Navigating HR trends in financial services: insights and strategies

Author Fay Phillips-Jones
April 30, 2024

In the dynamic landscape of financial services, HR professionals play a pivotal role in shaping organisational success by aligning talent strategies with industry trends. From artificial intelligence (AI) integration to fostering diversity and inclusion (DEI), HR leaders face multifaceted challenges and opportunities.

Here, Fay Philips-Jones outlines some key insights from a recent roundtable discussion with senior HR professionals working in financial services.

AI

AI’s capability in the workplace: what we do and don’t know

There is much debate on the transformative potential of AI in aiding HR leaders across functions such as talent identification, policy formulation, communication and recruitment support.

At our roundtable, concerns surfaced around the application of AI in volume recruitment, primarily centred on the potential legal ramifications stemming from bias. Despite this, companies are increasingly leveraging AI to streamline processes, expedite hiring timelines and identify top-tier talent. One HR leader underscored the importance of these advancements, highlighting the critical need to tread cautiously:

“This process could be frightening and risky. If a company receives 10,000 applications and AI is leveraged to screen out applicants so that we simply interview the ‘top 50’, but the process itself has bias in it, then we are opening ourselves up to potential for legal risk, as well as losing out on diverse talent. Until we can be confident that there is no error and bias, we should think very carefully before implementing it.”   

AI is only as good as the data it can access. And if that data is inaccurate or has bias, then of course the results will also be biased. Yet, on the other hand, AI could be seen to be less biased than a human judgment call, and it can evolve to reduce bias over time.

The question remains: are we better off taking a more data driven approach?

AI on performance and wellness

AI can be used to support annual performance and reward processes.

One of our HR leaders talked about how their team ran a dual AI and manager performance process. They noted that, on the whole, managers fared better than AI, because AI can only use information around ratings and key words, whereas managers know the background behind the ratings.    

It was also recognised that AI struggled with wellness scores for employee surveys.

ChatGPT

ChatGPT was initially seen as a big risk for businesses. Taking time to learn how best to utilise the tool was seen as critical.  Confidentiality sharing in ChatGPT is a huge concern for businesses as well as further education and training, and awareness raising is needed in this space to avoid major issues.

All of our HR leaders were in agreement over the ease of using AI in letter drafting, policy drafting, presentations, job descriptions and internal communications. They talked about how this saves time and energy which can now be better directed towards more value-add activities.

Is cost saving, rather than efficiency, the main driver for the uptake of AI? This could be a shortsighted approach, as some cost saving initiatives are not actually driving value. Perhaps the use of AI needs to be measured more in terms of efficiency rather than saving money to drive better business outcomes.

Cultural resistance to AI

One leader added:

“Within our business, culturally our managers don’t want to engage in AI as it is seen as a potential tool to replace jobs. It is seen as a risk. There is therefore a need to properly engage, educate and excite businesses to embrace the opportunity to leverage AI to remove the 5% of the role that involves menial tasks that would free up time to focus on more of the value- add without causing panic around job safety.”

AI in recruitment

One HR leader had tested AI to market map a few hires. They found there was often a cross-over (2-3 individuals) in longlists. They added in other predictors to support their process, such as who was more likely to make a move and what interview questions to best ask individuals. They added:

“It was a very interesting process, but was certainly not fool proof and did push out some ludicrous ideas as well as some good ideas.”

Employee engagement and wellness

AI was leveraged by one team to design a new wellness program. Results showed that wellness was the single biggest driver to deliver high performance.  Put simply:

“If people are happy and less stressed and have interesting roles – then wellness will help drive engagement and ultimately give us greater productivity.”

Hybrid working

Psychological safety: hybrid working

There is a concern amongst HR leaders that employee burnout is increasing. Some of this is around the fact that a number of businesses have pushed to have employees back in the office. That is not to say that all employees enjoy working from home, but going into the office for 4-5 days a week poses a significant impact for those individuals who have a long commute, early school drop offs/ pick-ups, have caring responsibility, global roles with numerous time zones, those who are working on tight deadlines or work that is best completed in an uninterrupted environment.

Comments around hybrid working practices included:

“It seems we are taking away flexibility and this is impacting psychological safety in the workplace.”

“I am often sat on my own in the office. A number of my global colleagues work in separate locations. Business leaders are often travelling or out of the office.”

“We have advocated five days in the office and this has been viewed as an extreme case of people monitoring.”

“It works well for us as we are a very small business so, we sit side by side with the founder and collaboration is one or our strengths and values.”

“Real estate and costs seem to be the main driver – this is an old-fashioned view. Some leaders are not living in the same reality as others – they are very out of touch.”

Hybrid working is still one of the first questions that potential candidates ask about a firm before deciding whether to interview there. Goldman Sachs famously asked employees to return to the office five days a week and have since been losing top female leaders and talent from their business.

DEI and talent attraction

Businesses are still facing real challenges attracting diverse talent through their doors. Even the financial services firms that have female CEOs are still short on female talent entering into apprenticeship and graduate programs. Of course, this is just one aspect of a diverse workforce.

“It doesn’t matter if the business doesn’t buy into the argument around having more diverse workplaces – we have to do it; it’s the right thing to do, and our investors are demanding it.”

DEI competency framework

Holding leaders to account by embedding governance into executive pay and reward around DEI targets has been proving useful for many businesses.

“Having a DEI competency framework has worked well for us. In our business, you can only become Partner if you are a great firm builder. DEI, skills and workplace culture are all incorporated and measured.”

Paternity and maternity coaching

For many of our HR leaders, paternity and maternity coaching has been successful in supporting colleagues and encouraging them to return to the workplace. In one organisation, it was mandatory for all line managers, and they have seen a positive impact on retaining talent and increasing employee wellbeing.  

Maternity leave and front office role challenges

Some women feel that they can’t take much of their maternity leave as they needed to stay connected to their clients and didn’t want to miss out on deals. It is a challenge for HR to understand how best to support these individual role types.

Some strategies that were discussed:

  • Shared parental leave as a means of supporting families and sharing caregiving responsibilities more evenly
  • Support on continuity of earnings. It was recognised that this is a challenge for businesses which needs to be tackled.
  • Job sharing opportunities could be promoted more widely. Businesses are still not sure how to embrace this. Although this is not a new concept, it has unfortunately been highly underutilised as a tool to support DEI initiatives.

Key takeaways

  • AI’s integration with HR Functions: While AI presents promising solutions in talent identification and recruitment processes, concerns around bias and legal risks persist. HR leaders must adopt a cautious approach, ensuring that AI tools are carefully calibrated to mitigate bias and enhance efficiency without compromising diversity.
  • Optimising performance management: Incorporating AI into performance management processes can streamline processes, but the human context remains invaluable. Combining AI insights with human judgment can lead to more nuanced and accurate assessments.
  • Prioritising employee wellbeing: Leveraging AI to design wellness programs can significantly impact employee engagement and productivity. By prioritising employee well-being, organisations can foster a positive work culture conducive to high performance.
  • Challenges of hybrid working models: As organisations move away from hybrid work arrangements, ensuring inclusivity and psychological safety becomes paramount. HR should address concerns with leaders around the impact on losing talent, diversity and burnout.
  • DEI initiatives as a competitive advantage: Promoting DEI is not only a moral imperative but also a strategic advantage in talent acquisition and retention. Embedding DEI goals into executive compensation structures can drive accountability and foster an inclusive workplace culture.
  • Supporting parental leave and flexible work options: Providing comprehensive support for parental leave and exploring flexible work options, such as job sharing, can enhance employee retention and promote diversity in leadership roles.
  • Striking a balance between cost savings and efficiency: While AI offers cost-saving opportunities, HR leaders should prioritise value-driven outcomes over short-term savings. Focusing on efficiency and strategic alignment can drive long-term business success.

In conclusion, HR professionals navigate a complex landscape characterised by technological advancements, shifting workplace dynamics, and evolving regulatory frameworks. By embracing innovation, fostering inclusivity and prioritising employee well-being, HR leaders can drive organisational resilience and success in an increasingly competitive market.

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useful resources

  1. 1. Corporate Social Responsibility Directive is coming into force in 2026 and will be critical for a range of businesses. This new directive modernises and strengthens the rules concerning the social and environmental information that companies have to report. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability. Frazer Jones hosted an event on this topic – the recording can be viewed here: Webinar replay: your guide to the Corporate Sustainability Reporting Directive – Frazer Jones
  2. 2. City HR Association is a member organisation and they have interest groups around both industry and topic. This has been found to be a great resource for some of the HR leaders in our network.

Fay Philips-Jones is responsible for engaging senior HR leaders across industry and delivering high-profile retained searches to meet their hiring needs. Her role is to support businesses by offering effective and tailored hiring solutions based on a methodological approach, psychometrics and her own HR practitioner experience.

To connect and create a space for like-minded HR professionals, we regularly host insightful executive roundtables across a range of topics and perspectives from AI, employee engagement, burnout, managing hybrid working and DEI.

For further information on the market, your career or hiring within financial services please contact Fay or get in touch using the form below.  

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