Change for growth 2011 - Why banking and finance must change its approach to employee engagement

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Change for growth
Why the banking & financial services
sector needs to adapt its approach
to employee engagement
Banking & Financial Services workplace study 2011

www.badenochandclark.com

Badenoch & Clark / Banking & Financial Services workplace study 2011 Page 2 0f 9

Change for growth
Banking & Financial Services workplace study 2011

Foreword
On the surface, it appears that the banking & financial services The landscape also continues to change at a fast pace. Many
sector is fully on the road to recovery – confidence is growing, organisations have gone through, and continue to go through,
organisations are expanding into new areas and job volumes large-scale transformational programmes, and the skills and
are still continuing to rise. Yet dig deeper, and confidence is attributes that a professional needs to bring to the table is
still tempered by caution. Employees remain disengaged and changing. The continual introduction of new legislation and
concerned for their future, still haunted by the redundancies regulations is also creating new demands within the sector,
and job insecurity of the past few years. and is bringing new pressures with it.

It’s been a difficult time for senior managers. Issues to
address have bordered on crisis management and they’ve
taken decisive action. Now, however, is time to turn attention
back to their people.

To push ahead with growth plans and retain and attract talent,
management needs to ensure the message of confidence gets
through; they need to reward loyalty, and demonstrate that Kay Senior
things are more positive and secure. Operations Director, Banking & Financial Services

At a glance
• The sector continues to recover from the • Employees’ motivations are changing but • Organisations need to focus their
recession; most employers are looking to employers have been slow to catch on – attentions on employee engagement
increase their headcount this year, either money is no longer a key motivator with – a significant number of employees are
through growth in existing or new areas quality of work and career progression not engaged and are looking to quality
of business favoured over bonus levels. Work-life of management and communication
balance is also increasing in importance. from leadership as the key factor in
• Recruitment remains a key challenge addressing this.
for employers – almost half believe it’s • The ideal attributes and skillset of
harder to attract and retain talent now a financial services professional is • Offshoring is the most common strategy
than 12 months ago. changing – employers are placing even being undertaken by organisations keen
more emphasis on strong communication on driving cost-efficiencies and process
• The recession has left its legacy – skills and analytical skills compared efficiency; however organisations need
employees remain concerned about to last year. Understanding financial to ensure that the necessary controls
redundancies, and are not aware of services legislation is also being are in place in order to create an
increasing job opportunities while increasingly valued, alongside people effective strategy.
negative public perception has made the management skills.
sector a less attractive place to work.



The legacy of the recession
The recession saw many banking and financial services organisations drastically cut back
on headcount, and certain areas of business reduce heavily in size and profitability.
In a bid to recover for lost time and missed revenues, the sector is now actively pushing
ahead with growth and recovery.

Almost two-thirds (63%) of employers are Mysalarychecker.com reflects this increase
expecting to increase their headcount in in recruitment activity. An independent It’s clear from the
the next 12 months, and in Scotland this salary data information website, provided
rises to 71.4%. in conjunction with Badenoch & Clark, it
employees and jobseekers
shows that banking & financial services that we spoke to that
There are a number of reasons for this contract vacancies are growing faster than
increase: while growth in existing any other sector, and on the permanent the recession has had
areas is the primary driver, fast making
up for recession losses, (accounting
side, it has one of the highest number of
vacancies compared to other sectors, and
a significant long-
for almost two-fifths of responses the second highest growth (data from May 2011). term impact, and that
across the UK at 38.6%, and 54.3% in
Scotland specifically), almost one-fifth Public perception makes an impact professionals are still
of employers (19.6%) are identifying While employers are seemingly upbeat suffering.
new areas of business. While some of in their outlook, employees seem far less
the larger firms will have areas that are so. When asked whether the turbulence
expanding, and others that are retracting, of recent years has made the sector a less
it’s fair to say that most organisations attractive place to work, an alarming 34.2% the presence of part government-owned
are keen to sustain a flexible workforce responded “Yes”. Over a third (36.4%) banks in Scotland, the results of the
so that they can react quickly to market gave the public perception of the industry Scottish market are even more pronounced,
trends. This is giving rise to staff being as the main reason for this, however wider where over three-fifths (62.1%) saw public
seconded onto project roles. consequences of the recession have also perception of the industry as the key factor
played their part – higher workloads in making it a less attractive place to work.
Another 15.7% see their restructuring (34.6%), excessive regulation (28.1%) and
plans as a reason for increasing bonus level restrictions (25.5%) were all It’s clear from the employees and
headcount. Ironically, while increased seen as contributory factors. Almost a fifth jobseekers that we spoke to that the
regulation is regarded by over a quarter (18.2%) even went so far as to suggest recession has had a significant long-term
of employees (28.1%) as a reason to make that London is no longer seen as being as impact, and that professionals are still
working in the sector less attractive, 15% competitive on the global market. Perhaps suffering. A significant number pointed to
of employers have seen it as a reason to due to the high profile attention around the ongoing issues around redundancy, and
increase headcount.

Employers – What is your primary reason for increasing headcount in the next 12 months?

Opportunity for growth in existing areas 38.6%

Opportunity to expand new areas of business 19.6%

Restructuring 15.7%

Increased regulation 15.0%

Transformation projects 11.1%

Employers were asked: What is your primary reason for increasing headcount in the next 12 months? Respondents were invited to select one that applied. All figures are rounded to one decimal place.



that a continuing atmosphere of uncertainty employees do not feel like they can trust into the future. Increased regulation was
and job insecurity prevails. Professionals are their employers any longer. what employers overwhelmingly see as
also not under the impression that there are having the biggest impact on the sector
plenty of job opportunities out there, despite In some cases, it may be that the drive to in the coming 12 months (49.8%). The
employers telling us that there are; ‘fewer ensure major banking institutions return pressure to implement and deliver on major
job opportunities’ came up as the greatest to private hands at the earliest possible pieces of regulation such as TCF (Treating
challenger for employees, both in the last juncture, and the motivations behind and Customers Fairly), Solvency II and the RDR
12 months (26.5%), and in the next 12 implications of such moves, have not been (Retail Distribution Review) is causing
months (39.1%). communicated in a positive way to the very concern amongst employers. Such pieces
people responsible for carrying out the of regulation have an impact on resources,
It seems that while employers are continuing necessary change. whether creating demand for more talent, or
full steam ahead, they seem to have to upskill existing employees.
forgotten to communicate this renewed What next for the sector?
confidence and ensuing job opportunities Despite anticipated growth and recovery, the
to their employees – or worse still, changes of recent years look set to continue

The challenge to attract
While most employers are planning to see this as a factor in their ability to attract.
increase their headcount in the next 12 This suggests that employers are fully Organisations need to pay
months, almost half (48.1%) believe it’s aware of the destabilising impact such
harder to attract talent now than 12 months projects can have on their staff, affecting attention to their employer
ago. Competitor growth and the simple fact
that so many organisations are looking for
employees’ perspectives on their long-term
security and career expectations. However,
brand, since the war for
the same people, seems to be a common it must also be recognised that this is talent doesn’t look set to
frustration. The increase in regulation, such an ongoing factor within the banking &
as Solvency II, is also making it harder to financial services sector, and is unlikely to dissipate any time soon.
find talent with the necessary skills. change any time soon.

The recession also continues to cast its The good news for employers is that there their strengths and their values, and what
shadow. Employers are well aware of are plenty of professionals willing to they can offer that’s different to other
the damage that was caused during the consider a new opportunity. Nearly three- organisations.
recession with almost a quarter (24%) quarters of professionals we surveyed
feeling that public perception of the (71%), are either looking for a job now or will Money is not the only motivator
industry is one of the three things that be in the next six months. Employers need to To ensure a successful recruitment strategy,
most affect their ability to attract talent. A harness this opportunity while they can. it’s essential that employers understand
few employers suggested negative public the key motivations for candidates. The
perception was likely to have a direct impact In particular, organisations need to remuneration package should be one part
on graduate intake. Since the recession, pay attention to their employer brand, only of an attraction strategy. Base salaries
many organisations have also gone particularly since the war for talent doesn’t and bonus levels are still seen as key
through, or are going through, significant look set to dissipate any time soon. motivators by clients, with the former as the
restructuring and transformation projects, Employers need to actively demonstrate key factor in attracting talent (highlighted
and almost a quarter (23.6%) of employers to both potential and current employees by 69.4% of employers), and bonuses

Employers – What top 3 things most affect your ability Candidates – What are your top 3 motivations when
to attract talent? looking for a new role?

Level of base salary 69.4%
52.0% Level of base salary 63.5%

Quality of work 35.8% Quality of work 58.7%

Bonus levels 34.9% Career progression 51.6%

Employers were asked: What top 3 things most affect your ability to attract talent? Respondents Candidates were asked: What are your top 3 motivations when looking for a new role?
were invited to select all that applied. All figures are rounded to one decimal place. Respondents were invited to select all that applied. All figures are rounded to one
decimal place.



coming in as the third most important The results act as a clear message to Interestingly employers in Scotland seem
factor at 34.9%. Yet there are a number employers – to attract and retain the to have understood jobseekers’ motivations
of other factors that influence jobseekers best, you must stand out in the market much better than their peers south of the
when deciding on a role. Quality of work with examples of good quality work and border. Level of base salary and bonus come
was highly regarded by jobseekers, with a strong brand. But more than this, you much further down the list of perceived
almost three-fifths (58.7%) of the vote, and must be able to provide clear career factors affecting Scottish employers’ ability
noticeably career progression at over 50% progression opportunities, and a to attract. Instead, their top 3 points were
of the vote (51.6%).Other key factors worth strong management team that develops quality of work (47.8%), communication from
noting were perception of employer brand its employees and makes them leadership (45.7%) and quality of manager
(26.1%) and strong management/good feel valued. (32.6%). London employers may do well to
line manager (26.1%). look to their Scottish counterparts when
they next go out to market.

The changing face of the worker
With the public and media keen to criticise when it comes to looking for a new role.
the banking & financial services sector for In the past, professionals in the sector The demand for a greater
some time now, for many professionals were accustomed to working very long
working in the sector, the last year has hours, appeased by the large salaries and work-life balance reflects a
bonuses that came with the job. Since this
been a rough ride, and the impact of the
recession and ensuing negative public is no longer the case for many of them,
wider trend where younger
attention has left a workforce battered and they are not to be duly rewarded, then generations are demanding
and bruised. organisations may not be able to expect as
much from their employees in the future. a better balance.
There is a common misperception that
‘bankers’ and those who work in financial This demand for a greater work-life balance
services are given unjustifiably large is being seen in businesses across the
salaries and bonuses; however we know UK, and reflects a wider trend where
this is, of course, a far cry from reality younger generations are demanding a
for the vast majority in the sector, and better balance. While financial services Candidates – If you have seen your base
ignores the complexity of the situation. have perhaps been behind the curve in salary or bonus reduce, has this made
The perception of the press and public addressing this change in motivations, our you want to leave?
that salary and bonus levels were grossly research shows that it is fast catching up,
inflated led to many organisations re- and to attract the new generation coming
No
48.1% No, money is not
my only motivation
evaluating these levels, and as such, they through, it is worth organisations thinking
came down last year – and in most cases about their offering to attract new talent. 71%
have not gone up significantly this year, if
at all. Two-thirds of professionals (66.2%) A skillset in demand
have seen their bonus stay the same this The last year has also seen a change
year, and 60.5% have seen their salary in the skills and attributes demanded
stay the same or only go up by a of professionals working in the sector. 23.4% No, it crosses the
maximum of 5%. Communication skills remain the key skill whole of the banking &
to have, and are even more valued than financial services sector,
it’s a fact of life now
Of those that did see their salary and/ this time last year (moving from 57.3%
or bonus reduce last year, it’s interesting to 68.8%), as are analytical skills (at
to report that for most, there is a general 45.6%, compared to 37.1% last year). Most
acceptance of this change in events – significantly, change management skills

Yes
almost half (48.1%) said that money is not are less in demand than last year at just 20.0% Yes, I am thinking
their only motivation (which increases to over a quarter (27.8%). This suggests that of leaving
70.6% for those working in the Scottish
market), and an additional quarter (23.4%)
other skills are perhaps more in demand to
manage the change that is still going ahead,
29%
said that it’s a fact of life now in the sector. but it may also demonstrate that, after 1, 2
8.4% Yes, I have already
or 3 years into major change programmes, left a role because of
Perhaps the upshot of this is that there that the sector has upskilled in this area. receiving less money
will be a greater expectation of creating a
reasonable work-life balance. Over a third Conversely, people management has gone Candidates were asked: If you have seen your base
salary or bonus reduce, has this made you want to leave?
(35.8%) of professionals saw work-life up the value chain since last year (from Respondents were invited to one that applied. All figures
are rounded to one decimal place.
balance as one of their Top 3 motivations 12.4% to 26.6%) –organisations are well



aware of the damage that has been caused ago. Commercial awareness also remains
to staff morale and engagement and realise key, being fourth in importance at almost Communication skills
that this needs to be addressed through 40% (38.8%).
strong management.
remain the key skill to
Professionals themselves are largely in have, and are even more
Unsurprisingly, the approach to managing agreement with these skills, however
risk remains a vital attribute when recruiting they also highlighted the importance of valued than this time
new staff. Likewise the understanding of
financial services legislation is also on the
relationship and client management, which
was echoed by employers. In addition, there
last year (moving from
increase in terms of importance, accounting were many comments around attention to 57.3% to 68.8%).
for over a quarter of the vote this year detail and teamwork, being a self-starter,
(25.7%), but less than a fifth (18%) a year and simple hard graft.

Employers in 2011 – What are the main skills and attributes Employers in 2010 – What are the main skills and
you look for when recruiting new staff? attributes you look for when recruiting new staff?

Strong Communication skills 68.8%
52.0% Strong Communication skills 56.3% 52.0%

Analytical skills 45.6% Change management skills 40.2%

Approach to managing risk 41.4% Approach to managing risk 35.6%

Commercial awareness 38.8% Analytical skills 35.6%

Project related skills 32.5% Project related skills 28.7%

Employers were asked: What are the main skills and attributes you look for when recruiting Employers were asked: What are the main skills and attributes you look for when recruiting
new staff? Respondents were invited to select all that applied. All figures are rounded to one new staff? Respondents were invited to select all that applied. All figures are rounded to one
decimal place. decimal place.

A workforce on the move
Almost half (47.5%) of employers think would suspect. Instead over half are very
it is harder to retain talent now than 12 much motivated by the quality of work If employers want to be sure
months ago. The level of base salary on on offer, 58.7%, and career progression
offer is their major concern, with 65.3% opportunities, 51.6%. While employers of retaining talent, they
seeing this as one of the Top 3 reasons clearly recognise the importance of offering
for not being able to retain talent. With career progression, (putting this in second
need to look carefully at
the emphasis firmly on monetary value, position with 40.2% as most affecting their achieving the right balance
employers also place much importance ability to retain), they have not fully got the
on bonus levels, with almost two-fifths significance of it, and the contrast in what between remuneration
(39.7%) regarding this as one of the Top 3
factors in retaining talent. A number argued
employers and employees are ranking as
the key issues highlights a potential future
and other factors.
that by regulating the industry on bonus concern. If employers want to be sure of
structures, it affected their ability to retain, retaining talent, they need to look carefully
particularly since there are organisations at achieving the right balance between Over half (52.4%) value work-life balance,
who are not regulated by UK guidelines or remuneration and other factors. In this while less than a quarter (26.2%) are
public pressure, and can therefore be more way, bonus levels can be relied upon less, motivated by career progression. This last
competitive with what they offer. and balanced more against creating career figure may be a reflection of the smaller
ladders and exploring career progression Scottish market, where career progression
Changing motivations opportunities, or even sideways moves, opportunities are more limited than in
Interestingly, bonus levels barely feature as with their staff. London. This should be warmly welcomed
a motivator for jobseekers, with less than by employers in Scotland as they believe
10% regarding this as one of their Top 3 What is worth noting is the marked it’s the number one reason (55.3%) for
motivators. While the level of base salary difference between Scottish employees and what affects retention. To effectively
remains key (with almost two-thirds, 63.5%, those in London. Scottish employees by recruit and retain talent in the Scottish
seeing this as a Top 3 motivator), banking & contrast, overridingly value quality of work financial services market, it’s essential
financial services professionals are not half with over three-quarters (77.4%) having this that employers take a different tack when
as motivated by money as their employers is as one of their Top 3 motivators. positioning their offering.



Candidates – How engaged do you feel with your Candidates – What are your top 3 things that impact upon
current organisation? your levels of morale and engagement?

Very engaged 21.6% Quality of work 74.9%

Quite engaged 46.8% Quality of manager 64.9%

Not very engaged 22.8% Level of base salary 54.5%

Not at all engaged 8.8%

Candidates were asked: How engaged do you feel with your current organisation? Respondents Candidates were asked: What are your top 3 things that impact upon your levels of morale and
were invited to select all that applied. All figures are rounded to one decimal place. engagement? Respondents were invited to select all that applied. All figures are rounded to
one decimal place.

To realise the potential retention timebomb, projects have also left many employees with 44.4% believing communication
it is worth highlighting that less than feeling disengaged. For those employers from leadership is key. With this in mind,
10% (9.7%) of professionals are happy to who have been through significant change, organisations need to look carefully
remain in their role for the foreseeable it has meant that any long-term planning at how they approach their internal
future. While the sector has never been one has fallen by the wayside – which may communications and whether there is a
where employees remain for a long time in explain why career progression is not a sufficient frequency of communication from
one organisation, almost 80% (79.4%) of priority. As we stand, less than a quarter the leadership, and the exact messages
professionals anticipate moving jobs within (21.6%) of employees feel very engaged that are going out. At the same time,
the next year, and in Scotland this is even with their organisation, while almost a management needs to change its focus.
more dramatic with 85.8% wanting to move. third (31.6%) feel not at all or not very Much of the last few years has been taken
This has come down since last year (87.2%), engaged. This is a significant number and up with crisis management and handling
but these are significant numbers which demonstrates the need for organisations redundancies, and with no direct action to
employers need to address. If organisations to refocus their attentions back on their remove this atmosphere, employees are
are intent on increasing their headcounts staff and kick start a proactive engagement still feeling the ill effects. Yet with
in the next 12 months, factors such as strategy. While some organisations are organisations now looking to boost
career progression will become even more focusing on internal mobility programmes headcount, now is the time for managers
important. Otherwise, organisations will be and engagement initiatives, too many to go back to the core basics of
in real danger of seeing their investment appear not to be doing enough, or not management, and start instilling confidence
in new staff lost when talented employees enough of the right things. back into their teams. In doing so, you will
can’t see their long-term future in the remove the misperception that employees
organisation and leave. Management and leadership remain the have of no job opportunities and no career
strongholds for employee engagement. progression prospects, and ultimately you
A focus on engagement Almost two-thirds (64.9%) of professionals may hold onto your staff for longer.
Since the recession, major redundancy regard the quality of manager as key to
programmes and large-scale restructuring affecting morale and engagement levels,

Do cost efficiencies compromise control?
This last year has seen incredible While there are a number of perceived
change across the banking & financial benefits of change, the clear driver for most
organisations has been cost. Over 90% saw
Some organisations have
services sector, with over half (53.8%) of
organisations we spoke to having been cost efficiencies as the main reason for this been forced to divest due to
subject to some form of divestment, change. Secondary to costs, almost two-
outsourcing, off- or nearshoring. These fifths (38.6%) of organisations saw greater governmental decree rather
have tended to affect the infrastructure process efficiency, with better service than any specific strategy.
of organisations, such as IT, Operations, coming in third in importance at 23.5%.
Administration, HR, Finance and Front
Office support. In addition, some Of those considering change, offshoring sustainability and flexibility. Yet,
organisations have been forced to divest appears to be the most likely route with organisations need to take care before
due to governmental decree rather than 63.8% of organisations preferring this they embark on such a programme – while
any specific strategy. These same strategy, while in Scotland specifically, the cost-efficiencies are undeniable, other
organisations are also going through huge both offshoring and outsourcing are objectives are not always so successfully
transformation programmes in order to favoured with 56.3% for both strategies. met. Of those organisations that have
attain cost, process and service efficiencies. Another driver in this decision is around brought areas of the business back in-



house, exactly half did so to obtain greater and genuine questions need to be asked
control, and another two-fifths (40.4%) did over whether the change will truly achieve Organisations must
so to improve customer service levels. improved customer service. It’s not
surprising to report that some organisations
consider very carefully
Before embarking on a new strategy, have specifically pledged to have all their what process management
organisations must consider very carefully service centres remain in the UK for this
what process management needs to be exact reason. In not addressing such needs to be put into place
put into place to ensure there is no loss of matters, organisations run the risk of failing to ensure there is no loss
control. Likewise, if one of the main drivers on their ultimate objectives - and potentially
is to provide a better service, then this spending more money by bringing it back of control.
needs to be balanced with cost-savings, in-house at a later date.

Employers – What were, or will be, the main reasons for your organisations in outsourcing, offshoring or nearshoring?

Cost-efficiencies 90.2%

Process efficiencies 38.6%

To provide a better service 23.5%

Consolidation 19.0%

Regulation 13.7%

Employers were asked: What were, or will be, the main reasons for your organisations in outsourcing, offshoring or nearshoring? Respondents were invited to select all that applied. All figures are
rounded to one decimal place.



Details and methodology Related articles
The research in this report is based on The research surveyed a range of Workplace study 2010
The new front in the war for talent
responses received from over almost 900 employees, from those earning £30,000,
banking & financial services professionals, up to over £250,000, as well as HR and Workplace study 2009
gathered through telephone and face to face line managers across a broad range of Is banking &financial services heading
for a brain drain?
interviews by Badenoch & Clark consultants banking & financial services sectors
across the UK. The report also draws upon and businesses. Workplace study 2008
the extensive market knowledge held by our A longer term view. Looking beyond
the current crisis
industry experts.
Career planning essentials for employers
A Badenoch & Clark guide

Developing your career plan
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Change for growth 2011 - Why banking and finance must change its approach to employee engagement

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Change for growth 2011 - Why banking and finance must change its approach to employee engagement