Published : 2 weeks ago, on 20/11/2024

By Stephen Bacon

A company’s workforce is the indispensable lever in transforming corporate strategy into business success, and in no business is that truer than with financial services. Yet so often, workforce considerations have been ancillary to C-level strategic planning. It has been, basically, “This is our strategy, and these are our goals. Now get it done.”

Technological and cultural factors are quickly antiquating that approach. The financial industry must make three key changes as they pursue the holy grail of workforce strategy: employees from the mailroom to the C-suite gaining and maintaining a deep sense of agency and ownership in achieving the firm’s strategic goals.

• Adapting to automation and AI

The term “banker’s hours” has long been ironic for many early career professionals in financial services. Having started out on Wall Street, I know from personal experience what it’s like to churn through spreadsheets well into the night. It was a rite of passage: Grind it out for a couple of years and move on to more interesting work.

It also made strategic sense. Junior employees slowly learned the business while serving as raw horsepower in generating the numbers more experienced hands needed to make better decisions.

Artificial intelligence can wrap up that sort of number crunching before the first cup of coffee cools. That will undoubtedly reduce the number of new hires. But financial firms still need talent, and they must cultivate it by substituting the now-automated repetitive work for more strategic efforts.

That means weaving overall corporate strategy more deeply into the organization’s fabric. Your early career cohort should be encouraged to think about what your organization actually does to create business value—focusing on customer satisfaction, building new products, growing into or making acquisitions to serve new markets, and buying books of business. That means embedding corporate strategy objectives into their individual goals and objectives – and incorporating those factors into performance reviews.

A large insurer I’ve worked with has the right idea here. They’re growing through acquisition, and that means a lot of business integration and change management. They’ve embraced automation in part by capturing and distilling the key points of meetings using AI. That may seem trivial, but it isn’t: They’re having people who had been doing the menial work of notetaking and summarization think about how the firm can improve the integration and effectiveness of the combined organizations on a day-to-day, transaction-by-transaction basis. That’s an example of pushing strategic thinking through all levels of an organization.

• Make it about outcomes, not outputs.

However vital outward-facing customer service has been in financial services, it is not known for its emotional sensitivity inside the corporate gates. Competitive, tough-it-out cultures have predominated. But that may be changing.

AI and automation are part of the story. There’s less repetitive work to plow through and, as noted, more opportunities for interesting work assuming leadership’s deliberate strategic engagement on this front.

That will involve supporting all three key elements of a successful workforce strategy: alignment, movement, and engagement. Alignment is about establishing and maintaining a shared understanding of strategic direction. Movement is about making progress toward strategic goals. Engagement is about employees buying into the firm’s strategic direction and understanding the importance of their roles as individuals and teams in achieving strategic goals.

Movement is easiest. Alignment can be taught. But engagement, you’ve got to earn that.

To build engagement, financial leaders at every level should clearly articulate how the specific capabilities of teams and their individual members are critical to the strategic success of the organization—and how that translates into team members’ personal and professional success.

Leaders who focus on delineating and rewarding for outcomes relating directly to strategic successes—not just outputs incidental to them—will be more successful in earning engagement.

• Hire for capabilities, not skills.

There is, and always will be, financial services work that demands exceptional quantitative skills. But the financial industry is already finding that an ability to think cross-functionally and probabilistically is more      important in the long run than whether a prospective hire has majored in finance, can build a spreadsheet with pivot tables, or can run a Monte Carlo simulation. (Annie Duke’s “Thinking in Bets” has been popular in financial circles for a reason.)

Many quantitative skills can be built through training and experience. Charisma, communication habits, the ability to sense something doesn’t quite add up based on incomplete information, a preternatural sense of priorities, courage, an ability to digest negative feedback and self-improve – these are harder to teach.

The good news here is that the next-generation workforce naturally sees the world in cross-functional terms. Consider the career path to which so many in Gen Z quietly or less-quietly aspire: influencer. TikTok/YouTube/Instagram influencers do it all – conceive, create, produce, market, sell, manage the brand, manage revenues, and invest in their businesses. This is a generation of systems-based thinkers.

Financial institutions can gain immensely by harnessing the emerging workforce’s interdisciplinary interests and expansive worldviews through the three steps outlined above. To that end, leadership must establish strategy, communicate it, and expect measurable action based on it. Strategic goals should steer the automation-driven redeployment of – and foster the engagement of – today’s workforce. Strategy should drive the acquisition and development of new talent based on criteria that best align with strategy goals. In short, strategy is lynchpin to adapting to new workforce realities in ways that most benefit your people as well as your firm.

Stephen Bacon

Stephen Bacon leads the strategy practice at The Gunter Group where he partners with senior executives and leadership teams in the experience of creating long-term strategies. After starting his career on Wall Street, he has spent two decades advising Fortune 500 companies, government entities, academic institutions, and not-for-profits on how to answer the questions, “Where are we going?” and “How will we get there?”