The financial industry has always been renowned for its fast-paced, high-stakes working environments, and in recent years with the emergence of new technologies and changing customer expectations, the pressure on staff has only increased.
HR professionals supporting financial organizations therefore face a unique set of challenges which require a strategic, agile approach to managing talent, cultivating leadership, and fostering inclusivity.
This article explores the top HR challenges facing the finance industry and the strategies needed to tackle them.
1. Retention problems
With its long hours, tight deadlines, and high performance expectations, retention in the finance industry is an ongoing struggle, with many firms facing huge employee turnover.
When employees leave, the impact extends far beyond a lack of capacity to a loss of valuable institutional knowledge, operational continuity, and recruitment funds.
So how can financial services firms retain staff?
First and foremost, HR’s focus must be on building a positive workplace culture, creating pathways for career advancement, and recognizing achievements.
Invest in their careers
Employees need to see a clear path for growth within the company. By offering mentorship programs, training initiatives, and leadership opportunities companies can send a clear message to employees that they’re valued and worth investing in.
Celebrate their success
Recognizing hard work and achievements is vital to morale and can help foster healthy competition that drives performance improvements. So try introducing awards schemes and enhanced performance-linked bonuses to help make sure staff get the recognition they deserve.
Recognize their real lives
Offering flexible work arrangements, wellness programs, and mental health support systems can help staff better balance their work and home lives. With greater accommodation of the other challenges life brings, HR professionals can help staff reduce their risk of burnout, which is a significant cause of turnover in high-stress financial roles.
Support performance
By installing a culture of regular 1:1s and formal appraisals HR can create junctures for managers to assess employees’ performance against their targets and quickly handle small issues informally. This rigor not only streamlines communications but also provides an invaluable picture of preceding support if the organization needs to opt for a performance improvement plan for a member of staff.
2. Poor inclusivity
Despite efforts to promote diversity and inclusion the finance industry continues to struggle with representation, especially at executive and leadership levels. But increasingly, clients and stakeholders are demanding change, seeking to work with companies who ensure a more inclusive culture.
Responding to this, it is easy for organizations to fall into the trap of taking part in national and international diversity days and campaigns, but fail to do the more difficult work. After all, the real answer to diversity challenges is not putting a banner on social media, or a celebratory message on your website, but genuinely engaging with those who are underrepresented and understanding what they need to feel comfortable at work.
Truly tackling diversity and inclusivity means creating an environment where every employee feels valued, heard, and has equal opportunities for advancement, as well as ensuring that potential employees from all groups feel welcome to join the company in the first place.
So how can financial services firms be more inclusive?
Bias-free recruitment
It can feel daunting for companies to tackle the subject of unconscious bias in their recruitment, but doing so is essential to eliminating unfair disadvantages experienced by some candidates. There are a variety of bias related interventions that HR can help with, and the good news is they can often be straightforward.
Implementing blind recruitment techniques such as removing names, addresses and ages from applications can make a big difference by helping limit opportunity for age, gender or racial bias in the hiring process. Additionally, it is worth exploring use of artificial intelligence tools that eliminate biased language in job descriptions to help more potential candidates feel welcome to apply.
Employee resource groups and networks
Establishing staff networks of employees who share particular characteristics, can help provide peer support and clear channels to help them access networking opportunities and mentorship.
Ensuring representation on organizational boards is essential as it not only sends a clear message that network members are recognized and taken seriously, but also helps to ensure that they can effectively raise and tackle issues at a high level.
3. Lack of leaders
In the highly regulated and rapidly evolving financial sector, leadership plays a crucial role in steering companies through uncertain territories.
The challenging economic times that unfolded following the 2008 financial crisis have seen the loss of many experienced people from the industry and as a result there is a lack of mid to upper level professionals in the market today.
It is therefore all the more important that HR professionals support their companies to develop a new generation of leaders who go beyond just possessing excellent financial acumen. The future leaders of the finance industry must also have a deep understanding of regulations, trends and digital innovations plus be emotionally intelligent and resilient enough to manage teams in a volatile environment.
So what are the key strategies for developing future leaders?
Mentorship programs
Pairing high potential employees with seasoned leaders can help them learn from the best, as well as providing a listening ear and confidante as they navigate the unique challenges of your business. This invaluable tactic enables your most senior professionals to share experiences and institutional knowledge not found in formal training, helping to accelerate development while limiting risk associated with tackling high level challenges for the first time.
Succession planning
An important part of ensuring enough high quality leaders for the future of any company, is creating a culture where those who deliver against their objectives and demonstrate potential are promoted.
By baking this promotional cycle into appraisals and reviews HR can foster open dialogue about development that will help the organization to identify the next generation of leaders and prepare for any gaps that may arise as early as possible.
4. Skills and knowledge gaps
The financial services industry now comprises more regulatory complexity and technology than ever before.
Every aspect of the financial services industry has digitized, from customer interactions to data management, and an understanding of automation, artificial intelligence, and blockchain is fast becoming essential for success.
But while these technologies have many benefits, they also bring additional burdens. All staff must be cybersecurity-aware to ensure customers’ sensitive information remains protected, and speedy availability of IT support has become more important than ever.
Increasingly leaders are looking to HR for help. The challenge is two-fold; finding individuals with the skills needed to navigate the new world of financial services and upskilling existing employees to ensure they can meet the demands that their roles have evolved to present.
So how can you help ensure staff have the skills they need?
Targeted recruitment
By developing strong partnerships with universities and professional organizations that specialize in financial technology, regulation and compliance, HR professionals can create key channels through which to source top talent with the very latest industry knowledge.
Upskilling programs and resources
Although it’s vital to ensure that programs of regular formal training are in place, HR should also consider other schemes. Staff may also benefit from membership of professional bodies, networks and fintech partnerships as these can be invaluable mechanisms through which they can stay abreast of the very latest industry developments and innovations.
Cross-functional working
It’s easy to overlook, but when there is strong collaboration between compliance, legal, and operational departments, important skills and knowledge will be shared by osmosis. HR can help with this not just by ensuring that departments understand each other’s roles and have key touch points throughout their work, but also by ensuring that communications tools and systems support quick and easy dialogue between departments.
The power of HR
HR in the finance industry operates at the intersection of people management and regulatory compliance, making it uniquely complex. But being positioned here is an asset, which allows a unique overview of the challenges facing the organization, and the ability to introduce changes that can alleviate them.
By investing in employee development, fostering a diverse and inclusive environment, and staying ahead of technological trends, financial services firms can build a more resilient, innovative, and engaged workforce. As a result, HR can play a vital role, not just in solving immediate problems, but also in positioning the organization for long-term success.
