Because of new compensation regulations in the United States, United Kingdom and other countries, financial services companies are placing greater focus on talent management and rewards beyond pay in an effort to attract, retain and engage top talent, according to a poll of financial services executives conducted by Towers Watson, a global professional services company.
Additionally, respondents are evenly divided regarding the current regulatory environment's effect on risk taking in the industry.
Half of the respondents recognize little or no impact on risk taking in their organizations due to the recent regulations; however, the other half of respondents say pay structure regulations have at least moderately impacted their organizations. Seven percent of respondents say the new regulatory structure has had a significant impact, and another 7 percent of respondents say pay structure regulation has fundamentally changed how the industry views risk taking.
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"Traditionally, the financial services industry has differentiated itself in the market for talent by its ability to offer above-average incentive compensation opportunities," says Mark Shelton, global co-leader of Towers Watson's Talent and Rewards financial services practice. "With the new regulatory restrictions limiting their flexibility in that regard, global companies are focusing more on talent management and redefining the 'deal' with their people."
The survey also finds that 31 percent of respondents say redesigning the employee deal or value proposition is the most troubling issue while 25 percent are most worried about employee engagement. Another 22 percent are most concerned about by compensation issues. Over the next few years, 47 percent of respondents plan to focus on improving leadership effectiveness, and 29 percent of respondents intend to center on redesigning key programs, including performance management and career development.
"Clearly, the current regulatory climate is creating new challenges around talent and rewards in the financial services industry globally," says Chris Fabro, the other global co-leader of Towers Watson's talent and rewards financial services practice. "The leading companies are struggling to adapt and redefine their programs for a markedly different environment from what preceded the financial crisis."
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