Stock market volatility, downgraded growth forecasts and the sovereign debt crisis have come to dominate the financial landscape this summer. Negative sentiment has had a real impact on the banking sector and the wider financial services industry: there is increasing talk of businesses being downsized to cope with tough times ahead. A relatively calm period for human capital is about to enter another turbulent phase, with hiring freezes and cutbacks topping the agenda at most EXCO meetings.
Against this backdrop, we have identified several themes, which present real challenges (and opportunities) for the human capital industry:
- Regulators have intentionally damaged the long-term viability of a number of traditional sell side businesses. Divisional heads recognise this, but are unsure how to reposition their human capital to cope with the downward revenue spiral and the need to implement a lower cost technology-driven business model.
- Higher fixed compensation, the financial services industry’s response to the post-Crisis crackdown on bonuses, restricts firms’ ability to be nimble and flexible in fast moving markets. The cost of downsizing a division or repositioning a business has effectively doubled.
- Share price falls in banking stocks and the high proportion of equity (as opposed to cash) bonuses will have an impact on staff retention at tier one banks, as the value of 2010 bonuses heads in one direction – downwards.
- Fundamental economics for the Asia Pacific and other emerging market regions remain solid: light touch regulation, lower income tax, growth markets. This will inevitably lead to a continued migration of financial services talent, with London and New York the likely losers. Great career opportunities will increasingly require a willingness to relocate.
However, amongst the gloom of this summer of discontent, it is not all bad news. As in previous downturns, 2011 offers opportunities:
- Redundancies at tier one organisations provide instant human capital liquidity. This in turn creates opportunities for firms to hire talent on more reasonable terms.
- Smaller, niche players have significantly more room to implement innovative performance-driven compensation structures, creating platforms to attract the high performer.
- Growth markets hungry for leadership and technical expertise will benefit from attracting talent away from core financial centres such as London and New York, but to secure the best candidates, organisations will need to work on the non-financial aspects of employment packages and make the international transition as smooth as possible.
2011 strategic mandates executed by Sheffield Haworth:
- Chief Executive, Saudi Arabia—Riyadh
- Chief Financial Officer—Kuala Lumpur
- Chief Compliance Officer, Asia—Sydney
- Chief Risk Officer, Middle East—Abu Dhabi
- Head of Energy IBD—Hong Kong
- Director of Projects—Pakistan
- Head of Commodity Sales, EMEA—London
- Global Head of Accounting Policy—London
- Head of Rates Trading—Tel Aviv
- Head of Middle East Sales— Bahrain
- Head of Debt Capital Markets Asia (ex Japan) —Singapore
- Head of Emerging Markets Loan Syndication—London
- Head of Russia ECM—Moscow
- Head of Equities Trading—New York
- Head of Equities, Asia—Hong Kong
- Senior Counsel, Regulatory Policies and Procedures—New York
- Chief Executive, MENA region– Dubai
- Head of Financial Sponsors Asia Pacific– Hong Kong
- Group Head of Legal–Delhi
- Chief Investment Officer–London
- Head of Capital Markets, EMEA–London
Sheffield Haworth’s Viewpoint: the global financial services industry is experiencing a period of further change and uncertainty, but this turbulence brings a rare opportunity for organisations to make truly transformational hires.
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