Financial services retention challenges loom for an industry that has been a bedrock of the economy for decades. Last year’s announcement of the Edinburgh Reforms is a clear sign that the UK government is looking to these sectors for growth in the short- to medium-term. In a fiercely competitive environment, organisations need effective strategies to both attract and retain the very best talent available.
Turnover is expensive. Some estimates put the cost of a new hire at one third of their annual salary, before you even factor in the cost of any training which might be needed. High turnover slows your loyal people down as they adapt to new hires, bring them up to speed, and integrate them into existing workflows.
When the CBI / PwC financial services survey for Q4 2022 looked at priorities for FS firms for the year ahead, “achieving high levels of employee engagement” was cited by 55% of respondents. “Reskilling the workforce” came in just behind on 53%, but when asked why reskilling was a priority, 61% identified “increased retention” as the key reason.
What are the challenges in financial services retention?
Financial services (FS) recruitment has historically been able to choose from the best and brightest. But rapid technology change is putting pressure on businesses. This is coming both from below (up to 21% of roles within the sector are at risk of becoming obsolete, according to the Financial Services Skills Commission); and above (only 14% of FS CEOs have an upskilling programme in place to address this issue).
Then there was the pandemic-driven shift in working patterns. Many (if not all) knowledge workers have become comfortable with remote and hybrid working arrangements. Not all employers agree.
JP Morgan Chase & Co called on its senior staff to return to the office full time back in April 2023. It was only the latest in a slew of FS businesses seeking to end or reduce home working. And here’s the rub: according to an August Deloitte study, 66% of FS leaders currently working remotely or hybrid would leave their job if required to return to the office full time.
This is a demanding environment. Remote working (ironically) may fuel the likelihood of burnout. We might simply acknowledge finance’s time-honoured reputation as an industry that asks a lot of its people in both time and energy. On top of that, when the Financial Services Skills Commission talks in foreboding terms about attrition and loss of specialist knowledge, financial services recruiters must feel they’re being hit from all sides.
An aging society and workforce change means we will lose 260,000 highly-skilled people by 2035. The FS workforce already struggles to attract younger workers and to retain older employees. 55% of our workforce is aged 31-50. We employ fewer people in the younger and older age groups than other sectors. By 2035, we will lose over 260,000 highly-skilled people through retirement and attrition.”People + Technology: How Skills Can Unlock Value for Financial Services
Employee engagement has real, measurable impact
The advantages of engaged employees, in terms of productivity, loyalty, improved customer service and bottom-line profitability, are now strongly evident. Study after study has shown that highly engaged employees deliver higher growth than their disengaged counterparts, inspire customer loyalty, show lower absenteeism, and are less likely to leave.
Low engagement teams have turnover rates typically 18% to 43% higher than those in high engagement teams (Gallup). If financial services employee engagement could cut its turnover rate by 30% (as an average), how many millions of pounds and billable hours could that save the sector?
4 ways to drive engagement in financial services
1. Create a positive work culture
An environment which values diversity, inclusion, and respect and where employees feel supported and empowered has benefits reaching far beyond the obvious boost to wellbeing. Psychologically safe spaces are vital for allowing people of all backgrounds to share their perspective without fear of being belittled or sidelined. Broader perspectives equip a business to create solutions which serve the diverse needs of their customers.
2. Invest in learning and development (L&D)
Continuous learning and development programmes mitigate against both natural loss through attrition and retirement, and the skills gap that businesses experience during rapid digital transformation. In the insurance sector, for example, many companies are focusing on people development to respond effectively to the pace of transformation:
[These insurers] are also making sure their workforce has the buy-in, motivation and skills to make the most of their systems capabilities as part of a human-led, tech-enabled approach.”Alex Bertolotti, Leader of Insurance, PwC UK
3. Deliver employee recognition and reward programmes
Effective reward programmes need to be properly tailored to their audience. Some will be more relevant than others, given the variety of roles and sectors financial services retention efforts could target. Commercial banks with tens of thousands of employees at varying levels will find value in high-frequency, wide-ranging programmes offering monetary rewards or vouchers.
Meanwhile, wealth management, for example, might look to more complex ways of allocating reward to a small cohort of highly-skilled, well-remunerated individuals. Examples might include job design and job architecture or encouraging intrapreneurship. There may even be room for more radical ideas like labour exchange models, where a valued individual is able to move between an ecosystem of employers.
4. Promote work-life balance
Broader wellbeing initiatives work across remote, hybrid or traditional working arrangements, and dovetail neatly with rewards schemes. Benefits include gym memberships, retained practitioners, and ensuring teams have the chance to bond through group events or away days. These have been part of the wellbeing landscape for years, and offer a good reason to bring teams together. Not everything will suit everyone, so a broad and flexible platform will give businesses the opportunity to do the most good for the most people.
Manage it all with clarity and efficiency
Managing these processes, programmes and people can feel challenging. In an ideal world your talent management suite could view, analyse, and optimise every employee stage, from hire to retire. While employee engagement is about the organisation’s relationship with individuals, you need to capture data centrally and review it at both micro- and macro-levels.
Banking giants employing tens of thousands of individuals are very different to small teams of brokers or wealth managers. But all businesses need to see clear, actionable data on individual L&D requirements, tailor-made reward and benefits programmes, training, and compliance.
Zellis’ Talent Management software – part of our award-winning HCM Cloud – is designed for precisely this. At every step, it streamlines the employee development process, empowering individuals to grow and thrive. It also allows the employer to make informed decisions about how best to support that process.
For the complex range of financial services sectors, an effective talent management tool offers a cloud-based, future-proofed pathway to a more engaged, more effective workforce across the entire employee lifecycle.