HR in financial services: a sector rich in opportunities?
An HR role in financial services can offer the chance to shine—but it will also be demanding. Stephanie Sparrow reports
The impact of technology and an appetite for change among consumers and employees alike means that the financial services sector has become one of the most dynamic areas in which to develop an HR career.
“It is an exciting time to be working in financial services,” says Julian Sykes, people director at The Co-operative Bank. “There are some really interesting, challenging roles for HR professionals and I see that being the case for some while.”
Regulation increases HR workload
Applicants for financial services roles are advised get to grips with the regulatory environment, particularly the Senior Managers & Certification Regime and IR35 tax legislation.
The SM&CR means that senior managers are personally accountable for their senior manager functions working in partnership with the regulators.
“This requires additional HR due diligence, process and documentation reviews across the entire HR lifecycle, ensuring senior managers are clear about their responsibilities and that they are ‘fit and proper’ for duty,” explains Charlotte Matthew at Oakleaf Partnership.
And there are increased pressures due to IR35, which targets tax avoidance by contractors working through a personal service company in ‘business as usual’ roles.
With the changes to IR35 in the private sector due in April 2020, medium and larger employers will need to decide whether individuals who work through their own limited company fall inside, or outside, of IR35 rules. Those contractors operating in potentially ‘disguised’ permanent positions are likely to fall within IR35's scope.
"This will inevitably lead to a sizeable workload for HR professionals to ensure they have appropriate processes in place to comply with their responsibilities," Matthew adds.
Sykes notes that digital transformation, its impact on customer expectations for a different range of services, and sourcing the talent and skills required to create a new working culture while answering these pressures, are simultaneously testing HR’s mettle and creating new opportunities.
So where are these emerging roles? Recruitment experts point out that many jobs are being reconfigured and skill requirements reviewed, thanks to Brexit uncertainties and the changes wrought by multiple factors such as acquisitions, consolidation, regulatory and governance requirements, not to mention digitalisation.
A reduced headcount is also affecting HR’s remit in financial services. The Spring 2019 London Employment Monitor from recruitment firm Morgan McKinley, which covers jobs in financial services from January to March 2019, found despite there being an increase in jobs available and in the number of jobseekers compared to the end of 2018, the year-on-year picture showed a decrease for both.
“The impact for HR is that roles have evolved and some have become more complex or more specialist,” says Henry Lee, HR recruitment manager at the company.
He explains that as companies try to retain broader talent within the workforce and improve succession planning, some are amalgamating multiple areas of HR responsibility such as diversity and organisational development (OD), previously held by individual managers, into a senior, one-person, talent management, learning and OD role.
This wider responsibility is reflected in the salary. “So a group talent manager role might now pay £120,000 where previously [its responsibilities] could have been found in multiple other roles. In certain cases, an amalgamation has created one highly paid role but left two other roles redundant.”
Governance and fintech
Other specialist roles are also evolving, according to Charlotte Matthew, senior manager for financial services at Oakleaf Partnership.
“There’s a growing emergence of HR governance roles to help navigate some of the complex regulatory changes across financial services such as Senior Managers and Certification Regime (SM&CR) and IR35,” she says.
A glut of HR jobs is emerging from a start-ups too, says Emily Nunes, business manager at Michael Page, particularly among financial technology (fintech) companies. Their heads of HR typically have a broad remit.
“The increase in fintech start-ups has led to a vast increase in head of people roles tasked with everything from people strategy origination, to policy and procedure implementation and everything in between,” says Nunes.
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Competition for these roles is intensifying. “We are noticing a rise in candidates from the technology sector, moving into financial services, and fintech businesses expanding,” she adds.
Senior jobs in fintech appear to be paying as well as the more traditional areas of banking, asset management and private equity. Recruitment company Frazer Jones salary guide for financial and professional services shows that heads of HR in these companies could be earning from £110,000 to £200,000.
However, pay for HR business manager and business partner roles fall in the slightly lower bracket of £50,000 to £65,000 for fintech, as opposed to £50-£75k in the latter three.
“Senior hires [are] coming from larger banking backgrounds seeking a less regulated and more entrepreneurial environment,” says Charlotte Faktor, HR interim and contract manager at Frazer Jones.
“Salaries in the fintech sector have shown an increase in order to compete for this talent.” The need for specialist skills in other areas has also driven up salaries in those fields, adds Matthew from Oakleaf Partnership.
“We are seeing the biggest pay increases (permanent and interim) apply to HR change and projects, such as SM&CR, IR35 and systems, and governance specialists given increasing levels of regulation impacting the financial services market,” she says.
That said, culture, benefits and stability are overtaking cash as the biggest incentive to change jobs, argues Nunes from Michael Page. “Salaries have stayed relatively stagnant, but firms have invested in more robust benefits packages and long term incentive plans (LTIP) or equity stakes,” she says.
“This evident change is also in line with a growing trends in flexible dynamic working. Many HR professionals would rather stay at a company that invests in their pension and would pay for their CIPD qualification or executive MBA, than move for more money on their base salaries,” says Nunes.
Outside the Square Mile
So how much movement is there? Interim HR professionals are often expected to specialise within the financial services sector (particularly in investment banking in the City) but can job seekers from other parts of HR or from the regions break into this dynamic sector? Are opportunities limited to those already in financial services in the City?
Not necessarily, says recruitment expert Sarah Barwell, director of The Three Partnership, a national HR recruitment consultancy based in Manchester. She has seen HR professionals outside the capital use their transferable skills to move between financial services and the private sector if the opportunities have not been available in their current employer.
“HR professionals in the regions are more likely to set out to have a career in HR, than specifically in financial services,” she explains.
“And if they are looking to move into financial services, what’s important is that their skills and personality suit the business in question.”
Barwell says “it’s about cultural fit”, explaining that she has noticed HR professionals from corporate environments being recruited for the large banks, and vice versa, and those from entrepreneurial settings moving into fintech.
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Of course, there are caveats. “The best HR people are always keen to keep their learning current and they would be expected to have an excellent knowledge of the regulatory environment including the SM&CR,” she says. (See box).
“They must show commerciality,” she adds, “and because this sector is all about relationships, applicants must be able to build deep and trusted relationships, and business partner effectively with the CEO and senior management.”
Know your tech
For those HR professionals already in financial services who want to progress further in the sector, the essential skill is appreciating the impact of technological innovation, says Cheryl Bosi of Lloyds Banking Group.
“Technology is an enabler, but we also have to understand the effects on human capital and our customers”, says Bosi. As people partnering director for retail and community banking she manages a team of 40, which in turn supports almost 40,000 colleagues.
“For example, our research tells us that human interaction is hugely valued, and we are looking to deploy technology so that our colleagues are able to wow customers in branch, and successfully meet their needs when they call us. The philosophy of my division is: ‘machines do the ordinary; humans do the extraordinary’,” she says.
Personal resilience and an interest in regulatory compliance are other essential qualities for this sector says Bosi, coupled with a commitment to inclusion and diversity. She feels that her slightly different route into HR and financial services from an apprenticeship scheme at 16 with Northern Rock, together with various customer facing leadership roles before moving into HR, engendered these qualities, along with a genuine passion for people and customer service.
Looking ahead, recruitment experts advise HR generalists to upskill on data analytics and to keep an eye on the ramifications of HR Centres of Excellence and business hubs being relocated as companies try to second-guess the outcome of Brexit. “While the companies that we work with are not leaving the UK, many are setting up business hubs in places such as Dublin or Frankfurt on a ‘just-in-case’ basis,” says Michael Page business manager Adrian Dawson.
Dawson points out that once these hubs are established they may continue, no matter what the eventual outcome of Brexit negotiations, so as not to create white elephants.
“The implications for HR are huge,” he says, “with potential redundancies, relocations and the need for recruitment into these hubs and Shared Service Centres.”
One of the best ways to future-proof your HR career prospects in financial services is to be curious, concludes head of people services at Skipton Building Society, Chris Worts. “Seek to gain a greater understanding of what is around you. Take advantage of opportunities such as working on cross-functional projects, secondments, even volunteering,” he says. “Broaden your exposure.
“The use of data, harnessing digital capability and the ability to work in an agile way and embrace change are now fundamental to success at both a personal and organisational level.”