Like many business sectors in today’s tech-driven world, financial services is experiencing an acceleration in the rate of digitalization. For banks and other financial institutions, adapting is essential for competitive survival. They grapple with emerging technologies such as blockchain, big data analytics, artificial intelligence and robotics, every day — and it’s why many companies are considering revamping their rewards strategies to attract and keep tech talent that has skills in these areas.
It’s not just about pay, as financial services companies offer some of the most competitive compensation in the job market, but still lose talent to smaller Fintech start-ups. Research also shows that digital talent often has little interest in a lifelong career, instead preferring to focus on building the “next big thing.”
So how can employers attract and retain this critical talent?
Drive a culture of innovation
When it comes to tech talent, innovation is key. This is a group that’s fostering innovation for their employers, and they expect to see the same free thinking in how they work and how they’re compensated. An innovative work culture is something that start-ups have by default, and this likely explains the fascination tech talent has for these smaller organizations.
As a way to drive a culture of innovation, some established players are experimenting with flexible workdays – from LinkedIn’s “Incubator” to Apple’s “Blue Sky,” there’s no shortage of tech companies that give staff time away to work on their own projects. The logic is that it’s better to hire people with great minds, even if you only have 90% of their attention. And besides, “10% of time away” can convert to “110% time at work.”
What really matters is having an innovation-friendly culture that gives tech talent access to the right facilities, resources, mentors and, more importantly, the assurance they can try new things and fail without consequences.
Measure and pay for performance
When it comes to pay-for-performance, equity grants (stocks or stock options) are common and often expected. However, granting equity at the parent company level may not be enough of an incentive; real (or anticipated) equity at the business unit level may be what these employees are after, as the direct line of sight toward wealth creation is more apparent. In designing appropriate rewards plans, it’s important for financial services companies to focus on defining where individual performance lies and differentiating it based on the evolution of business models, in addition to overall company performance.
In many traditional companies, managers assess performance against goals set at the beginning of the year, and the company determines pay levels based on the size of the job and market rates — with some variability based on employee performance relative to others. However, for digital companies, such people practices could be informed by any direct interaction an employee has with other stakeholders.
As an example, imagine a star-rating (common in ride-sharing apps) in which employees get real-time ratings – based on daily interactions, progress against milestones and project successes –weighted and adjusted for personal biases through technology. Such systems will be able to quantify previously intangible concepts such as reputation, culture, ethics and, indeed, performance management.
Consider a fresh approach to rewards
According to Willis Towers Watson’s 2017/2018 Global Future of Work Survey – Asia Pacific, more than 60% of HR executives say the design of performance management, leadership development and organizational structure will require an “outside-the-box” approach to help ensure the challenges of automation and digitalization are adequately addressed in their organizations.
For this reason, rewards need to be fresh and updated often. In the past, a rewards program may have been relevant for a company for five to seven years; now, they need to be redesigned and refreshed much more frequently.
The way these rewards are designed and administered will also be important — companies need tech talent to help hire and retain tech talent. This may involve an investment in tech tools, such as mobile apps, and social media to meet and engage with the specific needs of a multigenerational, dynamic, mobile-using and digitally savvy workforce.
Finally, freelancers — or contingent workers — are quickly augmenting traditional staffing models, the way work gets done and the fundamental assumptions about wellbeing and Total Rewards. This means more tailored and personalized Total Rewards with increased choice for all types of workforce participants will be required.
To retain and engage digital talent, companies need to treat their people with the same deference, flexibility, and end-user centricity as they do their customers.
The role of HR
An innovative approach to securing tech talent will require HR to think out of the box. Some strategies to consider include:
- Shift the corporate mindset. Ways of instilling a culture of innovation may vary from organization to organization, but it will require a shift in mindset to encourage employees to brainstorm and take risks without fear of consequence.
- Personalize benefits. Benefits are a strong differentiating factor. Think outside traditional compensation and get to know your workforce so that you can offer benefits — whether it’s flexible working hours, employer-supported wellbeing, more onsite services, or something else — that are relevant to different groups.
- Review your incentive strategy. Do your incentives have a direct line to compensation? In this instant gratification culture, and particularly for specialized tech employees, the knowledge that performance is being accurately evaluated and compensated goes a long way.
HR will play a driving role in this journey, and needs to be supported with the tools and technology necessary for success. This will take flexibility and openness to change in order to help financial services leaders and managers navigate away from legacy mindsets. The HR role is now one of true partner, leading the business into the digital future.
Shai Ganu is the Managing Director of Rewards in Asia Pacific at Willis Towers Watson.