The financial industry isn't just about numbers; it's also about the people who make those numbers meaningful. While the industry offers competitive salaries and an opportunity for significant professional growth, there are unique challenges when it comes to hiring.
Beyond the standard hurdles that every recruiter faces, such as finding the right cultural fit or the ideal skill set, the financial sector brings its own set of particularities that can make the recruitment process quite complex.
Regulatory compliance, a constant need for upskilling, and stiff competition for top talent are just the tip of the iceberg. Alongside the often intangible qualities needed in a finance professional—like trustworthiness, keen analytical skills, and a robust understanding of economic indicators—that aren't exactly easy to suss out in a 30-minute interview.
Overview of the financial industry
While the industry offers competitive salaries and an opportunity for significant professional growth, there are unique challenges when it comes to hiring. Tech vacancies in London's financial services have risen by 40%, underscoring the increasing need for tech proficiency in this sector.
Organisations are also becoming a little more desperate holding on to staff and understanding that the hiring of a replacement can be a more expensive option. In fact, across the year, the average salary increase was 22%, up from 19% in the previous year. The challenge here is that by increasing the salary of an existing member of staff to compete with external offers, it heightens the wage gap internally.
The tricky part is, as companies are forced to offer these steeper salary hikes to retain staff—a 22% average increase compared to last year's 19%—they inadvertently create internal wage disparities. This can result in several issues. For instance, it can sow seeds of discord among team members who discover the pay differences, potentially leading to decreased morale and productivity. It could also limit the organisation's flexibility in bringing in new hires at competitive salary levels, as these would need to be aligned with the inflated internal wage structure.
Talent gap
This isn't a problem unique to the financial sector, but it's particularly acute here. The financial industry often requires a very specialised skill set, including a solid grasp of not just finance but also mathematics, analytics, and, increasingly, technology. The pool of candidates who have this blend of skills is limited, making competition fierce.
What it means for the org/dept
A talent gap means that the organisation may struggle to find individuals who can fulfil specialised roles. This can lead to tasks being spread among existing employees, causing stress and possible burnout, or lower-level tasks being escalated to highly skilled employees, which is a poor use of resources.
How to overcome
Invest in training programmes that equip current staff with the skills needed to fill these gaps. Additionally, consider widening your search to include candidates who might not have the exact qualifications but have adjacent skills and could be trained.
Launch a "Lunch and Learn" series where outside experts are invited to give talks on topics like AI in finance, ethical investment, or tax code changes. This not only expands skill sets but also breaks the monotony of the regular workday.
Top tip
Start a mentorship programme within the organisation to upskill junior employees, making it easier to fill more complex roles internally.
High turnover rates
Finance jobs are high-pressure, high-reward situations. The burnout rate is substantial, leading to high turnover. This creates a cycle of constant recruitment, which can be expensive and time-consuming.
Adding to the complexity, nearly half (47%) of professionals in financial services considered changing jobs in 2022, indicating a volatile talent landscape."
What it means for the org/dept
High turnover is expensive, both in terms of recruitment costs and the loss of institutional knowledge. It can also negatively impact team morale.
How to overcome
Create a supportive work environment and offer perks that go beyond just a competitive salary—think work-life balance, opportunities for growth, and wellness programmes.
Top tip
Implement an 'employee of the month' programme with tangible rewards to boost morale and give employees something to strive for. Regularly survey your employees on job satisfaction and work-life balance. Make the results transparent and act on the feedback to demonstrate that you’re committed to improvement.
Use targeted surveys that go beyond generic questions. Ask things like:
- "On a scale from 1 to 10, how much control do you feel you have over your tasks?"
- "Do you feel the company provides adequate mental health support? If no, what can be improved?"
- "Would you recommend this job to a friend? Why or why not?" Compile the results and discuss actionable points in a quarterly team meeting.
Keeping up with tech skills
The finance world has been thoroughly disrupted by technology. Financial technology (FinTech) is a burgeoning field, and traditional financial firms find themselves competing with tech-first companies for the same talent. Many current employees may not have the tech-savviness needed to transition into a modern financial workplace, and finding new candidates who do is challenging.
What it means for the org/dept
If your team lacks the necessary tech skills, you're essentially running an outdated operation that's not tapping into the full range of tools available. This puts you at a competitive disadvantage.
How to overcome
Offer ongoing tech training and consider partnerships with tech schools or bootcamps to help keep your team up-to-date.
Top tip
Run a monthly 'Tech Talk' session where employees can learn and ask questions about new technologies relevant to their jobs.
Regulatory hurdles
Financial companies have to adhere to stringent regulations, and this extends to their hiring practices. Ensuring that employees are "fit and proper" according to regulatory standards is a constant challenge, and failing to do so can lead to severe penalties.
What it means for the org/dept
Failure to comply with regulatory requirements in hiring can result in legal repercussions, fines, and a tarnished reputation.
How to overcome
Work closely with your legal team or hire a compliance expert to ensure that you're meeting all regulations when recruiting. Work with a government-verified third party to handle background checks and other sensitive information. They are experts in ensuring compliance with local and international regulations. Also, hire a dedicated compliance officer to liaise with this third party and ensure that internal processes are up to scratch.
Hire a dedicated compliance officer whose sole focus is to ensure that every step of the recruitment process adheres to the relevant regulations. They can create a regulatory map that outlines all legal steps to be taken for each new hire.
Top tip
Create a checklist of regulatory requirements for each role and ensure it's completed before finalising any new hires.
By addressing these challenges head-on and investing in strategic solutions, financial organisations can significantly improve their hiring processes, securing the right talent to keep them ahead of the curve.
Cultural fit
This is a soft skill but incredibly essential. The financial industry has a particular culture that doesn't suit everyone. Finding people who not only have the skills but also fit into the existing company culture is crucial but difficult.
What it means for the org/dept
A bad cultural fit can lead to decreased employee engagement, lowered productivity, and even a toxic work environment.
How to overcome
Make cultural fit a crucial part of your interviewing process, not just a box to tick. Involve different team members in the hiring process to get multiple perspectives.
Top tip
Incorporate 'culture questions' into your interviews to assess how well candidates will fit into your existing team dynamic.
Geographic constraints
High-flying finance jobs are often in big cities with a high cost of living. Not everyone wants to live in these areas, reducing the pool of willing candidates. Remote work has eased this to an extent, but many companies in the financial sector still prefer a traditional office setting.
What it means for the org/dept
Geographic constraints limit the pool of talent you can draw from, potentially leading to compromised hiring choices.
How to overcome
Be open to remote working arrangements or offer relocation packages for the right talent. Alternatively, look into local partnerships to source talent.
Top tip
Start offering 'remote days' as a perk, where employees can work from home a certain number of days per month. This can help you gauge how well your team handles remote work and make you more attractive to potential candidates.
Final thoughts
The financial industry is undoubtedly a challenging landscape for hiring talent. It presents a unique set of obstacles, from the need for specialised skills to the pressure of regulatory compliance and high turnover rates. To thrive in this environment, organisations should consider investing in training programs for their existing staff, fostering a supportive work culture, and staying up-to-date with technology trends.
The importance of cultural fit cannot be underestimated, as a harmonious work environment contributes significantly to overall productivity and morale. Addressing geographic constraints by offering remote work options or relocation packages can also help broaden the talent pool.
By acknowledging and proactively tackling these challenges, financial organisations can enhance their hiring processes, secure top-tier talent, and maintain a competitive edge in the industry. It's a dynamic landscape, but with the right strategies, success is well within reach.
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