The ripple effect means the ‘new normal’ created since the crisis has brought about much-publicised skills shortages and rising salaries. By understanding from where these pressures are coming, business leadership will be better placed to adapt to this new environment and meet changing requirements with flexibility, speed and agility.
The reign of the regulators
It is no surprise that the regulatory response to the crash has been a major driver of change. Threatened with punitive fines, financial services firms have had little option but to dramatically increase the resources devoted to compliance and regulatory functions. The result has been a hiring boom. Some large banks have more than trebled the size of these operations, while much greater scrutiny in areas such as private equity and hedge funds has fuelled demand for skills in these sub-sectors too.
With the sector’s talent pool stretched, expertise is being drafted in from other sectors. Hedge funds and private equity groups have been purloining staff from banks and asset managers, who are themselves replenishing their compliance and regulatory workforces with talent from across consultancies. Some salaries in top positions have more than doubled in the past six years, due to this soaring demand but also the greater risk of personal liability for those in charge.
Grappling with digital
The second major change in the past few years has been technological. Digital technologies are still in their relative infancy in the financial services sector. Most firms had little or no digital or mobile functionality a decade ago, and are now playing catch-up. These firms are raiding the technology sector for talent.
The three key issues for the financial industry are a) how to access and engage customers through digital avenues (mobile, web interface, by tablet), b) how to find the technology and skills needed to do so and c) how to design and market the new systems.
Given that this expertise is not widely available in the finance world, leaders need to seek professionals from different backgrounds who might be tempted by a career in finance.
Staying ahead on cyber security
Cyber-security is not the preserve of Hollywood studios and celebrity phones. Financial services companies have been especially vulnerable to fraud, and are often under much more sustained and constant attack. Five years ago, the title of chief information security officer (CISO) did not exist at many firms. Now it has joined the list of occupational acronyms.
With the need for data security personnel increasingly urgent, and the stakes becoming ever higher, the recruitment net is having to be cast much wider to locate top talent. Defence is one sector regularly raided for quality staff, as well as the top technology companies.
Yet candidates need to be aligned with the culture of their new industry. Retention is becoming a measure on which recruitment agents, as well as the financial services firms themselves, are judged. Increasingly, deferred compensation arrangements are encouraging staff to stay longer.
Bringing Big Data to bear
In the quest for growth, financial services firms are realising the value of turning to their data to help them gain a better understanding of customer habits. The big retailers, many based in the US, are breeding grounds for talent that carry with them industry best practice, which can be a big support to firms in the UK.
With the sheer volume of new pressures facing CEOs and the competition for talent raging across a wide range of fields, it is safe to say that building teams to address tomorrow’s challenges will weigh heavily on executives’ minds.
James Rust is a partner at executive search firm Leathwaite
