Workforce Resilience: Risks and Opportunities in the Financial Services Sector

In this, the second in a series of articles looking at workforce resilience in a range of industries, I’m focusing on the financial services sector.

This is an industry that has seen a great deal of disruption in recent years – and that disruption is set to continue. From a workforce point of view, this has been very challenging, bringing with it a whole host of dilemmas for employers.

Aon recently undertook its ‘Pulse Survey’ – a huge research project to explore these challenges and find potential solutions for organizations in a range of industry sectors, and in this article I’m going to look at the risks and opportunities for the financial services in particular.

The challenges for financial services

Faster, more efficient customer-centric banking has led to widespread digitization across financial institutions. Innovative business models are driving change, as new banking capabilities call for digitally-enabled talent.

With competition from disruptive FinTechs and established institutions, the financial services sector needs to have effective incentives in place to attract and retain the talent they need today and in the future. However, it is becoming increasingly clear that financial incentives are not enough in isolation.

From commercial banks to brokerage firms, financial institutions are assessing the experience they offer to their people. To remain competitive, improved customer and employee experience is essential.

After all, a company’s EVP should focus on more than just financial wellbeing.

Today’s workforce increasingly values social, sustainability, physical, emotional and work/life balance as key drivers when choosing an employer. With competitive pay and compensation already considered by many as a given in the financial industry, potential talent now considers professional development opportunities, flexible work arrangements, company culture, recognition and supportive feedback when making a decision.

With increasing numbers of employees seeking employers whose values align with their own, it’s critical for finance companies to have a strong understanding of what motivates their people. Collecting people data will enable organizations to tailor more personalized and relevant benefits, shaping effective ESG and DE&I strategies.

Organizations that fail to provide stability during waves of volatility will struggle to retain employees. Conversely, those businesses that confront these challenges head-on have clear opportunities to safeguard their business by supporting their people — in both work and life.

The key to this is resilience.

The risks – Aon’s Pulse survey

To delve deeper into these challenges, Aon analysed holistic HR data from over 3,000 companies globally and asked 1,700 HR leaders to complete a workforce resilience risk assessment. This was followed by a survey of 1,300 companies about their specific workforce wellbeing priorities.

The results for the financial services sector make interesting reading, with three risk factors standing out in particular:

1.??? The sector scores below average for providing structure to drive action through effective decision making. Only 42% of financial organizations plan to offer increased workplace flexibility, while a staggering 94% are focused on adjusting base salaries.

2.??? Secondly, future skills readiness is not as developed as it could be. With 70% of businesses in the sector losing key digital skills, 42% are also having difficulty filling roles requiring skills in high demand.

3.??? Finally, creating value also lags behind compared to other sectors, with 43% of companies spending more time on higher costs and inflation management.

The solutions

We all understand that change is a constant, so adaptability needs to be a constant as well. And with change, having a resilient workforce is the key to adaptability.

And in 2023 and beyond, organizations need to be data-driven in their decision making. Only by doing this can they provide more personalized benefits and rewards for their people, based on specific needs and performance at work.

These performance-based compensation models strategically reward workers who contribute the most towards the organization’s growth – this in turn accelerates success in the convergence of technology, social, work/life and macro-economics.

It's vital therefore that financial services HR leaders assess if their current reward programs incentivize the behaviours their organization is looking for. They need to drive and analyse outcomes against objectives.

When looking at the results of Aon’s Pulse survey, I’d like to put forward what we like to call ‘no regrets’ solutions. Implementing them is low-risk, but the potential benefits are significant.

1.??? Providing structure

Organizations need to recognize that the business environment and business strategy have changed in the last 18 months and will continue to evolve at a faster pace. Human capital infrastructure needs to align and adapt at a much faster pace.

One tool we are seeing used effectively is personas (collections of individuals with similar expectations, needs and traits) as a way to introduce customization in a manageable way (from hiring, EVP right through performance management to pay and benefits)

2.??? Future skills readiness

We also know that automation is going to drastically affect the work environment – across all sectors, not just financial. The risks are big, but the opportunities are even bigger. An audit of which job profiles are at risk of automation and a position audit on your current talent pool is therefore a great first step.

Looking at banking as an example, in a recent article (https://bit.ly/3K6eJ9J) my colleagues John McLaughlin and Nick Chambers showed that 27% of banking jobs are currently at risk from automation. 27%... that’s a significant number of employees worldwide.

Banks, and financial institutions more broadly, have a duty of care to their employees and to be open, upfront and honest about what is happening.

As John and Nick say: “If banks take the wellbeing of their employees seriously, they need to ensure workers understand how technology will impact their roles, when that impact will happen, and what plans the bank has in place to manage the transition, be in reskilling certain individuals or helping others transition out of the business.”

In the medium term, a more widescale review of potential for new hires and existing talent pools is important. This then needs to be connected to roles and job architecture. These are the building blocks to ensure organisations can leverage potential and skills to build (versus buying in) the talent (and agility) they will need today and into the future as these roles disrupt and change.

3.??? Creating value

Key talent is one of the main drivers for creating value and in this fast-changing environment identifying, deploying, motivating and growing this talent pool is critical. We are seeing increased differentiation in approach to this talent and a more holistic and flexible way to consider this group. Financial services have to think beyond pay in isolation for this group.

Next steps

Like all sectors, financial services have huge challenges ahead. Providing structure, ensuring future skills readiness and creating value will not be easy, but must be done.

Because, at the end of the day, when organizations invest in their people, they have the opportunity to build a resilient workforce that’s better prepared to navigate uncharted change.

With the use of data (an Aon strong point) as the ‘engine’ to power a personalized approach to the full employee lifecycle and how human capital drives business strategy, HR leaders can ensure employees are agile and better equipped to adapt. This in turn means shared success.

If you are leading an HR function at a financial service organization and would like to have a one-to-one conversation with me or my colleagues such as Petra Schmidt , Daniel Butler , Richard Phelps OLY , Peter Rutherford or Patrick Connell , please feel free to reach out to us - our virtual doors are always open!

Further reading

For more information about building a resilient workforce across a range of business sectors, our recent paper entitled ‘Building a Resilient Workforce That Steers Organizational Success - An Outlook Across Industries’ may interest you. There’s a link to it in the comments section.