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ARE WE BANKING ON THE RIGHT NUMBERS?

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Maite Baron

Why the banking sector needs to make work/life balance part of the P/L sheet

By Maite Barón, CEO, The Corporate Escape

Numbers are at the heart of the finance and banking industry, but as we enter a new year, some of the figures for those working in the sector aren’t looking too rosy.

The number of bankers in employment is still on the slide, with the head count in the UK investment banking sector standing at about 80% of what it was at its peak in 2010. That decline looks to set to continue for a while yet, with employment in the top ten firms set to ratchet down another 3,000 by the year end, according to Deutsche Bank – seemingly all part of a global trend, with further predictions that the investment banking industry worldwide will be 20,000 slimmer by the time we hit 2015.

Maite Baron

Maite Baron

On a wider financial front, future prospects hardly seem more comforting, with European banks in particular eradicating whole swathes of business from their portfolios. UBS for example, is largely turning its back on debt trading, with a consequent loss of some 10,000 jobs.

Bankers’ pay, long the target of political and public ire, is also heading south, even before the might of Westminster has had a chance to properly squeeze it. Average pay at firms such as Goldman Sachs and JPMorgan Chase was down around 5% in the first three quarters of 2013, with pay as a whole for the largest investment banks pretty much flat-lining.

Down too are investment banking revenues, mirroring what’s happening to headline pay, with data-provider Coalition pointing to a corresponding 5% drop in 2013, as profitable ‘over the counter’ derivatives trading is forced out of the shadows to be conducted in the full glare of the exchanges and clearing houses. And balance sheets are also on the slide, as higher capital requirements and tighter regulation about banks trading securities for their own profit start to bite.

Of course, with banks looking to make savings, costs are also dropping, but not as fast as revenues.Given the high built-in overheads of computer systems and compliance departments, cutting expenditure was always bound to be a ‘lumpy’ experience,with a simple head cull of bankers never likely to lead to a proportionate reduction in large and established outgoings.

In this landscape of falling revenues and less steeply declining costs, it’s unsurprising that profits are tumbling – last year McKinsey revealed that for the largest investment banks, the average return on equity had dipped to a threadbare 8%. However, this much-reduced figure will look positively plump if predictions of a barely breathing 4% in five year’s time comes to fruition.

That said, for those who do manage to hold on to their jobs, bankers’ pay may well enjoy a short term uplift, as the sector takes a pragmatic approach to negate the impact of EU legislation on banking bonuses and either bumps up basic salaries, or finds other creative ways to exploit loopholes or work around the new restrictions.

However, the benefit of these measures may be transient if shareholders, fed up after taking the hit of previous years’ extravagance, turn off the tap in an effort to claw back some of their former losses.

On a more personal level, also down – thankfully so for those who have to endure them – are the hours that junior bankers are being asked to work, with Bank of America Corporation joining Goldman Sachs and JP Morgan in allowing those on the lower rungs of the ladder to have at least one weekend off a month. That will give some a glimmer of light at the end of a very long tunnel that commentator Roy Cohen, author of The Wall Street Professional’s Survival Guide, describes as “one of the last forms of legalized slavery.”

It is something of an anachronism associated with the financial sector (though not exclusive to it) that, when the personal and corporate benefits of a good work/life balance are so widely recognised, as is the fact that stress and burnout dramatically affect performance, offering just one weekend off a month is deemed acceptable,or indeed a ‘bonus’.

But if that’s down side, what’s on the up?

Well, the sector may not be having its finest hour, but the contribution that finance is still making to UK plc, is unquestionable, with its £46.3 bn in 2013 making it the largest contributor to the country’s trade balance, well ahead of the professional services sector (£9bn) and computer and information services (£5.1 bn).

In one of those economic paradoxes that accompanies this fundamental restructuring, while jobs are still being shed from the sector, financial services employment has grown at its fastest rate since 2007 as recovery takes a wider hold, according to a forecast by the CBI/PwC. This would take employment up to 1.16 m, still a not inconsiderable 52,000 lighter than at the end of 2008, but a more heartening prospect.The CBI/PwC viewpoint is also supported by other data from financial recruiter Morgan McKinley, which shows new job vacancies in the City to be up over 50% compared with 12 months ago.

So it seems that the banking industry may finally be starting to shed the legacy of all that it has been through in the last few years. But, with the return to fitness, comes the opportunity for a reinvigorated sector to address the issue of ethics and values behind its decisions, and that includes the well being of those who serve it.

Only then, when we talk or write about banking and finance, we will be able to focus on the numbers and nothing else.

Making numbers work is fundamental in finance, but must it be at the cost of quality of life and health? Anyone thinking of embarking on a corporate career should consider all options, especially when so many rewarding alternatives are available, thanks in no small part to advancing technology.

At The Corporate Escape, preparing professionals for success in a future world of work is our passion, so why not start by download our free guide – ‘7.5 Strategies to Thrive in Your Career or Business’.And for more valuable resources on how to break free and find independence outside the corporate world, go to TheCorporateEscape.com.

Business

Can your company data make you famous?

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Can your company data make you famous? 1

By Kerry Gould, Associate Director, Speed Communications

Businesses gather and generate reams of data every day on everything from purchasing habits to customer behaviour. But too often, it gets ignored or restricted to ‘internal use’. Is this a big opportunity missed?

Perhaps more than in any other sector, finance and banking companies hold a goldmine of data. Of course, individual customer transactions are highly sensitive and need to be kept secure. But when these are collated into trends across an entire customer base, it can paint a compelling picture of people’s changing priorities. What are people spending money on? How are they using credit cards differently? Are they shifting their savings goals or looking at mortgages differently? And it’s not just consumer-facing businesses that can use their data to tell stories. It’s a growing area in the world of B2B marketing, especially for firms targeting the UK’s 5 million+ SMEs.

Insight in the COVID-19 era

Appetite to share data is increasing since the start of the COVID-19 pandemic, too. We’re already seeing companies step up and share this intelligence; barely a day goes by when there’s not a report on how people are changing and adapting. In an era when everyone is trying to be a ‘thought leader’, having this unique insight can really set a company apart and elevate its public profile.

There are some great examples out there. Barclaycard revealed in its SME Barometer that the number of small businesses actively taking payments has increased by 24 per cent since the start of lockdown, an indicator of recovery. Meanwhile, Bottomline revealed in its Business Payments Barometer that 89% of firms continued to pay its suppliers late and £164,000 was lost by the average mid-sized business to payment fraud.

These reports achieved media coverage in print and online, and likely to have been shared widely over social networks, been promoted in email newsletters, discussed in online webinars and provided talking points in customer meetings. In today’s multi-channel world, there are a plethora of ways to reach customers (and potential customers) and we know that a ‘layered approach’ to these communications stand the best chance of getting you noticed and remembered.

Commissioning a survey through an independent research agency is a tried and tested method for marketing and PR teams to gather insight to use for content marketing and news generation. But often, your company’s own proprietary data can be even more compelling. It’s based on actual facts and behaviours, immune from the public’s continually fluctuating opinions. Plus, it doesn’t cost you thousands of pounds to commission. If your company has a strong enough dataset that can tell a story or indicate a trend, it should absolutely be used.

Overcoming hurdles

Like all well-meaning initiatives, data-led PR doesn’t come without its challenges. Here, we tackle three.

  1. Getting buy in to go public
Kerry Gould

Kerry Gould

Sometimes, business stakeholders can be nervous about releasing data that may be deemed commercially sensitive, revealing market share or insight that competitors could take advantage of. In this case, it’s about considering risk versus reward. The marketing benefit for making yourself known could be offset by competitive intelligence that your rivals may have through other sources anyway. Ultimately, there’s often a compromise to be stuck and there may be some data that you can’t disclose. Bringing stakeholders on the journey with you from the start is often the best way to ascertain this.

  1. Organising reams of data

It can be overwhelming to organise complex data sets, gather trends from different silos, departments and platforms. Many finance companies have in-house data analysts and insight teams whose job this is, but for others, outsourcing to a specialist provider like Data Cubed or Beyond Analysis can be a helpful move. By building a dashboard that collates everything in one place, teams from across the business, and external PR or marketing agencies, can get access in real time.

  1. Not having enough data

It may be that your business doesn’t generate reams of data or lacks a large enough sample size of customers. In this case, you can partner with an organisation that does. In the Jobs Recovery Tracker developed with the Recruitment and Employment Confederation, we partnered with EMSI to tap into their database of live job vacancies. This helped to track the employment market amid COVID-19, generating masses of media coverage, insight to inform its content marketing and talking points for its upcoming REC 2020 conference.  This can sometimes be treated as a commercial arrangement but often considered a joint PR opportunity that’s win-win.

Data journalism is a growing discipline in the world of media, with news outlets dedicating talented people and resources to telling stories with numbers. The BBC and Guardian do it particularly well. With marketeers – particularly in data-rich industries like finance – waking up to the power it can hold for true thought leadership, the future is likely to be one ever more governed by data-led insight. How long before ‘data-PR’ becomes a discipline in its own right?

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Advice for contractors closing down their contracting company

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Advice for contractors closing down their contracting company 2

By John Bell is Director of insolvency firm Clarke Bell, which he founded in 1994.

Contractors with a limited company/Personal Service Company (PSC) have been going through more than their fair share of turbulent times recently.

In the last two years contractors/PSCs have been bracing themselves for the impact that the new off-payroll legislation (IR35) will have on their lives and livelihoods, as the Government ploughed ahead with its plans to roll out the reforms to the private sector; as it, wrongly in many cases, believed some contractors should be deemed as employees and not genuine self-employed contractors.  Then came Covid-19 and once again those self-employed workers were dealt another blow as the pandemic left many without work overnight, albeit there was some relief as Off-Payroll was paused until April 2021.   And let’s not forget Brexit and all the uncertainty around it which is having a huge effect on a lot of businesses in the UK.

It has been a bumpy ride for businesses of all sizes over the last few months and, despite the emergency measures announced by the Chancellor in an effort to keep the economy afloat, not every contractor will want to carry on trading. Some will want to retire earlier than they’d previously planned – to get away from all the turmoil and ‘cash in’ all their hard earnings. Others, however, will have seen their income falling to such an extent that they are now having cash flow problems and are unable to pay some of their bills.   Some may be considering taking up a PAYE role for job security whilst others may be forced to put their retirement plans on hold and continue working until they feel confident that their pension pot will serve them well.

The combined effects of Brexit, Covid-19 and the new Off-Payroll tax have hit businesses hard and some company directors now think that closing down their company is the best course of action for them.

A Members’ Voluntary Liquidation is the best option for contractors

If a contractor is planning on moving into an employee/PAYE role, retiring or pursuing some other life or career plan then a Members’ Voluntary Liquidation (MVL) is likely to be the most tax-efficient way to close a solvent company – particularly if the assets of a company are more than £25,000.

An MVL is an HMRC-approved process and a licensed insolvency practitioner must be appointed. While it may have a negative-sounding ring to it – with terms like ‘liquidation’ and ‘insolvency practitioner’ – there is nothing negative about it. Quite the opposite, in fact. By placing a company into an MVL it is a clear illustration that someone has been running a successful company.

An MVL allows a contractor to draw any remaining profit as a dividend, paying income tax on the dividend amount.  With the help of the licensed insolvency practitioner who will liquidate a company, the reserves can then be distributed as capital, which are then subject to capital gains tax (CGT) at either 18% or 28%.

Through an MVL, a contractor can also take advantage of Business Asset Disposal Relief, formerly known as Entrepreneurs’ Relief before 6 April 2020.  If someone qualifies for this relief, this can mean that CGT will be paid at a rate of 10% on qualifying assets, which can translate into considerable tax savings.  Each shareholder of the limited company could also benefit from a tax-free allowance of £11,000, the Annual Exempt Amount.  If there are multiple shareholders, this can be highly efficient.

To ascertain eligibility for Business Asset Disposal Relief / Entrepreneur’s Relief, contractors should speak to an accountant and also look at the Gov.uk website.

Off-Payroll (IR35), Brexit and Covid-19 are all things that are likely to have a huge impact on contractors and their limited companies and most firms of Insolvency Practitioners will offer free and confidential advice.

My advice to contractors is to talk to their accountant and help decide whether an informal strike-off or an MVL is the best option.  If a contractor is having serious cashflow problems then an insolvent liquidation might be the best option.

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How we as female entrepreneurs can inspire and educate the next generation of female leaders

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How we as female entrepreneurs can inspire and educate the next generation of female leaders 3

By Vaishali Shah, serial entrepreneur at Creativeid

There is tremendous enthusiasm and aspiration amongst the next generation of women who are passionate about being successful in their chosen career, whether it’s running their own business or rising to the top in the company they choose to work in. It is up to those of us who are already in the shoes they want to fill to be the role models and help them along the way. They need our support and guidance and access to tools and resources.

The Alison Rose Review of Female Entrepreneurship found that only 39% of women felt they had the capabilities to start a business compared to 55% of men because they did not fully believe in their entrepreneurial skills. The Review also found that only 30% of women said they already knew an entrepreneur compared to 38% of men.

Here are some ideas and suggestions of how those of us who are successful women in business can help and support the next generation of leaders:

Mentoring – connecting the leaders of the future with experienced and established entrepreneurs and leaders in their industry who know the steps and have already overcome the challenges. Meeting on a regular basis (in person or via video technology), answering questions, offering resources and helping them to define their vision clearly while pointing out opportunities would be extremely beneficial.

Female only networks – most events, especially in the financial and banking sector, are attended by a majority of men. This can be a bit daunting for women who tend to feel isolated. Unfortunately, there are very few female-only business networking groups. We need many more. Women have a different networking style than men. A female only network can give members a safe place to network, build confidence and relationships, while sharing some of the challenges they are facing and ask for guidance and support.

Panel discussions – invite successful female entrepreneurs and leaders from different industries to share their journeys to success. Their challenges, how they overcame them, what kept them going and any nuggets that could inspire the leaders-in-waiting. This could be run around International Women’s Day in March, for example.

Vaishali Shah

Vaishali Shah

Workshops/seminars – offer a seminar or workshop on topics that give valuable information on various aspects of running a business for entrepreneurs. In the workplace, have a system in place for ongoing training, development and engagement. Providing support, tools and resources will help to develop female talent. Make the workshops free or low cost so there is no barrier to entry. Help them to formulate a clear vision and a strong ‘why’ for their vision. This vision and ‘why’ will carry them through the tough times and be an important reminder and motivation to stay the course.

Recommendations – emphasise the importance and benefit of continual learning. Suggest podcasts, webinars or books to listen to or read. Being open to others’ experiences and ideas will help to educate and inspire them. People who achieve great success have a thirst for knowledge and are eager to learn from others.

Confidence and encouragement – give the next generation of leaders a sense of their own value and the value they bring to their market by the products and services they offer. They fill a need – they bring value. Help them understand that setbacks are a part of any business, but they should not be considered failures, rather, as gaining experience. Using setbacks as stepping stones towards their goal is what differentiates those who achieve great success from those who let setbacks define who they are, thus diminishing their chances of success.

Time for them – running or working in a fast-paced business can be all consuming, demanding and overwhelming at times, especially if they’re ambitious and want to get ahead. Teach women in business the importance of taking time out for themselves every day and to celebrate even the smallest success. Taking time out may seem counter intuitive, however it gives the mind time to relax and be open to inspiration and creativity and therefore being more productive.

Dame Karren Brady says – “If you have passion, drive and an entrepreneurial spirit, being female shouldn’t prevent you from getting where you want to be, and sometimes we must have the determination not to let it”.

Whether the next generation of female leaders are students about to embark on their business career, already running their own business or those in employment, we who have the experience and knowledge can play a crucial role in their climbing the ladder of success.

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