You wouldn’t necessarily expect banks to find it hard to hire top talent — the average salary at Goldman Sachs last year was $400,000, according to The Economist.
Yet Goldman Sachs’ CEO David Solomon says the bank is experiencing “wage inflation everywhere” because of an ongoing war for talent.
And he’s not alone. More than 80% of British financial services employers are suffering from a skills shortage, according to the respondents of a November 2021 survey by Hays, a London-based recruitment firm.
In response, People teams in financial services firms are tapping into alternative talent sources to provide an expanded pool of qualified experts. However, in a highly-regulated industry, working with freelancers can take a bit of creativity.
What Are Alternative Talent Models?
Alternative talent models are the different approaches that businesses can take to bring in new people without directly hiring them — such as hiring freelancers, contractors, project-based short-term hires, or fully outsourced service providers.
But the word “alternative” is rapidly becoming a misnomer. For instance, researchers at the Society for HR Management estimate that the US workforce will comprise up to 50% freelance workers by 2027. Some are calling the post-pandemic transformation of the workforce a “freelance revolution.” Alternative talent sourcing is becoming the norm, not the exception, so it’s definitely a good time to adjust your hiring strategy accordingly.
Taking advantage of alternative talent streams means businesses will need to shift to a more long-term view of working with contractors. In a 2020 article in Harvard Business Review (HBR), Harvard Business School professor Joseph Fuller argues that a better term for “alternative talent models” might be “on-demand workforce.” Businesses today, he suggests, tend to bring on gig workers in much the same way they hire Uber drivers — when they need them, without much forethought, and at the last minute.
For the financial sector, hiring on the fly isn’t always a viable option. Issues of compliance and demanding standards means that freelancers will need careful screening. So it’s a good idea to have a solid plan in place that lets you take advantage of this growing source of available, specialised talent, without adding unnecessary complexity and costs.
The Challenges for HR Managers in the Financial Services Industry
People teams everywhere are struggling, but recruitment managers for banks and credit unions are currently facing a unique set of challenges. A 2022 Deloitte survey found that almost three out of four hiring managers are reporting difficulty finding financial and accounting professionals.
Industry transformation is making it harder to find professionals with specialised skills.
Financial services businesses need workers with a highly specialised skill set. For Teshia Davis, vice president of People at SECU, Maryland’s largest credit union, the hardest part of her job is “finding talented employees that have the desire to begin a career and invest the time in learning the industry, and who also possess the competencies and personal attributes that make them the best fit to deliver premier concierge service in the financial industry.”
What’s more, with the rapid pace of change throughout the sector driven by disruptive technological advances, financial professionals need to keep those skills sharp and upskill frequently.
Recruitment managers in the financial sector are therefore on an endless search for those unicorn candidates that combine niche skills with the level of professionalism required in such a highly regulated sector.
This has always been an issue in finance, but Matthew Hurley, a senior manager at Deloitte, believes the problem is currently being compounded by major digital transformations in the finance sector, such as the increased use of automation, AI, and robotics.
In an interview with Fortune, Hurley said, “A lot of the large companies are going through large finance transformation projects at this time. They’ve got lots of new technology including artificial intelligence and machine learning. They’re looking at ERP [enterprise resource planning] upgrades and updates.” Finding candidates with the right financial skills, coupled with up-to-date technological expertise, is just getting harder.
Finance organisations are struggling to meet changing candidate expectations.
In an industry where high salaries and fat bonuses are the norm, attracting top talent means creating a standout employer brand, explains Davis: “We find that expectations around compensation propel us to reshape our employee value proposition to set ourselves apart from other companies in our industry.”
And candidates are no longer just looking for a healthy salary. They also want a company culture that appeals to their values and priorities — something which can be challenging for the notoriously traditional and change-averse financial sector.
As well as adapting to changing attitudes towards work, HR teams in the financial sector also have to accommodate the growing demand for remote work, in an industry where regulatory requirements and data security issues make working from home particularly complex. People managers, Davis said, have to accommodate growing candidate “expectations about their work location, as the needs of the business versus personal preferences shift.
The need to create a deeper connection to an organisation is now paramount to show positive retention metrics; yet it is challenging, as more individuals want flexibility that incorporates a blend of in-person engagement and working in a hybrid or remote environment.”
5 Key Benefits of Alternative Talent Models
Expanding your talent pool to include alternative talent sources can be extremely helpful for financial recruiters. Here are five ways contractors, gig workers, and freelancers can uplevel your business’s talent strategy.
1. Expose your team to new skills and expertise.
Upskilling your team is a must in the banking sector, but freelancer workers can also be a great way to keep your knowledge base at the cutting edge. For Davis, this is one of the best reasons to hire financial freelancers: “Freelancers bring tremendous value, being that they can bring their expertise while balancing their talents across various industries. This helps us to stay fresh and bring in new perspectives.”
2. Widen your talent pool.
Wondering where all the great financial candidates have gone? Chances are, they may well be freelancing. According to research by leading staffing agency ManpowerGroup, nearly half of all global candidates are looking for something other than a full-time job, such as contract, project, or part-time work.
3. Encourage workplace diversity.
Despite numerous initiatives, the financial industry is still struggling to deliver greater diversity, equity and inclusivity in the workplace. For instance, in the US, just 15 to 20% of financial advisors are women, and only 1.8% of financial planners certified in 2021 were Black or African American.
For Davis, this is a critical challenge for HR managers in the financial services industry. One of her top priorities is “finding ways to attract a more diverse talent pool that connects us to our communities.” Part of the solution is to focus on company culture, she says: “It’s important that we live and breathe as an inclusive organisation where talent can see themselves daily, engaging with our members and each other, and ultimately providing them a true sense of belonging.”
However, hiring freelancers can also help increase your company’s diversity. The freelance talent pool is often more diverse than traditional candidate sources, because the flexibility of freelancing tends to attract those who might find a standard 9-5 too restrictive. According to The Work Crowd, a freelance platform which specialises in promoting workplace diversity:
- One in seven self-employed people in the United Kingdom are disabled.
- One in eight British self-employed people are working mothers.
- The majority of freelancers work remotely, so hiring freelancers can increase geographic diversity.
4. Increase access to specialist skills.
A 2019 survey by the Society for Human Resources Management found that more than one in four HR managers hire freelancers so they can bring in specialist skills. In a highly specialised industry like the financial services sector, bringing in freelancers means that you have the skills you need for specific projects, without needing to make a full-time hire.
5. Build a more agile talent strategy.
People teams across the board are facing a complex job market. On the one hand, the recent Great Resignation left companies scrambling to hang onto existing talent and fill an unprecedented number of vacancies. On the other hand, the possibility of a recession is making some business leaders cautious about hiring, according to a recent report by UK recruitment consultancy PageGroup.
The alternative workforce offers a more flexible and cost-effective approach to talent management. Human resources managers can bring in the human capital they need, without risking long-term profitability, or being forced to make redundancies if the financial services industry takes a tumble in the coming months.
4 Ways to Embrace Alternative Talent Models in the Financial Services Industry
If you’re ready to incorporate freelance and contract workers in your financial services business, you’ll need to start by creating a solid strategy. Falling into the trap of “on-demand hiring”, and calling on freelancers only when you need them, can do major damage to your company culture and your reputation. Instead, make sure your approach is thoughtful and designed to support both the needs of your existing team and your freelance workers.
1. Prioritise upskilling existing workers when appropriate.
Make sure you don’t fall back on hiring specialists and neglect the skills and potential of your existing employees. Nothing is more likely to create resentment and, over time, to decrease retention.
A forward-thinking approach to performance management can help. Creating individual development plans for your existing workers can help to define the skills they’ll need to develop next, not just the ones they need now. That way, they can keep up to date with changing regulations and technological advancements impacting the financial sector, and reduce your need to supplement with freelancers.
2. Choose the right projects and tasks for alternative talent.
Not every project is well-suited to be handled by freelancers — especially in finance, where sensitive or high-risk tasks may be better managed by employees who have established long-term relationships with the relevant stakeholders. In an article for HBR, Upwork’s Chief Economist Adam Ozimek proposes the best projects to assign to freelance or project-based workers (or “open talent” as he calls them) are those which require little firm-specific knowledge, and recur only infrequently.
3. Provide onboarding to your alternative workforce.
While you may think it’s not a great use of time to invest in onboarding temporary staff, it’s actually key if you want them to be able to perform at their best.
It’s worth bearing in mind that freelancers aren’t just workers — they’re also business owners. The best performers are likely to be in high demand, and if they receive a poor or chaotic onboarding experience, they may well be “booked up” if you want to hire them again in the future.
But it’s not just about engagement. Your contractors can only be productive and efficient if they have all the tools and information they need to do the work you hired them for. While you will not need to offer an identical onboarding experience as the one you provide to full-time employees, a streamlined induction process can make sure that nothing gets overlooked.
4. Involve them in your company culture.
While you shouldn’t treat freelancers and other contractors like employees, you can certainly create a culture in which employees communicate thoughtfully and kindly with external workers. Make sure to recognise and acknowledge good work, and ensure that they have access to the information they need through internal communication channels (where appropriate).
Given the fast pace of the financial sector, including them in internal communication channels can also be helpful to make sure that they remain up to speed with important changes, but companies should use discretion and provide security trainings to freelancers who are brought into the fold.
Alternative Talent Models May Be the Solution to the Talent Shortage in the Financial Sector.
Freelance and contract workers can help financial services businesses to bring in specialist skills and knowledge, while remaining agile in the face of potential economic uncertainty. Embracing the alternative workforce can be a true competitive advantage for financial institutions. But making it work will take adjusted People policies, thorough onboarding processes, and careful planning.
For more ideas on integrating alternative talent into your workforce, check out our new ebook Driving Engagement and Retention in the Financial Services Industry.