Posted on 5th June 2019 by Jo Lothian
The Hayne Royal Commission report was made public on 4 February 2019, revealing morally questionable and sometimes illegal behavior from various parties in the banking & financial sector, which has been sobering to say the least.
While it is evident that many of these findings will spark heavy debates about the role that ethics should play in business, the broad-ranging recommendations made in the report will also have a significant impact on the financial sector as a whole. Some of these are already being felt, especially in the area of recruitment. But it is also having an effect in other industries, as well as in the fields of compliance, governance and risk for all companies – no matter their size or industry.
Until now, likeability, track record, high performance and credentials have been the guiding principles of hiring new recruits. But in response to the royal commission, it seems that hiring managers are ranking integrity and professional principles among their top criteria. In other words, change is coming. So to help you stay ahead of those changes, here are some facts about what the Hayne Royal Commission means for recruitment.
The most obvious and immediate impact is on the financial sector of course. In fact, the effects were already being felt in 2018. According to statistics released by industry super fund Sunsuper in January of this year, the finance and insurance services were the weakest performers of 2018. Although things started to stabilise in the last quarter, recruitment demand in the finance industry dropped by a whopping 9.6% compared to the previous year!
With all of the issues, failures and scandals revealed by the Hayne Royal Commission, it is no wonder that the banking sector is gearing itself up to face a regulatory climate that is much tougher than in any previous years. Some may be hoping for a return to the old ways once the excitement has died down, however, the international banking regulatory trends suggest that they should be prepared to face even more exacting conditions in the future.
Most financial institutions already have risk and compliance departments that employ hundreds if not thousands of people, however, if there is one thing the Royal Commission has made obvious, it is that the frameworks they had in place were not enough to prevent misconduct. With industry observers expecting stricter regulations and stiffer penalties for impropriety, compliance has become the driving force behind recent recruitment trends within the industry.
According to SEEK, they saw the Banking and Finance sector advertising an incredible 48% more jobs that fall under the Compliance and Risk category in 2018 alone. A direct consequence of this trend is that other disciplines within the industry have seen a marked drop in job adverts, most likely due to the fact that organisations are having to reallocate their resources so they can stay ahead of increasingly restrictive banking regulations.
In the same report, SEEK noted that candidates searching for jobs where “risk” or “compliance” are criteria had increased by 13% by the end of 2018. They also discovered that there was a decided lack of qualified candidates to fill these types of jobs in several areas including Melbourne, Perth, Brisbane and Sydney. What this means is that financial organisations will have to get creative in order to fill these roles.
While it will involve some tricky logistics, the simplest option is to take the search for candidates who are talented, qualified and experienced, overseas. There is a very niche skill set required to fill risk and compliance job roles, and these skills can differ from one industry to the next. Some candidates such as financial planners, auditors and accountants may have transferable skills that could mean they would be the ideal risk and compliance professionals. MAYDAY Recruitment currently have a huge number of contractors working in these types of projects, some with exact experience and others we have found to have the transferrable skills to easily move into these projects. If you would like some more information about this, please do reach out to us via the contact details at the end of this blog.
The Banking Royal Commission exposed the fact that financial reward is behind much of the nefarious behaviour being brought to light. However, with 88% of employees believing that being rewarded for great work is vital, financial institutions are unable to just cancel their incentive programs altogether. Instead, they must build a culture where the focus is not on greed at the expense of the customer.
"Rewarding misconduct is wrong. Yet incentive, bonus and commission schemes throughout the financial services industry have measured sales and profit, but not compliance with the law and proper standards."
With this statement Commissioner, Kenneth Hayne has made it clear that employee roles within financial institutions need to be reframed. In other words, they must be customer-centric in future rather than sales-focused. Although overall satisfaction with banks has increased slightly since the beginning of the year, it is clear that financial institutions need to employ people for whom integrity is inherent in everything they do.
Other considerations are job candidates who can learn and adapt to changes within the organisation, and who are painstaking in their approach to upholding the compliance policies of the company they work for. It is also important to recognise the fact that incentive and recognition programs based on an organisation's values outperform other programs on every level, with HR professionals being 9 times more likely to rate these value-based programs as excellent when compared to other program types. This would be an excellent trend to follow!
For once, Australia’s habit of lagging behind other countries when it comes to adopting new banking legislation is working in our favour. Not only can we tap these foreign markets for talent, but we can learn from their mistakes and implement the changes that are most likely to succeed in the long run.
If you would like more information on how MAYDAY can help your business nation-wide with the changing compliance climate, please reach out to one of our consultants today at email@example.com or 02 8377 5600.