But talent management still biggest challenge in sector, finds poll
HR teams in more than half of banks are predicting an increase in fixed pay to offset the bonus cap planned by the European Union, according to new Towers Watson research.
A survey of HR professionals working in the banking and finance sector found that 53 per cent forecast salary rises in their organisations and a further 33 per cent expected companies to pursue alternative pay strategies. Only 7 per cent predicted a decrease in total remuneration for employees as a result of the new regulations.
The poll revealed that six out of ten financial services institutions also planned to counter the impact on reward by formalising training and development programmes, while a fifth would focus on pension offerings, 15 per cent on flexible working and 10 per cent on health and well-being initiatives.
“Financial services companies are aware that when the EU bonus cap comes into force many of their employees are going to receive overall lower pay and they recognise the need to make up for this shortfall in a number of different ways,” explained Mark Shelton, managing director of Towers Watson’s financial services talent and reward practice.
“Some will do it through higher fixed pay or increased pension contributions, but many companies are planning to invest in training and career development, healthcare and flexible working programmes in order to continue to motivate and engage employees despite the potential impact on their annual pay.”
But even with the drastic changes to banking incentives on the horizon, only 16 per cent of survey respondents felt that reward would be the most important human capital issue in their organisation over the next 12 to18 months.
Talent management emerged as the biggest challenge in the finance sector (34 per cent), followed closely by performance management (31 per cent).
Two-thirds of the HR professionals canvassed predicted that politicians and regulators were likely to have the greatest impact on banking industry rewards over the next three years, more influential than shareholders (22 per cent), employees (5 per cent) and the media (4 per cent).
When asked which financial market would benefit the most if there was a talent exodus from the UK market, New York topped the list (42 per cent), followed by Hong Kong (26 per cent), Singapore (16 per cent) and Switzerland (11 per cent).
This could lead to more of a focus on developing rather then recruiting top talent in companies, said Towers Watson.
“Organisations will shift from an emphasis on buying talent to growing talent,” exlained Chris Fabro, also from Tower Watson’s talent and reward practice.
“This will require more significant career planning, architecture and analytics to ensure the development of employee capabilities meets management and business challenges. While the industry must get pay right, it will also need to be thoroughly creative in attracting, retaining, motivating and engaging key talent.”
The Towers Watson survey included responses from more than 150 financial services HR professionals.