Bankers’ remuneration has been an increasingly hot topic ever since the global financial crisis began. The current action within the EU to cap bankers’ bonuses at 100% of base salary (200% with express agreement of shareholders) is keeping the subject in the headlines.
A cap on bonuses is just one of several developments that suggest that a banking career isn’t what it used to be. As in most industries, a job in banking is no longer for life. However, bankers must also cope with a poor reputation and standing in society, not to mention continuous change and uncertainty brought about through regulatory change as well as internal cost-cutting and cultural-change programmes. As a result, banks are concerned about their future ability to attract, manage and retain the talent they need to lead the industry back to calmer territory.
For banks to succeed, HR must adopt a more influential role, using the latest thinking in talent management to create propositions that attract and retain the right leaders.
Giving bank employees a purpose that is inspiring, compelling, and bigger than their own needs
As well as meeting employees’ individual needs for financial reward, banks need to appeal to them on an emotional level, offering satisfaction through serving customers and providing valuable products and services. We already see a version of this whenever we watch a film. Scriptwriters create story arcs that elicit emotional responses which ultimately satisfy us as an audience. Bank leaders need to create similar emotional satisfaction for their employees. Daniel H Pink, in his book Drive: The Surprising Truth About What Motivates Us, states that we are not only motivated by profit and financial reward, but also by purpose. Like scriptwriters, leaders need to give their staff a sense of purpose, supported by stories to engage them on an emotional level.
Banks have much to learn from other industries and professions and an injection of new leadership blood and capability from other industries will help embed the right behaviours and skills. Learning from industries with an ingrained culture of customer intimacy, such as retail, creates an opportunity to cross-fertilise cultures, reaping significant benefits.
Recalibrating what banks offer their talent
With bonus incentives being reined in, a bank’s leadership, line management and HR need to think carefully about their employee value proposition (EVP) – what they offer to attract and retain employees. To do this, they need to get under the skin of what their employees want. Through research with 44 multinationals (including banks), we found that talent can be segmented into six groups, each with their own preferences, needs and wants. For a global media company, for example, we identified that the most important aspect of the EVP was around career opportunities and personal challenge. We then worked with the organisation to recalibrate what they offered to their people. In banking, where emphasis has traditionally focused on financial reward, organisations need to rethink the EVP for those whose priorities may instead lie in individual career progression and opportunities for challenge, learning and development and the work environment.
Using HR to ensure that talent management is exemplary
Even before the EU’s new bonus cap, only a small number of bank employees were earning multiples of bonus to salary. Focusing on the larger proportion of bank talent, HR needs to ensure that they have strategies and interventions in place that actively manage this talent. One strategy involves leaders acting as role models to show the importance of putting effort into development conversations around individual career journeys. Working with a major oil company, for example, we helped line managers reframe their staff's mindset to active career management, understanding the importance of networking and understanding how individual career journeys can be very different.
Less than 2% of FTSE 250 companies have a seat for the HR director on the board. With so much change relying on support from the HR domain – from culture change and vision and values programmes to enhanced leadership programmes – now is the time for HR to come out of the shadows in banking.
To find out more about what talent management can do for your firm, please contact us now.