A whiff of change in talent landscape

Where an institution is, in its time trajectory, is fundamentally dependent not just on the sum total of its individual human capital, but on how effectively it draws out the best from its talent bank at any point of time, through effective placements, performance appraisal, rewards and recognition mechanism…Today management itself has come to mean how to attract talented people, how to nurture them, how to develop them and to give them the necessary space. Indeed, when it comes to Human Resources, it is a great humbling factor – the best of knowledge workers who have ready answers for just about every technical issue are necessarily humbled when it comes to human resources. When we deal with humans, there are questions, issues and concerns – but no ready answers, no quick fixes, no instant remedies. It is thus with humility, but humility combined with a will to succeed that we can approach any Human Resource subject. 

This is part of a speech that V. Leeladhar, the then Deputy Governor of Reserve Bank of India, gave about a decade back, while speaking on the occasion of the centenary celebrations of the Corporation Bank. Ten years later, these words still ring true. Companies in the BFSI segment continue to struggle with managing human capital and as competition heats up with changing regulatory environment and the emergence of new players, organizations have realized that talent is the biggest asset they have. There have been many game-changing economic considerations that companies in the sector have had to contend with such as large-scale retirements, grant of new banking licences, raising the cap on foreign direct investment (FDI) in the insurance sector and the rising exodus of talent from the mutual fund industry. This story aims to look at the talent scenario in the BFSI sector amid all these changes and what companies are doing to cope up with them.

State of Human Capital in BFSI sector 

If one were to look at the history of banking in the country, the three major strategic inflexion points along with the advent of the Information Age are:

• Nationalization of banks in 1969-70

• Financial sector reforms that commenced in the early 1990s

• Partial opening of the insurance sector

The emergence of private companies in the sector has led to not only innovation in product offerings but also increased the quality of talent. There is a huge scope for expansion in the BFSI sector as nearly 40 per cent of the population (480 million people) has no access to financial services. Besides this, rising disposable incomes and a younger population are beckoning to be tapped. The fourth inflexion point will be extending the reach of the sector to Tier-II and Tier-III cities while keeping innovation and customization in mind.

However, as the central bank plans to dole out more licences to financial sector companies and the government paving the way for global risk companies to set up base in India, the sector will face a talent crunch. As appropriately put forward by R.P. Yadav, Chairman and Managing Director at Genius Consultants, “The BFSI sector will have a talent crunch as RBI will be issuing licences to several new ‘would-be’ banking firms. The existing banks will lose out employees to the newer players in the market. Thus, these banks must strategize to hold on to their current crop of resources and expedite the hiring process for filling in the ex-employee gaps.”

According to Michael Page, banking has witnessed an uptick in attrition levels of 15-20 per cent this season. Front-end roles like corporate and retail banking are looking at expansion and will see the most attrition. Nicolas Dumoulin, Regional Director at Michael Page India, said the new bank licencees are in the process of expanding their leadership teams with candidates from domestic banks (as they are more accustomed to the Indian market and assure scalability). For positions that are lower down the hierarchy chain, banks are willing to fill it up with people from MNC banks. Dumoulin added, “Organizations are getting innovative while dealing with talent churn, offering international moves and huge counter offers. They are also offering large incentives for women employees, including complete health insurance plans. Qualitative and quantitative benefits are being offered to ensure that the best talent is retained. Bonus schemes have had a facelift as well, with the introduction of newer incentive schemes such as deferred variable payouts.” Mayur Satyavrat, Head-Learning, OD & Talent Management, RBL Bank shared an interesting perspective. “There are multiple business models that exist within each bank and hence one-size-fit-all talent management will not work in banks. Hence, the way you approach talent will be very different depending on the kind of business model and life cycle that you have within the bank. There is a lot of pressure on the existing large players. But, we at RBL don’t have such a large employee base like many large players. Hence, the strategy that we have for attracting and retaining talent is very different from the rest,” Satyavrat said. Citi India’s Bhanu Singhal who leads Talent & Organization Development reaffirms Satyavrat’s view and said that while existing established players tend to be the easiest poaching ground, such scenarios make the talent market more competitive, ensuring that organizations put in concerted efforts towards development and retention. Thus, he adds, the HR function is becoming even more business aligned and innovative in its approach.

With the rising cost of running operations and decreasing margins, resources are under tremendous pressure. Since it cannot be sustained, the banks have to find new and innovative ways of finding and managing talent. “Companies will always look at getting only the required amount of talent from the market. However, over a period of time that has to shift to making talent rather than buying talent. They have to create the capability within the bank in order to create a talent pool rather than completely depending on the market,” Satyavrat added. On the other hand, the approval of 49 per cent FDI has opened up opportunities for various new players to enter the Indian insurance market, according to Sunil Wariar, Executive Vice President-Human Resources, Future Generali Life. Nagina Singh, Chief Human resources Officer at Bharti AXA Life Insurance, said this would raise the game in a sector which when compared to other sectors like FMCG is relatively less favorable from an employability perspective. “International players have aggressive plans and they will be willing to go the extra mile to attract talent in India.” Dumoulin of Michael Page echoed Singh’s views. He said that the inflow of overseas players is a matter of concern for people working with domestic insurance companies. While domestic players can do internal transfers within their associate banks and are better placed to tackle attrition, pure-play insurance players will find this slightly more difficult.

It is estimated that as the industry keeps growing, about 2 million insurance professionals will be added by 2021. “India is on its way to becoming one of the key insurance hubs globally. There are larger insurance companies globally who outsource their core insurance functions to India, given the expertise and the IT infrastructure, thereby enabling more cost effective solutions. There has been a significant increase in the number of BPOs in the insurance sector. This will further spur the demand for core insurance professionals with technical and domain expertise. There will be a healthy competition in terms of talent and companies will increasingly focus on creating a differentiated value proposition to attract new people and ring fence existing talent by providing ample opportunities to fast track career progression and continuous technical and domain skill building,” Warriar added.

This industry is growing at a fantastic pace and good talent is in demand, said Mohan Pandalai, Managing Partner at Antal International. “Having said this, attrition is also high and companies are doing their best to retain their star performers. To curb attrition, companies are trying to retain talent by giving higher portfolios and better compensations. Issuing ESOPs is one of the most common techniques being used currently in this sector to curb attritions, especially to attract the younger talent. Many companies are using performance driven rewards, incentive schemes, year-end variables on achieving targets, employee engagement, career progression focused training to retain their staff,” Pandalai said. The rise in the competition will have a direct impact on the demand for ready talents and open the ground for poaching, said Sudhir Dhar, Director, Head HR & Admin, Motilal Oswal Financial Services. Terming it as a “positive wave for job seekers.” Dhar adds, “New talent acquisition tools and techniques are emerging across the globe to attract the best talent. Referral schemes are on the rise. While the industry is on the run for attracting potential talent, the chances of losing the team and not just a single member are very high. Thus, organizations will have to strategize their retention and development plans to retain their key talent.” According to Saba Adil, Head-Human Resources, AEGON Religare Life Insurance, the skills/capabilities in demand will depend a lot on the strategic intent and business model of the new players, including their market proposition, product/ service offerings, markets they’ll operate in etc. Niche talent and core skills will be in demand. While most insurance companies we spoke to say that they expected widespread changes in the talent landscape, Sugata Dutta, EVP-HR, Kotak Mahindra Life Insurance felt otherwise. “The banking sector has been geared up for the churn for some time, but I don’t think raising the FDI cap will have a significant impact on the insurance sector currently because companies are not going to set up operations overnight as there are issues around current legislation on ownership structure,” he said.

The way forward for companies 

Identifying key talent is a universal truth for companies and the same applies here as well. Former RBI Governor Dr. Bimal Jalan had pointed out “capital and technology are replicable but not human capital which needs to be viewed as a valuable resource for the achievement of competitive advantage.”

Service providers feel that companies need to invest a lot more on training and development programs for existing talent as well as incumbents. According to Yadav of Genius Consultants, training will help the talent to get adapted to the innovative technologies prevalent in the sector. Besides, most companies have started using technologies like mobile applications for recruitment purposes and HRMS software for workforce management. The existing players are in the danger of losing their employees to the new players and hence they must strategize on how to hold on to the current crop of resources. Adil of AEGON Religare Life Insurance said, “We have a formal process to spot key talent and potential. It is also important to understand and identify what the employee aspirations are and when you combine both you have a customized plan that works. We got an engagement score of 80 per cent on the Hay Engagement Survey in 2015 with 95.6 per cent participation. Our endeavor is to communicate more and more with employees, stay connected with them, instill pride in what they do and engage them for a larger purpose.” On the other hand, Motilal Oswal believes that one should engage with the candidate, who has been given a job offer, even before he/she is on board the company. MOFSL believes in hiring right as it has a direct implication on attrition. “If your hiring is right, then engaging and developing would be an easier task. We use an early warning system to engage and retain our employees,” Dhar said. The company has instituted engagement programs like “Focus Groups” and “Dil Se” where the employees share their issues with respect to job, working environment, role etc. and suggest the solutions as well. “Such forums makes the employees feel involved and heard. Engagement at each level of the pyramid is different. We have designed our engagement plans at an individual level, group level and organizational level so that each employee feels drawn into the organization,” he said. Keeping the talent churn in mind, MOFSL has started to develop in-house talent to take up leadership positions in the future. “This involves creating individual development plans of the key talent and monitoring their growth very closely,” he said. They have another program called SPARK, in which they rotate management trainees through their various businesses to ensure their continuous learning and development. Thus, we create a pipeline of leaders allied to the culture of MOFSL, Dhar added.

The key differentiator at Citi is the opportunity to work with the best and most innovative minds in the industry, experience global careers and delve into every aspect of banking. “One of the big advantages of being a global organization is that we are able to leverage upon the learnings from other countries as they may have gone through similar economic cycles/challenges at different points in time,” Bhanu Singhal said. “From a career growth standpoint, each employee at Citi owns his/her career and their manager and the organization plays an important role in helping them achieve their aspirations. Hence, we have a very participative process towards engaging and developing our talent. It begins with the preparation of Individual Development Plans and development discussions with managers. Support by the means of coaching and mentoring helps them to advance in their career. Our segmented talent development approach ensures early identification of talent, providing structured development experiences and learning opportunities keeping employees engaged with their development. We also run several best-in-class leadership development programs providing regional and global exposure,” he said. Sugata Dutta of Kotak Mahindra Life Insurance had an interesting anecdote to share. “In 2010, when the regulations were revised, productivity crashed by half. Attrition soared. The morale of the sales force was at an all time low. So, we started future-proofing ourselves. The insurance sector generally suffers from the lack of a leadership pipeline and that is something we have been able to establish here. Development of managers takes time and our Managerial Effectiveness Program has been a huge success. Today, we have a five-year visibility of how our people will grow and evolve.”

At RBL, Holistic culture and EVP plays a very important role in engaging talent. “We have a Talent Committee, Assessment and Development Center, 360, Leadership & Talent Maturity Profiler, which identifies the key talent for the talent pool. Once they are identified, we run a year long intervention for them around personal, team & business leadership. For every level, we map the complexity of the role, span of control, ambiguity, decision making etc. The intervention takes place across eight levels and is called Future Leadership, current Leadership and Thought Leadership. This is part of a larger program called Leadership Acceleration Program (LAP). There are other programs for talent leadership called Young Leadership Development Program (YLDP), a functional leadership program and a business leadership program and Executive Leadership Development Program for the management committee and above. For Thought Leadership, RBL Bank has tied up with one of the leading university and is planning to do research in larger systemic area which is very vital & important for industry at a lrage to create that capability,” Satyavrat said.

Nagina Singh of Bharti AXA Life Insurance said, “At Bharti AXA Life, more importance is given to nurturing and retaining talent as compared to acquiring new talent. Hence, we consistently strive to improve our learning & development infrastructure and people management processes. We believe in personal growth of individuals and we provide a lot of short-term and long-term global opportunities to our employees. There is a lot of work on mentoring and grooming employees for leadership roles. We are also looking to have a development agenda that cuts across lines not only for the top managers but for frontline employees as well. Also, we’ve seen from experience that the initial one-and-a-half years are crucial for an employee, if we are able to provide a compelling employee value proposition, the employee stays with us for the long-term.”

How companies are leveraging ­technology 

With the expanding workforce, leveraging technology has become the need of the day rather than just a tick-in-the-box. Technology is being used to gauge the mood of the employees, to track the extra work hours put in, to address day-to-day issues and also for HR processes as well. Anupam Suri, Head, Learning & Development, Citi India, said, “Technology can be a great enabler and Citi has been a market leader in leveraging technology for customers. In people practices, we have been using technology for engagement and learning in various ways. The in-house social networking site Citi Collaborate is used to conduct virtual leaders connect sessions, live web chats, HR reach-out sessions, exchange ideas, thoughts etc.  This addresses the unique needs of engagement with GenY & millennial employees. Additionally web-based training programs are very successful and address the current business realities for having shorter and more focused learning interventions. Through a host of data analytics, we refine people interventions to suit the need of the hour.” Customized mobile applications that enable candidates to research job opportunities will be a big game-changer. “Technology will play a huge role in creating further awareness amongst the targeted talent pool and data analytics tools will help quick and informed decision making. Leveraging technology instruments like mobiles for interview and selection purposes will play an increasingly important role,” according to Wariar.  

Kotak Mahindra Life’s Dutta said, “We are the first insurance companies to be on the Cloud with the performance, talent and succession planning model; we went live in August last year. Performance Management has been one of the trickiest aspect for any HR function as the manager tends to put his/her personal nuances. So when we moved to the Cloud, our entire goal-setting for the next year was done there and it saw a participation of 98.5 per cent.”

“In 2010, we designed our own psychometric instrument for frontline staff. We have used it about 50,000 times by now. Through this tool, we look for certain traits and qualities, which ultimately help a person, succeed in his role at the agency. At the managerial level, we take a group of assessments such as the one around capability and orientation. We use a pyramid of external assessment tools to aid us so that our managerial recruitment is right,” he added.

At MOFSL, they have an internal portal that helps them to resolve day-to-day issues with a click and ensure shorter turnaround time. They also have a system to track how much time employees are staying back in office as it helps to root out various issues department-wise. Technology plays a huge role in enhancing the effectiveness of various processes like recruitment, payroll and learning. In payroll, employees are given the option of a flexible salary structure. “Recruitment Management System (RMS) is an online tool designed to manage the entire recruitment process right from the line manager raising a requirement to the candidate being offered. Apart from RMS, we use online interviewing and assessment tools for our recruitment process. This helps us filter the right candidates in the initial stages and saves time of both the candidate and the recruiter. Not only saving time, but it helps to create a quality database of the candidates which can be referred to during any future requirements,” Dhar said. Antal International said that many financial companies are looking at six sigma/re-engineering professionals. They are also looking to hire key HR people with tech degree. HR is also now specializing with roles like OD, OE, HR Technology etc. On the other hand, Michael Page’s Dumoulin believes that managing workforce is “a subset of technological innovation.” “We will increasingly see technology at the forefront from a hiring perspective as far as any HR tool is concerned. It is a much easier and more efficient way to operate. There is a growing need for platforms where both recruiters and candidates can interact with each other.”

Another trend apart from the rise of job portals that one needs to look out for is digitally driven appraisal system. It would ensure that employee performance is documented and helps avoid discrepancies at a later stage. It eventually helps companies become more efficient. Nagina of Bharti AXA believes that technology will play a huge role in people processes like hiring and retention. “We have a proper HRMS system in place, which many companies are still struggling with and don’t face any hygiene issues. From a business point of view, while it sounds primitive, hygiene is extremely important as we have 2000 plus people as frontline staff. I think there is a lot of scope of getting into the digital and social space from talent perspective, where I think our exposure is still primitive. Automation is the way to go as insurance is a highly people-centric business, but the Indian industry is not yet ready for it. You could just possibly see incremental changes.”

The beginning of the end 

The BFSI sector is touted to be one of the biggest job creators in the next five years. The National Skill Development Corporation has said that the country will add an estimated 2 million jobs to the banking and insurance sectors by 2021. The geographic spread of India offers a unique opportunity and challenge to the recruiters: On the one hand, they have to comply with changing regulations that require them to increase financial inclusion and focus on rural areas. On the other, it offers them the potential of untapped opportunities. While developmental bank and financial inclusion is the way forward, not many banks are prepared to provide such services. There are close to 25 players in the life insurance sector. The first line of direct employment is the frontline staff. Nagina Singh of Bharti AXA Life said that while attrition is an accepted norm in the industry, there is a need for the industry to think and act differently. “We have to break the shackles of conventional hiring and retention as we are just looking at talent within the BFSI sector. We need to look beyond the sector and that could prove to be the game-changer,” she added. RBL’s Mayur Satyavrat believes that rapid changes in technology, cost & capital, governance & culture and talent are going to be the four main challenges facing the BFSI sector going forward. “Hence, sustainable growth will be biggest challenge. The business models that banks operate on currently are likely to change in the next 10 years and thereby talent management will also see a huge change. HR & Talent leaders will have to think like a business head or a CEO and that competency is very rare in supply in this function & hence in order to be relevant this function will undergo huge change.” According to a CII and PwC report, measures like data aggregation, customer relationship management and financial inclusion initiatives are essential to take banking to the next level of growth. And that in turn will shift the focus of recruiters and that of the HR leaders as well.

So how do HR leaders upskill themselves? According to Satyavrat, firstly, the technological transformation has to be aligned to the organization’s life cycle. It can’t be an ideal scenario. It has to be aligned with the way the organization is evolving and the maturity level of the organization. The HR function can’t be ahead of the business function as it would create a lot of frustration and instead of enabling, it is likely to be disabling. The second way would be through external cross-pollination and bringing in best practices. The competency of HR is going to evolve from a pure-play functional role to a techno-functional role in the next decade. So, HR managers need to adapt and become relevant to business leaders.  

Michael Page predicts that the impact of the talent churn will not be immediate as any new player usually takes around 12-18 months to settle down (in terms of rolling out its expansion plan). A gradual rollout is expected, similar to the one in the banking industry. However, the attrition levels will not spike as much as they were when the banking licences were rolled out. Clearly, it is emerging that companies are indeed worried about increased competition and have already begun efforts to attract and retain talent. The impact of the changing regulations will not be felt immediately even though new players in the banking sector like Bandhan and IDFC are going to begin operations in another two months.