent outcomes to be shared across relevant business and HR leaders.