Realising the wealth within a workforce "The value of ‘Human Capital Management’ in the financial services sector "

Almost a cliché now, businesses understand that their employees are their biggest asset. Human Capital Management (HCM) is about understanding the link between an organisation’s people management strategies to ensure that an organisation is able to optimise the full potential of this asset to deliver on its business objectives. Being able to manage people effectively and efficiently, understand skills sets, attract and retain talent and look to future recruitment requirements is essential to the ongoing success of any organisation.

This is especially true of the financial services sector, which has its own challenges when it comes to people management. These include strict regulatory and compliance rules covering FSA directives, a culture of performance related pay with the promise of big city bonuses and a constantly changing business landscape. Consolidation of the market through acquisitions and mergers and the introduction of new EU regulations and schemes such as the Single European Payments Area (SEPA) mean that HCM has shot to the top of the business agenda as financial services companies juggle with complex staffing and skills issues.

FSA compliance – quantifying qualifications

One of the biggest HR challenges is with FSA compliance. Key to this is monitoring skill levels, ensuring that people maintain their professional development programmes and that they are appropriately qualified. Whilst there is no firm stipulation about how these aspects should be monitored, there are a number of key areas that have to be tracked – matching posts with key skills, making sure employees have FSA registration and the appropriate background checks are essential. Companies cannot afford to be caught out with unqualified personnel advising on or selling financial products and services.

By deploying a system which supports HCM principles, financial services companies can keep on top of these vital details, tracking current employees and their qualifications as they move around the organisation and assessing new staff before and after they join. Alerts can be set up to warn the HR department if employees don’t have the right skill sets and qualifications to enable them to fulfil their job function.

Performance management – the right rewards

As well as tracking qualifications, HCM systems can play a valuable role in monitoring performance, ensuring that employees are progressing and being suitably rewarded. Performance related pay and bonuses are prevalent within the financial service sector and therefore being able to measure performance accurately and consistently is essential. Good systems can generate performance ratings that can be fed into reviews as well as alerting managers as appraisals become due.

The implementation of skills monitoring and evaluation as part of a comprehensive performance management cycle enables an organisation to make the most of its human capital and respond quickly to a changing business environment. By creating personalised development plans for employees and reviewing progress, in line with the strategic performance objectives for the business, companies are able to quantify the effect of training and development, and access the likely impact on future business performance.

Avoiding the skills gap

The pace of change within the landscape of the financial service sector is also a huge challenge. A plethora of new regulations and initiatives such as MiFID (Markets in Financial Instruments Directive), SEPA and more recently the Faster Payments scheme mean that organisations have to look constantly at developing new skills sets. By monitoring, tracking, and recording competencies through HCM systems, companies can plan for changing skill requirements effectively.

It is essential to identify the existing workforce skills and map them against ideal profiles in order to address potential gaps across all departments. This also increases the possibility of finding the right person in-house, without turning to outside sources with associated costs. In addition, this approach helps to retain key performers, who are less likely to leave for greener pastures if they have a clear route to progress.

Acquisitions and mergers – a clear view

Change also comes in the form of mergers and acquisitions, which bring a wide range of issues for HR departments. The consolidation of large institutions means dealing with multiple employment terms and conditions. As new employees are brought on board they may have different medial insurance, pensions and annual leave terms – all of which have to be managed. HCM systems can play a central role in evaluating the costs of different conditions and migrating all employees onto common packages quickly and efficiently.

Saving time with technology

A major benefit for the financial services sector is its very high PC literacy, which allows it to take advantage of self-service solutions. Self-service applications give employees the power to maintain their own personal information such as details of bank accounts, emergency contacts and dependants. Employees can also access benefit information and choose from a variety of flexible benefits. Self-service is particularly valuable to those organisations where employees spend much of their time working away from the office.

More recently, forward-thinking companies have also seen the potential for expanding HR self-service facilities into more effective line management enabling managers to handle HR functions electronically. This eases the administrative burden on the HR department, reduces paperwork and helps increase business efficiency.

Conclusion

It has long been recognised that good HR principles such as hiring a diverse workforce, ensuring that employees have the right skills and making sure that people feel valued at work have a positive effect on business. Nowhere is this truer than in the dynamic world of finance where a highly motivated and focussed workforce can provide vital commercial advantage.

HCM systems provide a clear, holistic way to deal with the challenges of people management in the financial services sector. They provide an accurate and effective means of complying with FSA regulations, reduce the time and costs associated with HR administration and ultimately help organisations realise the real worth of their workforce by tracking skills and helping develop personnel into high value assets.

About MidlandHR

MidlandHR is a leading supplier of HR management software and services to 'blue chip' companies, government, health and other public sector organisations worldwide. Formed in 1984, MidlandHR provides its customers with tailored solutions to meet all their payroll and personnel requirements. Customers include Friends Provident, Severn Trent Water, University of Bath, Leicestershire County Council and Lincolnshire Police. For more information, visit MidlandHR at http://www.midlandhr.com