Human Capital Trends have huge impact on Financial Services Industry

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Human Capital Trends have huge impact on Financial Services Industry

Disruption rules the day

The Deloitte report ‘Global Human Capital Trends 2017’ looks at the challenges ahead for business and HR leaders in a dramatically changing digital, economic, demographic, and social landscape. The report identifies ten trends regarding human capital. Ronald Meijers and Sanne Welzen, partners Deloitte Human Capital, highlight which of these human capital trends they think will have the biggest impact on the financial services industry.

The organisation of the future

The workforce, workplace, and the world of work are changing radically. These shifts change the rules, from learning to management to the definition of work itself. The first human capital trend mentioned in the report is ‘building the organisation of the future’, where agility plays a central role in organisations of the future, stepping away from structural hierarchies. Both Meijers and Welzen agree this trend will have a huge impact in the financial services industry, a sector that already faces a huge level of disruption.

Human Capital Trends 2017

Disruption rules the day

One would have thought the financial crisis was a great catalyst for building new organisational structures. Financial services companies were mostly blamed for the economic crisis and indignation was felt widely throughout the industry. Yet, many companies were keen to return to ‘normal’ as soon as possible, rather than returning to something new. “They longed for the past, not for the future,” says Meijers. He continues: “Banks, insurers and pension funds have known very long periods of stability and are traditionally good at building robust organisations. They are not so great at building change capabilities. So it seems that even a huge financial crisis was unable to radically shake things up.”

Of course, many companies did implement changes. Some companies, such as ING Bank, for example, did this very well, but they were the exception rather than the rule. Few others managed to change in all aspects. Some companies became more agile, changed processes and reorganised but kept the entire Managing Board as it was, for example. Others say they are becoming more agile but sometimes seem too set in their ways to actually be able to make the change. Which is exactly why this first trend — of building new organisations — will be the most important one for the financial services industry, yet one of the hardest ones to achieve. “I see some large organisations really struggle with this integrated and full change,” says Welzen.

New leaders needed…

In order to embrace change, leadership will play a crucial part. Trend 6 in the report states that organisations are clamouring for more agile, diverse and younger leaders. A new breed of leaders who can thrive in a rapidly changing network. ‘New’ agile organisations have less, or no, need for the current models of top-down steering. Leaders need to think, act, and react differently to make their organisations succeed in a digital world. “An environment needs to be created where it is OK to fail,” elaborates Welzen. “To try and fail several times even, or just fail fast!”

This is where Meijers and Welzen again see a huge challenge for the financial services industry because it requires an emotional transformation for current leaders. The financial services sector knows many regulations, supervision and compliance challenges, all not conducive to encouraging more fluid organisational models. “The strong influence of the regulator versus an agile way of working seems a toxic mix,” says Meijers. “One that will require leaders with the right amount of courage and skills,” adds Welzen.

…to lead new teams

Then there’s the ‘new’ workforce: in short the ‘gig economy’. Changing times require new capabilities, and workers, careers and learning need to constantly evolve along with the times. For the financial services industry, this trend means that employees should be sufficiently equipped to offer the kind of customer experience required in this new era. Welzen: “The approach should be ‘person-centric’, rather than ‘customer-centric’, because customers no longer accept an environment that is incapable of dealing with them as individuals.” Meijers: “Companies should be looking to offer a more individual, yet multi-stakeholder, approach, and its employees should be trained and ready to do this, because organisations don’t learn, people do.”

With a focus on culture…

Compliance is often high on the agenda, with culture barely mentioned. But Meijers and Welzen argue that compliance is all about culture and that the same person-centric approach needs to be applied when it comes to employees. It’s no surprise therefore that they see trend 4—which states that culture and engagement in the workplace are a vital part of the employee experience—as one that will have a huge impact in financial services. Behavioural oversight is even in the remit of supervision by the Dutch Central Bank and HR’s mandate is increasingly starting to include workplace redesign, well-being and employee journeys, through to retirement and even beyond.

…and performance management

Then there’s the trend of changing performance management—trend number 5 in the report. Performance management is ideally positioned as the key lever to help and drive people in organisations to make the required changes but currently, the focus for rewarding managers, for example, is often based on the size of their department and the size of the budget they are responsible for. If you take an ‘agile’ approach, you’d actually reward those people with the least budget yet the most impact. That would suit the new model of working and the organisation of the future. The legacy of high pay in the financial services (especially banking) industry is another factor making it hard for banks and other financials to transition to a new organisation, with different models of reward.

Deloitte’s Human Capital services

Business challenges are overcome by their people: from globalization to digital to regulation to innovation, organizations depend on their people to deliver business results. Deloitte’s Human Capital services leverage research, analytics, and industry insights to help design and execute HR, talent, leadership, organization, rewards and change programs that enable business performance through people performance.

More information?

If you would like to read more about the human capital trends, please download the full report: ‘Global Human Capital Trends 2017 – Rewriting the rules for the digital age’.

If you have any further questions, please do not hesitate to contact us.

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