Banking on high-fliers

The Royal Bank of Scotland gets more than 10,000 applications from graduates each year for a few hundred positions. Barclays attracts interest from around 5,500 jobseekers for less than 100 jobs. And speak to most other banks and you’ll probably get a similar story.

Talent management is a pressing issue in both the retail and investment banking sectors. In a market that is becoming ever more competitive and cut-throat, how you find the right talent, hire them before your rival does and hang on to them are very real problems.

It is now not uncommon for banks to have dedicated talent teams. In the case of UBS, this team is sub-divided into four units, covering recruiting on campus, professional recruiting, learning and development and performance and talent management.

Yet both retail and investment banking have traditionally had a strangely contradictory attitude to talent management. They will be more than happy to pay huge salaries to hire and keep star performers and they are some of the biggest, most sought-after employers in the country – able to offer a wide range of benefits, incentives and performance management initiatives.

Yet while the Association of Graduate Recruiters can say that investment banking is the top payer for graduate jobs, starting on around 35,000, it was only in May 2005 that thousands of HSBC workers walked out in protest at poor pay – after all, when was the last time you walked into a retail bank and felt a real buzz of enthusiasm coming from the workers and managers?

Then there is the painful process of offshoring jobs to India and other countries.

In investment banking there has been a spate of high-profile discrimination cases against institutions by their high-fliers, notably HSBC’s global head of equity trading Peter Lewis who claimed he was unfairly dismissed for being gay and the separate sex discrimination cases brought against Merrill Lynch by bankers Stephanie Villalba and Elizabeth Weston.

According to Chris Archer, head of financial services at talent management firm Macmillan Davies Hodes, one of the ongoing difficulties many banks face is a certain degree of scepticism among workers that their employers really have their long-term interests at heart.

“They know that what really counts is simply how they perform and if they are not performing the bank will need to cut costs, so that can give people a slightly jaded view of talent management,” he explains.

So, how are banks managing their talent? The war for talent is being fought on many fronts, suggests Archer. “It is getting increasingly hard because the market is changing and is becoming much more complex and faster moving. Everyone wants the brightest and best and there are only so many of them to go around,” he says.

This has meant banks have had to take a long, hard look at their selection and promotion processes as well as how they train managers to recruit. For instance, two years ago Barclays appointed psychometric testing specialists SHL to lead a programme training its line managers in candidate selection and interview techniques.

Banks have also been looking at how they can encourage internal job mobility among their workers, thereby ensuring that they remain challenged and stay with the business. Goldman Sachs has had an ‘internal mobility’ website up and running for the past two years which carries virtually all the firm’s vacancies.

Merrill Lynch, too, despite its problems over the Weston and Villalba cases, has a dedicated jobs intranet and has set up networks to encourage more applications from women and minorities.

In fact, diversity is an area all the banks have been looking at closely as a way of bringing in talented people who may have been overlooked in the past.

When it comes to high-level roles at Merrill Lynch, employees get an individual development plan that is designed to identify their next job, the likely time-frame in which they will need to move and what skills they will need to make that move.

UBS does much the same thing, creating integrated programmes for its top talent to ensure that people have a clear sense of where they are going, the challenges and goals ahead and that they are given the relevant opportunities and the right skills. It has a large team of in-house psychologists both in Zurich and London looking at career paths and career development issues and whether people are meeting their potential and taking the right steps.

Rather than simple talent management, the focus across much of the banking sector for the past couple of years has shifted to ‘talent pipelines’. The thinking behind this has been a recognition within many banks that they need to be doing more when it comes to identifying and grooming their internal talent.

“A lot of companies are bad in that, once they’ve identified talent, they don’t know what to do with it,” says Archer. As a result, many banks are increasingly using sophisticated psychometric and assessment tools on current employees as well as potential recruits.

When it comes to external recruitment, the focus again – at least for top talent – is now less ‘bums on specific seats’ and more to do with identifying pipelines of people who have talent. They are then either hired even if a position is not currently available (although this ‘defensive hiring’ is now much less common as it is very costly) or there is a focus on ensuring they are kept interested until a vacancy arises.

Where banking was once something of a closed environment, there has also been a growing recognition that, if talent is in short supply, you simply have to be more imaginative and look farther afield.

“Banks are looking more at people from different industries or backgrounds, although this is less the case in investment banking,” explains Archer. “There is an understanding that there is a whole wealth of knowledge out there.”

This widening of the talent pool is also having an effect on the interim market, says Gail Bell managing director of employment agency Interim Performers, with day rates currently running at around 400-500.

“The banks that are US-led tend to be more innovative in their recruitment practices. They tend to look for people with the right competencies rather than if they just have financial services experience,” she says. “They also tend to find those people who will probably get fast-tracked very, very quickly,” she adds.

There is also a lot more emphasis on continual coaching and mentoring than there once was and giving people alternative business skills – for instance, offering HR people training in finance and vice versa.

The keyin all of this istrying to gaugewhat people can give their organisation, whether there is something extra they can offer simply beyond doing the job they were hired to do,and what their organisation can give back inreturn, she argues.

“It is not just about the top dollar; it is about what they feel they can add in terms of value. It is not just about doing the role but what you feel you can bring to it,” says Bell.

Case study: Lloyds TSB

With 70,000 staff working in a fast-changing environment, and a major restructuring of the business under way, for Lloyds TSB, talent management is a particular challenge, admits Kate Griffiths-Lambeth, head of talent, resourcing and management information.

“When you have a period of change there are many more opportunities, but people can also find it disturbing if you cannot communicate that change,” she says. “If people feel under threat it is the most talented people who are most likely to be the ones to leave because they are the ones who can find a job most easily.”

The talent management team is also being re-organised, moving from a regional to more centralised set-up.

Lloyds TSB has historically had a strong focus on developing talent internally, but more recently has been concentrating on trying to bring in fresh blood and fresh ideas, she says.

“To be honest, when it comes to talent management, financial services has often been behind the curve and has to play catch-up in some areas,” she says.

A balanced scorecard system, career mapping and development of career paths are among the talent management tools widely used by the bank. The scorecard is used across the organisation, including front-line customer facing staff, while the career mapping and paths are used for junior managers upwards, explains Griffiths-Lambeth.

As with other financial organisations, thousands of applicants apply for just a few jobs. This year, 25 graduates were appointed to the bank’s graduate development programme and next year that is set to decline to 20. At the other end of the scale, around 100 managers have now been put through the company’s leadership development programme, says Griffiths-Lambeth.

“It is very much a fast-track for people who we think will be managing the group in the future,” she says.

“We are very focused, very concentrated on providing bespoke information for individuals that is appropriate for the programme they are on.” The key, she says, is being able to develop and adapt what you can offer, creating modules that are appropriate to the needs and challenges of the individual.

“The skills someone needs if they are in working in risk or finance are very different to those needed by someone who is a branch manager or local area director,” she explains. “It is important for managers to have a breadth of skills and insight and to be able to understand where it all fits together,” she adds.

The bank is also currently rolling out a tool for gathering career path information from individuals that aims to give managers an idea of a person’s current and potential performance and whether they are reaching the level they should be.

“We have done some research looking at leadership profiles, what motivates exceptional and inspirational people, and who has the potential to be not just average but truly stunning. We are using this tool to help us look at who should be in the leadership pools,” says Griffiths-Lambeth.

There are clear signs that the labour market is starting to become less competitive than it was, say, a year ago – a situation helped by various rounds of consolidation throwing people on to the jobs’ market – but finding the right sort of talent is, and will remain, problematic, she argues.

“We are looking for people who are innovative, almost entrepreneurial in outlook, but also empathetic and responsible. Finding people who fit that profile on the recruitment side and spotting and developing those people internally will always be an issue,” she explains.

“There is a fine line in giving people too many hoops to jump through so they just leave and not giving them enough hoops,” she adds.

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