They say change is a constant. In 2023, the rate of change is accelerating. The skills required by today’s C-Suite are shifting, as are the strategies required to put the right people in place. This blog looks at some of the trends affecting UK Financial Services executives in 2023.
Environmental, social and governance (ESG) issues have become priorities for executive teams, partly driven by the demands of investors and a new generation of potential employees. EU ESG legislation is ramping up over the next three years. The move from best practice to regulated activity brings ESG into sharper focus. The “People, Planet, Profit” mantra will become more central to strategic decision-making.
The scope of regulation covers many related issues, some with metrics that will be alien to a typical Financial Services executive. While necessary skill sets can be recruited for further down the hierarchy, the challenge of bringing informed ESG leadership to the C-Suite will be harder. Building the kind of leadership team required to implement an ethical corporate mindset will require training, development and strategic hiring.
Leadership Style and Soft Skills
In late 2020 we said that the challenge of engaging remotely played into the hands of the most natural leaders. Hybrid working, social media, instant messaging and video conferencing have made executives more visible, and people have become used to having a voice. Today’s leaders must embrace their accessibility and make engagement part of their toolkit. This requires emotional intelligence, resilience, listening skills and transparency.
Modern leaders use a storytelling style to present their visions, adding personal information to bring it to life, engaging their teams and making it clear where everybody fits into the narrative. The evolving challenges of management and the problems to be solved mean that innovation, entrepreneurial spirit and the ability to foster it in others become more important too. Traditional leadership skills, strategic thinking and clear communication are still valuable, but the soft skills cannot be neglected.
Technical Skills for a Data-Driven World
Banking executives accept the need to be data literate, with enough digital skills to be authoritative and informed in problem-solving and decision-making. Technical talent can be recruited. Key staff need to be trained. Some banks deliver training by asking multilevel teams to develop an internal app or customer-facing FinTech solution. This encourages collaboration and problem-solving, provides a sense of achievement and avoids the boredom of dry theory. In the best outcomes, it generates a new product or application.
Building a Resilient Culture
The ability for individuals to be resilient, and to collaborate with different groups effectively to solve problems, can be recruited for at all levels. Executives need to lead by example, demonstrating a willingness for collaboration while reiterating corporate priorities. Being visible and engaged makes it easier to develop “champions” or “ambassadors” up and down the org chart. This practice gives large organisations the tactical agility to respond positively to market disruption, handle crises and seize opportunity from uncertainty.
“..crises and disruptions represent formidable opportunities to accelerate transformations. The way you handle crises makes you stronger and sets the organization up to take on bigger challenges..”
Frédéric Oudéa, Former CEO, Société Générale
Middle management, neglected in some companies, is not only a development zone for future executives, it can also be the engine room for delivering cultural change and maintaining strategic focus. Managers at this level are also vital for developing junior staff. Key traits to recruit or train for in middle management include creativity, transparency, operational discipline, a consultative approach and the ability to challenge, engage and inspire.
Companies that free up their middle managers see tangible bottom-line returns. A McKinsey Study identified optimising team sizes, reducing unnecessary admin and keeping some staff as individual experts as ways to free up time. It is also important to think about the management experience; to retain mid-level talent, it is important to engender a sense of purpose and belonging and to provide development opportunities. Modern DEI best practice also helps to retain talent.
Succession planning in Financial Institutions tends to be better the larger the organisation. In smaller firms, the board needs to be proactive in ensuring the company has appropriate leadership. The process is not simple in any organisation and the volatile environment means that a nominated successor may be a less ideal fit when the time comes. For example, leading through an inflationary market is not what many potential CEOs would have predicted three years ago. Do you abandon your first choice in favour of someone who has led a bank through an acute interest cycle in another country?
If the company has developed the resilient culture described above, with the ability to cope with new challenges, this might not be necessary. When looking to recruit senior leaders from outside an organisation, it is more important than ever either to seek cultural fit or the ability to steer the company in a new direction effectively without wasting the cultural investment that has already been made. Once a new leader is identified, it is essential to manage an effective transition where he or she is enabled to do the job.
Financial Services can be slow to change unless there is a tangible bottom-line return. This might explain why companies in the sector perform relatively well at delivering on diversity, equity and inclusion [DEI]. It doesn’t just make an organisation more attractive to new starters; there is a return on investment. Although there has been progress, there is a long way to go. Tokenistic appointments at the top of the organisation, diverse candidate lists and positive statements in a company report are not enough.
Leadership needs to analyse current demographics, skills gaps and future growth areas before aligning people strategy and setting measurable, time-bound objectives. Underrepresented groups can help meet the company’s challenges. With relevant role models up and down the hierarchy and compelling career paths mapped out, it becomes easier to create and maintain a diverse workforce and enjoy the benefits. As with any company strategy, each division should be motivated to help deliver on it with targets at all levels. At the very top of the company, it is important to have diversity across the key decision-making roles.
The Way Ahead
These are some of the trends that are relevant now and for years to come. A Search Consultancy like ours is part of the solution. Identifying the key candidates at mid to senior levels; playing our role in the recruitment and onboarding process to enhance the reputation of the hiring company; helping to achieve targets through shared goal setting and unbiased best practice. We are proud to see what our candidates achieve and to see the progress our clients are making in terms of ESG, DEI and generally being great employers.