Limited availability of skills are biggest threat to growth
NEW YORK, April 16, 2013 - Research from PwC has found that FS CEOs view talent shortages as the biggest threat to growth. The report, Seizing back the people agenda, also suggests that current models for people management are unsustainable in the face of new market realities and that rebuilding trust and re-engagement with employees and customers is needed.
Bhushan Sethi, PwC's financial services people & change practice leader said: “Rather than actively shaping the people strategies that financial institutions need to move the business forward, many are reacting to immediate pressures. But the upheaval in the marketplace and challenge of re-engaging with customers and staff are making the need to regain control of the people agenda ever more pressing. To get their people strategy onto the front foot, executives need to know what the new objectives for the business are and what people strategy components are needed to support and deliver them."
Sethi continued, “Addressing these questions will make sure businesses are more likely to have the right people, with the right skills and motivation to contend with the new market realities and take the business forward. Underpinning this will be a clear statement of why people would want to work for the business, which is capable of attracting and retaining talent without simply relying on pay.”
There is significant disillusionment with the financial services industry. For many people in the industry, this antagonism has created a ‘them and us’ mentality that is suspicious of change and reluctant to re-engage with those from outside.
The reputation of the industry is also making it difficult to attract talent. A global PwC survey of college leavers coming into the workforce found that more than 20 percent would no longer even consider a career in financial services because of its image. Jobs with meaning and interest are a key attraction for this millennial generation.
A new employee value proposition
A considerable amount of the employee value proposition within financial services has been built around financial reward. But the sharp falls in returns since the financial crisis mean that there simply aren’t the funds to sustain the old levels of compensation. Nonetheless, more than 70 percent of financial services CEOs say that they have to match the pay of peers to retain top talent. These pay pressures need to be balanced with the returns to satisfy shareholders and fund investment for growth.
Further strains are coming from stakeholder pressures being put on how organizations set rewards – nearly 40 percent of financial services CEOs are changing the way they set executive reward in response to shareholder and public reaction. These demands are leading to a huge and complex overhaul of reward policies, with significant implications for the balance of fixed, variable and deferred pay and the governance, communication and employee engagement procedures that surround this. Supporting the organizational reputation by requiring employees to live up to expectations on behavior and accountability should be a key aspect of the reward package.
“A culture of integrity, customer focus and risk-awareness is critical in re-engaging with customers and rebuilding confidence in the industry. There are clear competitive advantages for getting this right including better targeting of products, stronger reputation and more effective retention of key people," Sethi remarked.
He added, “Pay is still important, but not at the expense of everything else. There needs to be a more viable balance between risk and capital demands, employee reward and the returns needed to attract investment and fund future growth.”
To obtain a copy of the report; please visit: PwC’s Seizing back the people agenda.
About PwC US
PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 158 countries with more than 180,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US.
© 2013 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
The Neibart Group
Tel: +1 (718) 875-4545