Is banking and financial services heading for a brain drain
22/06/2009
Is banking and financial services heading for a brain drain?
Foreword :
Banking & Financial Services workplace study When we discussed the banking & financial services market with employers and employees in the last year, it was evident that the
approaches being used by organisations to tackle the banking crisis were as all-changing as the climate that they were operating in.
So, for employers to be equipped with an up to date insight into changing workplace issues we saw a demand to undertake a review of the market again. Following conversations with employers and employees across across the UK and the mainland European financial centres of Germany, Luxembourg and The Netherlands, what has emerged is an industry that continues to go through significant change as organisations battle to stay afloat and survive the downturn.
However, with the majority of change focused on organisational structure rather than effective talent management organisations are at risk of losing their valued talent. Employees are facing longer working hours, increased responsibility and fewer rewards.
What this has brought is added pressure and a focus on career planning which in some cases involves a move outside of the industry.
Our advice to employers is to ensure you have a strategy for success and that it is communicated with, and understood by, your people. Consider ways of motivating, rewarding and engaging them – you’ll need your valued talent by your side to get you through the downturn. Get this right and it will put your organisation in the best possible position for success and limit any brain drain on upturn. But time is not on employers’ side
and business should sit up and take action now: echoing the European Commission’s belief in a European recovery in 2010, a fifth of employers see the current crisis ending by the close of 2009 and a further 60% believing it will be by the end of 2010. Our programme of ongoing research is a reflection of our promise to our customers to add value by really getting to
understand the issues you face.
I welcome your feedback.
Darren Robinson, Director, Luxembourg
At a glance :
Here is a summary of the findings of the research, providing an insight into the trends, challenges and areas of focus for employers and employees.
• Banking and financial services employers continue to see the current climate as an opportunity for future growth – many approaches are being taken to cut costs and position themselves for the future.
• Employers have a clear strategy in place for surviving the downturn. However, more needs to be done to ensure this strategy is communicated and understood.
• The industry has gone through significant change but there is more to come. With over three quarters (77%) of employees already concerned about their future, and
some evidence of movement to mainland European financial markets, the UK industry is at risk of a talent brain drain.
• It appears job cutting in the industry has reached a plateau – three quarters
of employers have no plans to reduce headcount any further this year and 40% have plans to hire in the second half of 2009.
• There are still opportunities for top talent, particularly accounting & finance, banking operations and compliance professionals.
• When it comes to talent management, employers are managing for today. They are no longer taking the longer-term view.
• A key message for employers is not to mistake retention for loyalty – if you want your top talent with you for the longer term you need to consider how you reward and motivate them now.
• Employees are placing more long-term emphasis on their career plans – they may be happy to have a job right now but they are preparing their next moves for
when the upturn comes.
• With working hours on the increase together with additional responsibility
and in some cases less benefits almost half (42%) of employees are under more pressure.
Strategy for success in the current climate :
The industry has certainly experienced quite a lot of change already but with organisations battling to stay afloat and be in pole position for when the markets recover further change is inevitable. With plans to restructure divisions, improve attraction and retention techniques and give their people more responsibilities and a wider client base, employers are certainly considering everything possible to save costs, survive the downturn and position themselves for the future. But it seems employers are so focused on getting their structural and operational issues in shape that it is at a cost to their
people, especially their valued talent, without whom the organisations’ position will be more vulnerable.
So, while they may be taking a longer term view in some areas they are managing for the here and now when it comes to their people. This is having a direct effect on the professionals working within the industry with many questioning their careers and taking steps to plan their future which in many cases will lie outside of the industry.
It’s clear that the winners will be those organisations that focus energies on perfecting their organisational structures as well as ensuring they identify and work to retain their valued talent.
As we have seen, most employers have a clear strategy in place to survive the
downturn. But what are they doing to ensure their people are aware of it and actually
understand it? The majority of employers (84%) surveyed have a structured plan in place to communicate this strategy. However, there is a mismatch between what employers are doing to ensure their strategy for success is communicated and their employees’
knowledge and understanding of that strategy. This may be because some organisations give responsibility to their managers to share the strategy without a clear communications process to follow while others share it with select audiences only.
Overall, of those employees surveyed 49% only fully understand and agree with the strategy.
Interestingly, according to Synopsis, a specialist UK-based internal communications consultancy, it has been proven that in most organisations 50% of employees don’t know the strategy they are supposed to be following. This creates
a group of people labelled ‘unguided missiles’ who work hard for the cause
without knowing what the cause is. At present, the evidence is that disengaged employees are staying put. No doubt they have evaluated their prospects in a difficult employment market. For employers, this spells problems in two areas:
1. Shorter-term –
Disengaged employees can be poor brand ambassadors,
have lower productivity and deliver
poor customer service and
2. Longer-term – they are likely to vote
with their feet when the upturn comes.
Employees – Understand and agree with the strategy
49.1% tell us they fullyunderstand it and agree with it.
17.5% understand it but don’t agree with it.
13.3% don’t understand what has been comunicated.
20.0% do not know what is happening at all.
Yes : 49%
No : 51%
Employees were asked: Do you have a clear understanding of your company’s strategy for surviving the downturn?
Results cover the UK, Germany, Luxembourg and The
Netherlands.
Respondents were invited to select one option. All figures are rounded to one decimal place.
The importance of engagement should not be underestimated.
There are other areas that need to be addressed to ensure your people are engaged. In addition to being honest and open with everyone, particularly during periods of change, employers need to consider how they motivate and ultimately retain their employers and we look at this in greater detail in our ‘Retaining your
people’ section on page 5.
The importance of engagement should not be underestimated. At a recent Badenoch & Clark roundtable the key message for everyone was the importance of sharing the strategy with your people from the beginning, providing them with clear goals, making sure they understand
the why and the how and ensuring they are ready to take the journey with you.
Although media reports focus on headcount reductions our research tells a different story with three quarters of employers having recruited in the last six months. This trend
looks set to continue for the rest of 2009, with 40% of all employers telling us they have
plans in place to recruit.
What’s more it appears that job cutting within the industry has reached a plateau with plans for any headcount reductions at a low – 75% of organisations have no plans to cut staff numbers any further this year. Mainland Europe leads the way with 80% of employers not planning any reductions to headcount compared to 71% of UK employers.
So, if you are in the market to find some great people then now is a good time to hire – over 80% tell us it’s a good time to recruit, that the talent pool is at least as good if not stronger than Attraction in the current climate it has been. And it’s accounting & finance (56%), banking operations (44%) and compliance (41%) professionals that will
be most in demand. Three quarters of employers have recruited in the last six months.
Retaining your people :
Industry professionals, although concerned about their futures, won’t be seeking alternative employment in the short-term. However, employers cannot afford to
mistake this for loyalty. It’s simply that the professionals are not moving as they
perceive there is nowhere to go. This won’t always be the case – when the markets recover they will vote with their feet. And with three quarters (77%) of those professionals
surveyed telling us they are concerned about their future, organisations need to sit up
and take action as there is a risk of a banking & financial services brain drain. In some
areas this exodus is already starting to happen with a movement from UK into mainland European markets evident. And the recent UK tax announcements certainly won’t help.
Now more than ever it’s essential that employers focus on implementing the techniques that will work to engage, motivate and ultimately retain your people – particularly the valued talent you worked so hard to get on board in the first place. When we asked employers what they were doing to motivate their people in the current climate two-thirds told us they were
not doing anything specific. The situation in mainland Europe is slightly better with just
over half of employers putting measures in place to keep their people motivated
compared to just over a third in the UK.
Across the UK and mainland Europe there are pockets of positive approaches being taken including flexible working hours and location ( 5%), training (26%) and unpaid leave (6%). And with over half (54%) of employees telling us that they are prepared to give up a benefit to help their organisation survive the downturn employers should really take this as a great opportunity and look to motivate them in other ways before they become disengaged. With career planning taking on even greater importance for professionals one sure fire way
of working towards retaining your people is to support them with training and development.
Although a quarter of employers are offering training as a motivational tool there is an additional 25% cutting back on training in an effort to save company money. These employers should take note and focus their cost cutting on areas of less impact such as flexible working hours, location and unpaid leave. Although career plans could mean an external move,
if your people see that you are supporting them in their careers, believe they have the required competencies to progress in their careers and that there are opportunities inhouse
then they may be less inclined to look elsewhere for their next role.
The message is clear – employers must focus energies on retaining their top talent – if they are to be in a position of strength when the climate recovers they need their strongest people with them. So, plan now to avoid knee jerk reactions and the potential ticking time bomb. The exodus is already starting to happen with a movement from UK into mainland European markets evident.
Employees – Career concerns
23.5% are confident in their career prospects and are looking to stay with their employer for the rest of their career (or at least 5+years).
26.0% are concerned they may be made redundant.
24.9% will stay in their current role until there is an upturn, but will then look for a new opportunity within the industry.
13.3% are concerned and would like to leave their role as soon as possible.
12.3% are considering moving outside the industry and taking a different career path.
23% are confident
77% have concerns
Employees were asked: How do you think the current climate will affect your career? Results cover the UK, Germany, Luxembourg and The Netherlands. Respondents were invited to select one option. All figures are rounded to one decimal place.
Productivity :
As a result of headcount reductions over the past year employers are loading their employees’ in-trays with more responsibilities and a wider client base, resulting in more man hours being invested. Almost half (47%) are working longer hours and of those that are working longer hours a whopping three quarters (77%) are now putting in over 50 hours per week at the office – a huge increase on the 17% in 2007 and the 26% that we reported in
autumn 2008. This, together with the lack of efforts to maintain motivation, is causing
a real pressure point – organisations are managing for today and the workers are
simply biding time. Employees tell us they are comfortable with these longer hours, that they go with the territory. However, when the market improves and there is more choice no doubt workers will look elsewhere. At this point we may see organisations undertake recruitment drives which will result in more staff and therefore less hours and pressure for everyone.
However, employers need to be mindful that there will be a lag in getting talent in the door and up-skilled and many of your valued people may have been lost to the competition.
And with the pressure on employers to further reduce costs wherever possible they are looking to benefits as a way of doing this. This unhealthy combination of longer hours and less rewards is a recipe for disaster for increased pressure and less commitment. Three quarters are now putting in over 50 hours per week at the office.
Salary trends :
With organisations continuously looking for ways to reduce costs basic salaries/ rates are suffering. Almost a fifth (17%) of professionals have had or expect to take a pay cut in order to remain in work and help their employer in the downturn.
For the moment permanent staff remain largely unaffected with the majority (92%) of cuts impacting temporary and contract staff. On a positive note some employers (6%) are taking a more long-term view and are improving salary rates in an effort to motivate their people.
Comparing the UK and the mainland European markets the difference is quite significant with 4% of UK-based workers reporting a cut compared to 6% only for their mainland European counterparts.
Bonus trends :
The implication on bonuses is strong with almost half of pay outs that were once deemed standard, being stopped or at least capped for 2009. And it’s not expected the picture will get any brighter – employers tell us radical changes to bonus structures including better share options and more deferred cash will be unveiled over the next twelve months. Amidst all of this negativity 15% of employers have told us they are reviewing bonus packages in an effort to reward and motivate their people. With employers still considering how to structure these pay outs almost three quarters of employees have not been informed of their bonus structures for 2009. However, employers beware. As we previously addressed communication is key – with the majority (75%) of workers happy to accept a trade off until the markets recover it may simply be a matter of keeping your people informed of plans and progress even if an ultimate decision has not yet been made.
Voir aussi : Badenoch & Clark
