The return of the candidate king

As the recovery takes grip across global financial markets, hiring in banking, finance and accountancy is regaining momentum. However, the pool of suitable candidates has shrunk. The old adage “candidate is king” is more relevant than ever for skilled professionals.

A war for talent in the financial sector

Increased regulation resulting from the 2008 crisis and the fast-developing use of big data mean there is a shortage of skilled professionals in certain key areas of the financial services sector such as compliance, credit management, risk control, finance, accountancy, IT and analytics.

“Senior executives are worried: 59% of industry CEOs who participated in PwC’s annual Global CEO Survey in 2014 view a shortage of skilled workers as a threat to the growth of their organizations,” a report by the professional services firm said.

The war for talent in the financial sector has prompted employers to implement new recruitment strategies and change their working culture. Candidates demand a better work-life balance, so more and more organisations are now offering flexible working arrangements.

“In an era of talent shortages in which millennials and others are seeking rewards beyond compensation alone, we believe that flexibility is at the core of a strong employee value proposition. By offering flexibility, financial institutions can differentiate their brands and gain a competitive edge in the market for skilled employees,” the PwC report stressed.

To remain competitive, attract and retain top talent, employers are also ready to increase salaries and perks. However, this weapon is a double-edged sword. “A common method to entice new talent is to offer increased salaries but over the longer term this presents disparities with existing personnel that creates a new set of management challenges. Training programmes, employee benefits, flexible working arrangements and family-centric approaches are now common,” my colleague Ian Clark, Director of Financial Markets noted.

Benchmarking and counter-offers push salaries up

According to Hays Financial Reward Report 2015, over the past 12 months, 68% of UK employers in the financial services sectors have encountered new hires receiving a better offer from their current organisation, with 6% saying this happens with almost all of their potential recruits.

“Over the last year in particular, a counter-offer culture is now ever-present. Employers desperate to retain their best staff have been quick to offer pay rises far beyond the standard annual increase. Employees are more than aware of this, driving up expectations across the firm and giving staff a major weapon to wield when negotiating their salaries,” Ian said.

A brain drain out of finance

Before the crisis, a large proportion of graduates from the world’s top universities would join the financial services sector, particularly in investment banking. However, the crisis and the ensuing increase in regulation has affected the sector’s attractiveness and reputation, with many bright graduates now preferring the IT start-up sector or even more creative industries.

“Financial rewards are being reduced by lower returns, by new rules on compensation, and by relentless political and media scrutiny. The work is increasingly dominated by regulatory compliance and managing legal and headline risk, rather than growing the core business. Innovation is being stifled by product regulation and legal peril,” says a report from Oliver Wyman, a global management consultancy headquartered in the US. “Compare financial services with working in an “information” business, such as Google or Apple or one of the countless younger firms (one is tempted to say “even” younger – Google was founded in 1998). These businesses are lightly-regulated, dynamic, and offer talented staff potentially great rewards – and they are considered cool.”

From higher salaries to greater emphasis on the personal development and needs of the candidate, a shift is operating within the financial services sector as it does its best to seduce the brightest and most skillful professionals. There is, clearly, a window of opportunity.

Author

Geoff Fawcett

Director, Hays UK

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Geoff Fawcett has been in the recruitment industry for over 16 years. He is currently responsible for Hays Financial Markets, which provides an integrated recruitment solution to London based Banking & Financial Services organisations. Specialist divisions include Finance, Operations, HR, Marketing, Purchasing, Secretarial, Risk & Compliance, Front Office, Finance Technology and Executive with in excess of 100 consultants.