Upskilling FS amid tech-led disruption

June 2019  |  COVER STORY  |  BANKING & FINANCE

Financier Worldwide Magazine

June 2019 Issue

Closing skills gaps is one of the biggest challenges facing financial services (FS) today, with much of the sector struggling to secure a suitably skilled workforce due to considerable technology-led disruption.

As a consequence, performance and competitiveness is likely to be adversely affected, putting firms under intense pressure to upskill their existing employees, as well as ensure the skills of new starters, especially graduates, are up to speed.

The Robert Walters ‘Bridging the Skills Gap in Finance Functions’ Whitepaper notes that finance leaders are “struggling to source top quality finance professionals who can demonstrate the skills they need”. Furthermore, “a combination of strong technical abilities and excellent communication skills are necessary as the role of the finance team becomes more prominent”.

In its ‘The Skills Gap Dilemma: How is it Evolving and How Have the Naysayers Got it Wrong?’ report, Oliver Wyman notes that skills gaps are the articulation of an increasing tension between employers, educators, and job seekers in expectations and desires. “A key element of this skills gap is an information gap between the main participants,” states the report. “Employers do not know how to articulate their capability needs nor how to assess whether candidates have those capabilities. Educators do not know which skills to focus on and job candidates do not know how to demonstrate they have the right skills.”

Further evidence of skills gaps is a 2018 survey by CNBC which found that 63 percent of companies are struggling to recruit skilled staff, with many indicating this would worsen as technologies become more complex. Also, 46 percent said their workforce was not receiving enough training and support to allow their business to grow. And, according to recent research by Robert Half, 49 percent of FS leaders in the UK rank sourcing talent and skills as their number one concern.

“The employment market is in the midst of a ‘war for talent’,” says Matt Weston, managing director at Robert Half UK. “More than four in five companies find it more challenging to find qualified professionals today than five years ago. Chief executives looking to expand their business will want to recruit the top talent to help them drive their growth ambitions. However, despite such expansion aspirations, the line of top talent is currently thin.”

The UK, for example, is facing unprecedented skills challenges – a predicament exemplified by low productivity and growth. “What the UK produces in five days the French and the Germans produce in four,” asserts Dr Neil Bentley-Gockmann, chief executive of WorldSkills UK. “Current and future workforces are going to be very different, creating a growing skills shortage that could leave up to 3 million jobs unfilled by 2030. Ensuring the next generation is engaged in the sector – and that they have the tools they need to succeed – is the key to the future of FS.”

While it should be acknowledged that skills gaps are not ubiquitous across all sectors and skill types, virtually all the available evidence suggests that companies, and FS firms in particular, are facing a skills shortage of crisis proportions.

Drilling into skills

With the difficulty in closing skills gaps and the long-term impact on growth and productivity not in doubt, FS firms need to take remedial action, starting with identifying where the gaps are greatest.

“It is a complex set of factors that lead to skills gaps, and different roles have different gaps,” says Charlie Ball, head of higher education intelligence at Prospects. “For professional roles, and especially for new starters, there can be issues with the amount of technological knowledge required. Problem solving and time management are also big issues.”

In terms of the roles that FS firms are struggling to fill, according to the UK Department for Education’s ‘2017 Employer Skills Survey’, certified or chartered accountants, programmers and coders, sales, financial analysts, business analysts and tax specialists are the key positions where skills gaps exist. “Some employers are unaware of the current state of the marketplace and the level of competition that exists for the best graduates,” adds Mr Ball.

As far as the impact of new technology on FS firms is concerned, a 2018 report by 451 Research reveals that skills gaps have emerged on account of the increasing priority that firms are placing on advanced technologies – the top three being artificial intelligence (AI), machine learning (ML) and containers and blockchain – with multicloud expected be central to their plans. Indeed, 60 percent of FS firms expect to use such platforms over the next two years, believing it will help improve application performance and availability demands.

“The next few years will bring critical changes, including a major shift toward execution on cloud platforms,” suggests Liam Eagle, research manager at 451 Research. “We expect hybrid IT strategies and partner-led managed services to be key elements in overcoming obstacles, such as regulatory compliance and information security.

“Technology such as cloud computing platforms, once considered leading-edge technology, is now an accessible part of mainstream IT, and widely regarded as a vehicle for achieving business agility, cost savings, and improvements to application performance and availability,” adds Mr Eagle.

However, while some systems are now commonplace, others are increasingly complex, with FS firms likely to see skills gaps widen as a consequence. According to the 451 Research report, 46 percent face a shortfall in multicloud expertise, 41 percent struggle to find information security skills and 37 percent lag behind on AI and ML. “New technologies are shaping our future,” says Dr Bentley-Gockmann. “FS employers, therefore, are in need of a workforce that can harness these innovations to drive up growth and productivity.”

Closing the gaps: internal vs. external

Once skills gaps have been identified, a means of closing them needs to be implemented, with FS firms well-advised to take a holistic approach when doing so.

“Companies need to be very candid with themselves as to whether skills gaps are due to supply or as a result of their hiring and training practices,” suggests Mr Ball. “Universities are very keen to improve graduate supply and will be receptive to good and constructive suggestions, such as local partnerships. In addition, work experience is an especially effective way of developing good relationships.”

In the case of new starters, Mr Weston believes that firms should offer a competitive benefits package, alongside financial remuneration, in order to attract candidates with specialist skills. “Perks such as flexible working and remote working can be the difference and convince a candidate to sign a permanent contract. Once companies know which skills they require, they should focus their search on the type of candidate they are looking for.”

Another option is for firms to upskill their existing staff through development and training opportunities. “This does not necessarily have to be through an expensive external training course,” adds Mr Weston. “Other options, such as job shadowing and secondments, can help employees develop new skills that employers need.”

For many firms, whether to attain the skills they need by internal or external methods is a key decision. According to the Robert Walters Whitepaper, 49 percent of FS firms indicated a preference to resolve skills gaps by upskilling existing team members. In comparison, 28 percent preferred to hire permanent staff externally in order to acquire the necessary skills, 16 percent preferred to move staff internally from different teams and offices, while 8 percent felt hiring temporary or contract staff was the answer to skills attainment issues.

“It is clear that chief financial officers (CFOs) and finance team leaders believe that, long term, developing and training existing staff is the most effective strategy to bridge skills gaps,” states the report. “While external hiring of permanent or temporary staff will be the best strategy to resolve skills shortages under certain circumstances, upskilling existing staff is always an important strategy to ensure long-term retention of top talent.”

Drilling down, there are a diverse range of reasons why FS firms favour the internal upskilling approach. The Whitepaper notes the most widely cited reason as the desire to encourage internal promotion and maintain company culture. The opportunity to invest resources in current employees that they know and trust is also seen as a key motivation to upskill internally. In addition, upskilling is often regarded as a key part of an effective talent development programme for many employers. Another important consideration is cost, with almost half of firms preferring to upskill existing staff to avoid the costs associated with bringing new talent on board.

Cultivating a skills culture

To help identify where skills gaps exist and how best to close them, FS firms should look to cultivate an environment in which a desire to attain skills – among existing staff, as well as the next generation – is an integral part of workplace culture.

“In addition to developing the next generation, FS firms must become ready by understanding how they can create a workplace that attracts fresh talent,” says Dr Bentley-Gockmann. “The right policies have to be in place with respect to apprenticeships, mental health, mentoring, mindset and inclusion – demonstrating to young people in particular that the jobs on offer are designed with them in mind – a crucial differentiator in today’s increasingly tight labour market.”

As far as extant workers are concerned, in the view of Mr Weston, chief executives should work closely with HR to identify whether any departments are suffering from a skills gap or if the firm as a whole is lacking certain skills. “Conducting 360 job performance reviews, ideally at least twice a year, can help chief executives and HR analyse which skills are most required by their firm. Ultimately, the best way to fill a skills gap is to have a wide pool of qualified candidates to choose from, with different skills and varying levels of experience,” he says.

According to analysis by Cornerstone – ‘How to Address the Workforce Skills Gap’ – by creating a learning culture and an environment that welcomes knowledge-seeking, firms can help employees feel comfortable about self-improvement. “Even the most innovative learning programme will not go far if employees do not recognise the value in it,” suggests Cornerstone. “A strong learning culture starts at the top, with values dedicated to knowledge and improvement.

“The best way to ensure that this culture permeates the entire firm is to align learning with strategic goals and show how it makes a difference in the business,” continues Cornerstone. “For example, using predictive analytics tools, HR teams can demonstrate how addressing employees’ weakness and areas of potential through learning and development can lead to longer-tenured, higher-performing employees, which benefits the firm in the long run.”

Furthermore, research carried out by Bersin by Deloitte found that at firms with strong learning cultures, employees are 37 percent more productive. These firms are also 58 percent more likely to have candidates in their talent pipeline with skills to meet changing marketplace needs, and 32 percent more likely to be first to market with an innovative solution.

Future skills

The importance of closing skills gaps is difficult to overstate. In the years ahead, as technology continues its seemingly inexorable march, FS firms will need to pull out all the stops to ensure they possess the skills needed to thrive in an ever-changing environment. Consequently, if skills are to be increased and gaps closed, far-reaching action is necessary.

“It is no secret that advancing technologies are widening skills gaps and fuelling a ‘buyer’s market’ – in which candidates with in-demand skillsets have multiple employment offers and are more comfortable negotiating,” says Mr Weston. “Our ‘2019 Salary Guide’ revealed that 53 percent of chief executives admit they cannot find candidates with the necessary skills to help them navigate an increasingly technology-led business landscape.

“While the skills gap may not be getting any smaller anytime soon, there are measures that employers can take to get on the front foot and secure the talent they need to adapt to an increasingly technology-led world,” he continues. “Providing training opportunities and employee benefits, alongside competitive financial remuneration, will ensure that FS firms attract and retain top talent moving forward.”

© Financier Worldwide

BY

Fraser Tennant