The human factor.
Investment – the City is all about investment. We trade and invest in stocks, equities, commodities and all manner of other instruments, but we rarely discuss our investment in people. By Susan Cuff, Managing Director, talentflow.
According to figures published in 2012 by the City of London Corporation, over 300,000 people commute to and work in the “Square Mile” on a daily basis, with the majority working in the financial services sector. Every one of them has been employed for their skills and potential, and every one of them makes up part of the world’s largest financial ‘machine’.
For an employer looking to recruit, this makes the City a pretty daunting haystack in which to find your needle. The challenges are many. You know what you are looking for, but how do you find the talent that fits your business? And how do you hire, retain, develop, and make best use of that talent? And, if and when the time comes, how do you exit that person in such a way that your personal and corporate reputations remain intact, as do theirs?
The City is all about the capital markets, but how much time is spent considering the human capital? It is this capital that operates the markets, delivers the margins, delivers the gains and delivers the benefits to a range of customers, and like the Secret Garden, the gate needs to be unlocked and the capital within needs to be nurtured with care and attention. Even those who have found the keys, rarely spend enough time in that garden. How much of the board, executive or management meeting agendas are dedicated to people and resource issues? Too often, nowhere near enough. Cost of hire, time to hire, competitors for talent, our USPs as a hirer, our employer brand, our good and bad hiring case studies – these KPIs are equally important as the sales, margin and EBITDA numbers. They are crucial.
Although I’m sure it was not their intention, the financial services regulators might provide some guidance. “Best execution” is the term used in securities trading to ensure that the best possible outcome is achieved for customers. The Markets in Financial Instruments Directive (MiFID) defines it as: firms “must take all reasonable steps to obtain the best possible result, taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.” While I’m sure it took an army of consultants to come up with the actual wording, if you read it again, isn’t it a summary of what your talented people do all the time? It doesn’t say anything about “never getting it wrong” or “average execution.” Why would it? We all want to do our best and give our best.
Therefore, it’s no surprise that successful businesses invest in their human capital as much as in their systems. They do everything in their power to ensure that the talent that flows through their businesses is able to deliver to the best of their ability and achieve best execution.
Retaining the talent is just as important. Having spent time, effort and money on finding that talent, there needs to be a continuous investment in developing and keeping that talent in your business.
The real cost of losing a key member of staff is a great deal more than we generally assume. The assumption has always been that the cost is the recruitment or agency fee to replace, plus any increase in the salary level. Wrong! Statistics show the real cost is close to 12 months’ salary of the departed person. There is also the pressure on the rest of the team to close any skills or knowledge gaps, management time to manage the departure as well as the new recruitment process, the induction, training, and management of the change – do the math!
The Saratoga Model (the Saratoga Institute is a research firm known for benchmarking best HR practices) calculates those costs in hard terms and it is compelling reading. Further, if you do succeed in persuading the departee to stay on, by promising or even delivering promotion/training/more money/bigger bonus, the statistics over the last 20 years show that the average length of time you will retain that person is less than nine more months. The psychological contract has, in effect, been broken.
Your greatest asset
Take a look around the City and you will see examples of great businesses all around you. But what makes them great? Is it just their profits, or how long they’ve been around? The heartbeat of any business is the people that operate within it. And we admire the organisations that routinely attract great people.
Can you look around and spot the talent? Do you know how to attract and hire it? Is your company rewarding top talent? And for business leaders, are you living up to the oft-repeated phrase, “people are our greatest asset,” as seen in many an annual report? These are questions that must be asked as rigorously and regularly as “how close are we to sales target.” In many acquisitions, the acquirer is as hungry for the human resource as for the business base.
These are some powerful questions that sit at the heart of leading, managing and delivering in your businesses. Nothing around human capital management, at any point in the cycle, is easy. But when you do take on the challenge of finding, hiring and retaining top class talent, the rewards are there in best execution. Time and time again.
© BestExecution 2014