By Mark Jenkins, Chief Finance Officer, MHR
The Covid-19 pandemic has left a lasting mark on the UK financial sector. While a gradual recovery has started to take place, the economy is now beset by political uncertainty and rising inflation. With this backdrop emerging, the widening skills gap, the tendency for hybrid working strategies and a post-pandemic focus on employee experiences need to be on the radar for organisations. Businesses from regionally based insurers right up to City investment banks need to bring together workforce and financial planning while becoming more data-driven. In this evolving sector, here are four related trends that are likely to continue shaping the financial industry this year.
Companies are looking internally to fill vacancies
Skills shortages have made a significant impact on the financial sector. Seasonally-adjusted Office for National Statistics figures show there were 45,000 vacancies in finance and insurance at the end of last year – a 127% year-on-year increase.
With challenges in recruiting specialists externally, more businesses are now pivoting towards realising the full value of employees already employed at the company. There’s a key focus on developing the skills of current employees through enhanced training and mapping talent more effectively across the organisation to improve internal recruitment.
In organisations that are planning ahead, HR is playing a key role in this process by leveraging technology to gauge the skills, experience and qualifications among the current crop of employees, with learning management programs and better-defined career pathways then being devised. Matching potential internal candidates for probable vacancies or new roles is becoming a necessity unless organisations wish to enter a downward spiral of salary competition that only delivers short-term fixes. As well as being quicker, recruiting from within is also much cheaper than using specialist recruiters.
Looking at hybrid working through a different lens
Hybrid working remains a key trend. Opinions are divided, often strongly, about the value of working from home, but at one point last summer 80% of financial firms planned to put hybrid into practice. However, the continuation of hybrid working also poses managerial problems.
The onus is on HR to ensure that managers have the right training in place to enable remote workforces to be effectively managed. Managers must engage meaningfully with employees and foster a team culture using technology to share ideas that improve performance or productivity. Two-way communication should be genuine, ensuring employees and those leading them understand one another and employees know where their work fits into a business’s longer-term goals.
Supervision needs to be both transparent and firm in the financial sector due to the requirement to meet regulatory compliance, but not so that it veers into surveillance territory that may prove demoralising for employees. Firms using hybrid working may also need to revise their plans so as to meet FCA expectations.
A focus on developing employee experience and internal culture
The employee experience (EX) comprises the third trend in the sector. While trying to win the skills shortage battle, financial organisations are being put under pressure to prioritise employee experience not just to attract and retain talent, but to ensure operational continuity and maintain business identity. Post-pandemic workforces are more focused on work-life balance and wellbeing, and employers have to ensure they meet changed EX expectations as well as competing on salary.
With skills requirements constantly changing, it’s little surprise that many employees desire access to effective training and development programs. As well as meeting such requirements, established institutions also have to create less overtly hierarchical cultures and offer flexible working opportunities to compete for data and IT talent with fintechs and challenger banks. Employees need to feel they can influence internal culture for the better. In large or dispersed workforces, this is where HR technology platforms become necessary so all employees have a voice.
It’s crucial also that businesses have greater visibility when it comes to their people data. This, however, requires rapid adoption of data modelling and engagement tools to identify key patterns in employee behaviour and feedback. Organisations that fail to act on employee insights typically see productivity levels plummet and their organisational culture come under threat. However, those that embrace technology and intelligent workforce solutions can make better, more informed business decisions, improving the employee experience.
Strategic planning with the combined expertise of HR and the CFO
While the financial sector remains in recovery mode, HR will need to place talent management higher up on the priority list and look to create greater commercial awareness. The compartmentalised approach that was once the traditional strategy is being replaced thanks to technology, bringing HR and finance leaders together. This trend has not only allowed benefits from an internal networking perspective, but has also encouraged empathy for the other departments. Employees then quickly learn how to mould inter-departmental inputs and outputs to both shape shared goals and improve efficiency.
As change-agents, HR and finance now need to play a bigger collective role. HR leaders need to be able to get under the skin of finance and also leverage analytics to ensure that predictive information can be used in organisational plans. Finance chiefs themselves are incorporating workforce planning analytics outputs into wider strategic plans, with these analytics able to highlight strong or weak areas of the business, highlighting where support should be offered to teams or where current successes should be expanded on.
In the digital era, CFOs are increasingly using a combination of spreadsheets and financial planning analytics with automated data collection to build scenarios with near real-time information. The fallout of the pandemic is continuing to shape the strategy of the CFO, with analytics able to improve decision-making and foster greater agility and profitability.
With the effects of the pandemic lingering and other global issues impacting 2022, it was always going to be a disruptive year for organisations. However, by taking these four themes into account, businesses will be in a much stronger position in future.
