Workforce issues in banking and capital markets: lessons from 2021 and outlook for 2022

By Jan Bellens and Stefanie Coleman

Lessons learned in 2021

The year 2021 was filled with aspirations around returning workers to the office. As the COVID-19 vaccination rolled out globally, some banks shared public plans for bringing workers back on site and tackled several questions around what flexibility might remain in a stabilized world, such as who would come back, when and on what terms? Soon, different approaches emerged.

Some organizations declared an unwavering commitment to co-location, insisting that on-site work is foundational to culture. Others explored flexible work options, such as giving workers a schedule of on-site and off-site days or curating schedules based on team preferences, location or risk profile. Some banks insisted on confirmed vaccination status as a condition of entry to work sites, while others are putting in place on-site protocols for workers, such as mask wearing, regardless of vaccine status.

The “great resignation” — a term coined for abnormal attrition patterns driven by the pandemic — means retention bonuses have ballooned as the employment market has tightened. This happened particularly in relation to in-demand talents with technology, cybersecurity and digital skills.

In companies that are reluctant to embrace long-term hybrid or flexible work arrangements, compensation may serve as an offsetting lever when competing for banking talent. However, this may not be a sustainable solution on its own. Instead, firms need to consider the holistic employee value proposition to optimize the appeal of the talent brand in the current market.

Reimagining work in 2022 and beyond

The emergence of a new variant, in recent weeks, highlights that banks must remain flexible for now but also consider strengthening ways of working and workforce resilience in the future. Some common themes to consider in 2022 include the following:

1)?????Embracing agility. The uncertainty of the pandemic means banks must be ready to disrupt the best-laid plans at a moment’s notice. Being able to rapidly transition workers to off-site locations at scale is a new capability. This muscle must be exercised along with other kinds of business continuity and resilience testing.

2)?????Acknowledging differences. One silver lining of the pandemic is the humanization of colleagues. It is not uncommon for video calls to involve home décor, pets and children or domestic partners in the backdrop. This has revealed that no two workers are the same and day-to-day stressors vary from person to person. Some banks are considering these differences in the way they address return-to-office strategies — particularly for caregivers, or for those with unvaccinated children, or for those with health preclusions from being vaccinated. Additionally, banks are increasingly concerned about how to manage a dual workforce of on-site and off-site workers. They are seeking to establish a fair performance and development environment and are diffusing the “us and them” mentality and cultural conditions.

3)?????Adapting real estate. More than 50% of banks participating in the EY Work Reimagined Study indicated that they are planning to invest in enhanced collaboration and network spaces within the office environment. Anecdotally, some firms are adopting aspects of the campus model, seeking to make the workplace a destination with state-of-the-art facilities, including outdoor workspaces for safety. Given the relocation patterns observed over the pandemic, with some workers migrating to areas with lower living costs, several banks are revisiting relocation strategy — particularly for contact and transactional centers, where they seek lower-cost options that provide access to a healthy pipeline of local talent.

4)?????Enhancing total rewards. The pandemic has encouraged some financial institutions to enhance the total rewards strategy, with a heightened focus on employee well-being and ESG, including diversity, equity and inclusion (DEI).

a.??????Focus on wellness: some banks have expanded leave purchase programs, sabbaticals and financial wellness benefits, including paid leave for bereavement and childcare, as well as paid time to cover time off work related to receiving the vaccination, as a form of encouragement. Greater investments in mental health have been observed in the form of resilience training, mediation programs and counseling services, as well as an enhanced focus on physical wellness. Some firms are even offering fitness tracking tools and equipment such as exercise bikes and health resources such as lifestyle coaching.

b.??????ESG accountability: in some banks, the pandemic is taking a toll on diversity, and many firms are concerned about a greater proportion of minority groups leaving the workforce entirely, changing industries or leaving for competitors. To address this, several banks have placed a stronger focus on diversity measures within the compensation framework, including the tying of executive rewards to diversity, equity and inclusion measures and strengthening commitments to pay transparency and equity reporting.

Additionally, investors are increasingly looking to boards to tie executive compensation to ESG outcomes, including forward-looking climate and human-rights goals. Beyond compensation, some banks have begun to explore upskilling the workforce on sustainability concepts, starting with the board. Firms recognize the growth trajectory of this topic and are considering rotational career experiences and the use of skills adjacencies to resource these complex programs, which require a combination of risk, finance, marketing, compliance, human resources and investment skills, among others.

On the horizon

The liquid talent market observed across the sector could continue in 2022, and banks investing in the employee experience over the past year will reap the reward. This includes providing a fertile environment for career development, offering a competitive compensation deal, managing wellness and work-life balance and improving the quality of roles via automation enablement, process simplification or upskilling investments. The “war for talent” has always been a theme in banking. Adapting to new ways of working and enhancing employee well-being could be the keys to winning the war.

Disclaimer: The views reflected in this article are the authors' and do not necessarily reflect the views of the global EY organization or its member firms.