The financial industry is one of the largest industries. It consists of several sectors, including the bank, investment firms, insurance firms, and property companies that see the commercial and retail needs of individuals. Their indirect impact on the economy is too vital to set aside. Here are some HR challenges in financial services.
In the last few years every industry has experienced cutting-edge change. This has forced everyone to adapt to new realities. The Banking services industry fell into a bad cycle and had to make changes too. First was working remotely alongside the increase in risks, uncertainties, and more workload for employees.
The ever-evolving world of digital transformation touches every sector. Additionally, this shows that the role of Human Resourcing in the financial industry cannot be overemphasized. Human resourcing personnel must realize that improving operational effectiveness and customer experience is a continuous work to deliver their quota. As such, HR outsourcing financial services needs technological expertise as much as they need leaders to manage change effectively.
To understand this change, adjusting business and talent strategies is a must. However, it is also important to know that certain challenges come with the change. Let’s look at six HR challenges in financial services right now.
1. Skill Gap And Talent Upgrade
The skill gap in the financial services sector is wide and continuously so. A survey shows that 70% of financial services CEOs regard the availability of important skills as a threat to their business growth.
This is driven by the impact that digital technology has on the emergence of new finance roles to a reasonable extent. As new technology continues to change how the financial industry works, staff and employees need to upgrade their skills or learn new skills.
Although this could be daunting, especially as many financial services struggle to bring their workers up to speed, you must bridge the gap. The need to invest in data visualization, cybersecurity training, and artificial intelligence could mean more organization costs. However, a tech-savvy HR team is the best image for the organization.
Furthermore, talent upgrade reduces manual tasks. Besides, HR can establish a sustainable talent system that focuses on developing skilled employees. That way, you close the current skill gaps. Also, HR may consider training employees for the company’s future needs.
2. Fostering A Learning Culture
Be a top bank with a rich learning and development culture can make employees productive. It also keeps them engaged while building the intellectual capital of the company. However, this is one of the top HR challenges in financial services.
According to a survey on both employees and executives, most financial services companies have failed to build a continuous learning culture. As a result, it makes development opportunities and training programs unappealing to workers.
As such, employees criticize executives and their bosses so that both feedback and development opportunities are lost. Finance workers, when compared to employees in other industries, are less likely to admit or affirm that their company retains, updates, and shares institutional knowledge. They are much less likely to say that their company can provide training.
While this shows that there is a gap in capabilities, it shows that there is a greater interest in learning amongst workers. This is both a huge opportunity for the company and one they should not miss.
For example, research shows that 47% of insurance workers are more likely to embrace and value learning opportunities. This percentage agrees that supplemental training programs are beneficial compared with about 44% in other industries.
To foster a richer learning culture amongst its employees, finance firms should consider the need for soft skills and a willingness to offer training to the effect. Day-to-day interaction with customers shows that an employee should put the company at an advantage in their skills, communication, and creativity.
3. Attracting And Retaining Top Talent
Attracting the right talent takes time, work, and effort on HR banking services. If you develop a bad reputation it is a challenge because you can only employ people primarily by their skills and possibly a stellar reference. Understanding a person’s attitude and character takes professional discernment, time, and careful observation. You wan to avoid trouble in the hiring process. You do not need to constantly reprimand and punish banking employees as you will get a bad reputation and have trouble hiring good people.
Retaining talented employees is possibly one of the most difficult challenges. People decide to move on for several reasons, and persuading them against such decisions could be difficult, especially when they have made up their minds.
Unlike their parents and grandparents, millennials are fickle on loyalty. As a result, they tend to see longevity as stagnation and not a positive career trend. A PwC report shows that only 10% of millennials are willing to stay with their employers on a long-term basis. This means that about 90% of the millennials don’t plan to stay in your company for too long. You can expect your cost-per-hire figures to increase drastically.
The average company spends about $4,129 to hire a replacement if they fail to retain an employee. Of course, this is not part of the cost of training a new employee. Therefore, financial services firms should consider using platforms (social media platforms and other professional platforms) that are more frequented by talents.
By monitoring their activities, you can decide how they interact with people. This could ultimately help you determine their skills, industry, and professional capabilities, making the screening process easier.
To Attract New Talents:
- Constantly update job requirements and organizational expectations. Depending on the skills, industry, and job level, focus your screening processes on how potential candidates fit into the organization than with the position. Using the same indices, find out how they handle feedback. That way, you can decide how they can likely achieve goals and, more importantly, how your organization’s values can align with their core values.
- Training could be a good motivation for retaining talents. It shows that you are interested in their personal development, how they spend their time, and the future. Since your company has its core values, share this with your talents and show them how their skills help the company achieve its goals. This inspires them to stay longer with you, gives them a purpose, and keeps them motivated.
- Build a strategy with tools and metrics. Setting a successful talent strategy starts from the awareness of what’s going on within the workforce. One of the vital roles that HR can play is to help determine what roles and talents will be key in the next couple of years. When companies lack the tools and metrics to measure this kind of visibility, it is quite detrimental because they cannot successfully plan for the future.
- Go mobile. According to the hiring assessment, only 7% of the firms use mobile assessment. That’s a significant gap given that mobile phones are almost indispensable for millennials especially. As an example, this generation will rather use cash apps that accept prepaid cards than carry cash.
You will need to attract, recruit, and retain millennials using their tools. Unless you learn assessment via phone, you are at risk of losing out to the competition. Assessment is not solely about finding the best talent alone but identifying new skills and the right tools to help your business.
- Deal with millennial demands. It’s not news that millennials are different from other generations. They have more interaction with technology and are difficult to motivate and even retain. Don’t forget that they are creative and intelligent too.
Since their attitude to work is quite different, their demands are equally different. They demand learning and development opportunities, so that’s exactly what you should provide.
For instance, millennials demand more flexible hours than the 9-5 or 40 hours per week tradition. Since they will be working with more flexibility, HR should consider this great news. They will be more productive and efficiently engaged.
4. Creating An Attractive Workplace Culture
According to a new workplace culture report from LinkedIn, about 86% of the millennials would consider a pay cut in a bid to work at a company whose values align with theirs. In comparison, only 9% of baby boomers will do the same. The survey shows that 70% of US professionals would not consider working at a top company if their workplace culture is not ideal.
The report also shows that about 51% of professionals are happy to work with companies that create a work-life balance. This includes enjoying benefits like access to paid time leave, parental leave, and health insurance. Most employees are hurting and struggling with their jobs since there is a direct correlation between employees’ mental state and how their companies support them.
As remote work is gradually blurring the lines between a corporate physical workspace and the home life, employers should create a culture that includes everyone. Culture matters to employees and employers alike since creating an attractive culture ensures that new hires align with the existing system. This alone will cut down on HR challenges in financial services.
How To Create An Effective Workplace Culture:
- Take an honest and deep look at how things are in the present. Talk to staff members directly or consider doing a satisfaction survey. This will create a picture of what’s working and what could be better.
- Avoid addressing the issues at once because it won’t be as effective.
- Prioritize the challenges and tackle them individually.
- Look after their health and safety. Health and safety in the workplace are not primarily about hygiene. It is more about the psychological well-being of the individuals involved. This is one of the most obvious challenges yet one of the most neglected.
As a result of high demands, stress, pressure, and burnout, it is easy for an employee’s health and well-being to deteriorate rapidly nowadays. The period of stress and pressure cannot be separated from daily work because it is a part of it but, you should work on curtailing high-stress levels.
HR personnel should watch out for larger workloads and stress levels. Also, access to an emotional intelligence professional should be available. You may also consider mindfulness training, stress relief and management training, and availability for time-off.
5. Managing Diversity With Locals In Mind
Globalization is the soul of many businesses, and it’s affecting the workplace culture gradually. The prospective customer reach is expected to go beyond the local head offices.
As a result, employees’ diversity, experiences, ideas, and perspectives are directed towards that goal. While adhering to the need for a global reach, the organization misses managing each person’s diversity on the local team. Hence, causing challenges and issues within the workforce.
HR should create a workplace that is warm, comfortable, welcoming, and free of conflict for every single employee. Cultural awareness programs could help everyone appreciate and recognize the benefits of diversity, especially in reaching a wider audience. Also, consider using team-building activities to integrate employees of different cultural backgrounds towards a common business goal.
6. Developing Leadership
To manage the modern workforce, it needs a leader that can leverage global development, diversity, and constant change. Yet, most company executives say that their companies cannot boost the said qualities—banking and insurance firms inclusive. Finance services firms have leaders who effectively manage change. However, the shortfalls are still present.
Research shows that about one-third of finance executives claim that talent in leadership positions is enough for global growth. About 46% agree that leadership leads a diverse workforce or inspires and engages employees.
These numbers paint a grim picture and call for concern. Besides, only 20% of banking employees and 17% of insurance employees say leadership is one of the most important leadership attributes to their top executives. It is clear from the numbers that executives are not doing enough towards succession and continuity.
Of course, there is the advantage of attracting talents and even the possibility of retaining them. However, HR outsourcing financial services needs to show employees commitment by developing them as future leaders.
Not all team members perform at the same level, mostly because of the team leader. However, it is easier said than done. Grooming employees for leadership will not work when present leaders keep changing jobs—a common occurrence in the millennial workforce.
One of the better ways to approach this challenge is to devise several ways to motivate leaders-in-the-making to stay. Actively investing in their growth by providing training that aligns with their career path could work. Also, fostering a culture of continuous learning could work too.
Final Thoughts on HR challenges in Financial Services
The ultimate challenge for HR professionals is the ability to predict the future. As the financial services industry evolves, new generations enter the workforce. There are several ways to address these challenges.
HR outsourcing financial services recognizes that attracting and retaining top talent is more challenging than it used to be. These and other challenges are creating new perspectives and new skills.
The importance of training new and existing staff is to meet present and future demands. Your values as financial service providers should go beyond only monetary benefits.
Providing professional development workshops, team-building events, and employee wellness programs can help your organization stand out. Implementing new strategies via social media, employee referral programs, and diversity initiatives also work.
Corban OneSource is a Mid-Market Human Resource Outsourcer or HRO for companies of 75 to 6,000 employees. Are you looking to outsource the core HR functions of Payroll, Benefits Administration and HR Support? Find out more here.