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CEOs at financial services firms face a dilemma. Because the industry is changing rapidly, they must build the right skills for their organisation to continue to compete in the future. Yet doing so requires making investments that won’t generate a return for several years. In the meantime, they face relentless pressure to hit short-term financial targets.
Judging from the results of PwC’s 23rdAnnual Global CEO Survey, the industry has yet to solve this challenge, but it must. In a fast-changing economy, winning companies are adept at building new skills and capabilities, particularly those based on digital technology. These organisations have moved beyond the traditional ideas that upskilling equals training and that the workforce is a fixed entity, and instead, they create more flexible ways to access the skills and capabilities they need. Although those skills can be gained through alliances, joint ventures, partnerships with government and academia, and other types of collaborations, the most lasting results come from upskilling the current base of full-time employees.
The COVID-19 pandemic has only underscored the need for digital transformation and upskilling initiatives aimed at improving both internal processes and customer engagement. Consider the changing roles of commercial bankers, wealth advisors, and insurances sales and distribution staffs, all of whom are now engaging with clients via digital channels for sales, relationship-building and support. Or consider the way that the shift to working from home puts new pressure on organisations to manage security as well as employee productivity, with ramifications for a company’s real estate portfolio and IT infrastructure.
To that end, the survey results, which were gathered before the COVID-19 pandemic, should be a wake-up call. Financial services CEOs are less likely than their peers in other industries to say they have made significant progress across a range of upskilling efforts, and more of them acknowledge that they haven’t made any progress at all. Consider:
Financial firms struggle to retain employees who have learned new skills (15% of chiefs say this is their biggest challenge) and to find the resources—not just funding, but also people and expertise—to conduct upskilling programmes. And nearly 40% of CEOs say their firm has made no real effort to partner with the sort of institutions in academia or government to help them develop the skills that their business will one day need.
Certain segments of the industry have even more work to do. Asset and wealth managers (AWMs) lag the rest of the financial sector in every upskilling initiative in the survey. Nearly one-fourth of AWM executives concede that they’ve made no progress at starting an upskilling programme, and 8% say they’re not even considering it. Notably, AWM chiefs are more likely than those in other segments to say that they simply don’t know whether these programmes are helping their companies meet bigger goals.
Upskilling is a long-term project, but the pressure on firms to deliver short-term results has hardly abated. Financial companies no longer have the overwhelming advantage in compensation they once enjoyed, and they still haven’t found the right balance of rewards—financial and otherwise—to draw and retain today’s talented young employees. Thanks to both expansion and consolidation, firms that were already large have grown even bigger, and face a skills mismatch that’s pervasive in global operations; by contrast, mature markets have too many qualified employees, and growing markets have a shortage. The solution isn’t as straightforward as simply relocating talent to higher-growth markets. In the short term, COVID-19 has revealed the challenges of relying on international talent. More important, employees who understand the local context will have the best chance of being successful.
Upskilling demonstrates its value on many levels. In PwC’s survey, CEOs who have made more progress on their upskilling agendas tend to be more optimistic about their company’s growth prospects than those who haven’t. And although upskilling certainly leads to improved productivity—particularly when it comes to softer skills, like collaboration, that can’t easily be replaced by technology—there’s more at stake for companies that hope to be responsible corporate citizens. Firms that aren’t constantly developing the capabilities of their workforce risk creating waves of jobless people who can no longer find productive work. To avoid that fate, organisations need a more flexible model to access the skills they need.
If events so far this year have anything to teach CEOs and the companies they lead, it’s that the era of worldwide disruption is firmly and irrevocably here. So just as financial services companies subject their balance sheets to stress tests to show they can withstand economic calamity, the time has come to stress test human resources, to take the measure of your team’s flexibility and resiliency, and to consider aspects such as the geographic distribution of skills.
With so much time and money at stake, demonstrating a strong financial return is essential—buy-in from the leadership and engagement within the workforce will quickly evaporate if the effort shows no clear evidence of benefits. In a well-planned digital upskilling initiative, financial growth follows from efforts to build talent and improve the external stakeholder experience, so it’s important to track key metrics in all those areas.
Building a successful upskilling strategy calls for management to focus on six aspects:
The financial services industry is changing at an unprecedented rate. Financial services firms must keep pace—not only at an organisational level, but also in how they upskill their people. In a relentlessly changing market, success demands nothing less.
Global Workforce Risk Leader, Partner, PwC United Kingdom
Tel: +44 (0)20 7804 4957
Strategy&, Principal, PwC United States
Tel: +1 (646) 471 2377
Global Workforce Strategy Leader, Principal, PwC United States