Some economies may be rebounding, but a study from Oxford Economics entitled “Workforce 2020” shows companies across the financial services industry don’t necessarily understand the import or impact on human resources (HR) and the rest of the business.
Supported by SAP, the global survey of over 5,000 executive and employees reveals the top five labor market shifts impacting workforce strategy in the financial services industry are an increasingly globalized labor supply, millennials, rising numbers of contingent and intermittent employees, and difficult recruiting employees with base-level skills.
However, just one-third of finance executives say talent available in leadership positions is sufficient to drive global growth, and fewer than half say leadership is equipped to lead a diverse workforce or knows how to inspire and engage employees. Based on these findings, banking and insurance companies face three major risks encompassing leadership, learning and technology.
Risk 1: Lagging Leadership Development
Workforce management in the digital economy demands leaders who think globally, use diversity and stay one step ahead of constant change. Yet according to this survey, only 20% of banking employees and 17% of insurance employees say leadership is among the attributes most important to their bosses. What’s more, just 31 percent of banking and insurance executives say their company has a strong vision for the workforce it wants to build in three years, and 37 percent of executives say their company plans for succession and continuity in key roles.
Risk 2: Growing Skills Gap
Under 50 percent of executive respondents to this survey say their company has a culture of continuous learning. Access to the right technologies is a problem for some financial services organizations. While 47 percent of financial services employees receive ample training on workplace technology, only 33 percent have access to the latest innovations like analytics and cloud. In three years, only 27 percent of employees expect proficiency in cloud and 47 percent expect to gain skills in analytics.
There’s also a gap between understanding the changing workforce and being prepared to address people’s needs. For example, 80 percent of financial services companies say they are increasingly using contingent, intermittent, seasonal or consultant employees, the highest of any industry. Yet only 47 percent say this requires increasing investment in training.
Risk 3: Dearth of Fact-Based Insights
While the financial industry may be among the most advanced in using new technologies, this survey reveals problems in applying collected information to support talent. Just 38 percent of financial services executives say they use quantifiable metrics and benchmarking for workforce development, and 35 percent say they know how to extract meaningful insights from data. For example, some financial services companies may not fully understand what their employees really want from them. Sixty-eight percent of employees say competitive compensation is among the most important benefits to them but only 40 percent of companies say they provide it.
Making Human Resources Strategic to the Business
Managing talent risk in today’s financial services industry requires fact-based decision-making, leadership development and aligning workforce strategies with business goals. Like every industry, building a successful talent strategy in financial services begins with an awareness of what is happening in the workforce. This changes HR’s role.
“It is very difficult for companies to recognize the talent they need to succeed,” says George Murphy, senior vice president of total rewards, HR technology, and operations at Lincoln Financial Group, the big, Philadelphia-based insurer. “One of the major roles that HR can play is helping to see what types of roles and talent are needed to be successful in five years.”
No industry will ever be risk-free, but by strategically aligning HR with the business, financial services organizations will be better equipped to win in the war for top talent as economies continue to improve.
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