The Fintech industry is experiencing unprecedented growth and at its very core are various start-ups and financial institutions which are vital in keeping the industry running. With considerable efforts from financial institutions, the Government, start-ups, and venture capitalists, the Fintech ecosystem, is expected to touch USD 2.4 Billion by 2020, as per a recent study by NASSCOM.
Financial institutions are increasingly adopting a collaborative approach with Fintech start-ups to provide personalized and engaging services to their customers, which thus require appropriate skill/ talent to address the increasing demand in this sector. The Indian Fintech market is expected to grow with a CAGR of 22% in the next five years and like all other industries, Fintech will also see brisk talent acquisition ahead of the appraisal season for the year.
Following are the factors that will shape our industry’s performance appraisals:
Millennials in FinTech
Behind the growth of Fin-Tech is the core of hardworking millennials that are a new generation of employees with a completely different set of engagement drivers. They are different with respect to their need of immediate feedback/recognition, accelerated career trajectory and the need to work on something new and challenging consistently. Thus, whatever means we chose for appraising them, it must be simple to use, continuous, tech-enabled and transparent. They need feedback on the go and the traditional annual or semi-annual reviews are too infrequent for them. Not only are the timing and frequency of feedback important, but also timely distribution of rewards. They are accustomed to a higher level of engagement and empowerment and similarly expect regular affirmation from their managers. Thus a ‘pay for performance’ philosophy that rewards employees more regularly and frequently, works best for them.
Perceived fairness in evaluation & rewards distribution
One of the most important reflectors of a good appraisal is its transparency, which drives the attribute of fairness. In the current scenario, what we all should focus on is ‘procedural fairness’, which ensures that the key elements of performance management are designed well and function fairly. Following activities must be looked at to keep the system fair:
- Make the employees understand what their goals are and how they link up to the org priorities
- Beefing up the skills in line managers to equivocally cascade the principles of appraisals and remove biases in the system
- Ensure everyone is aware of what goes into evaluating the performance of an employee and how are the rewards distributed at a team and function level
Navigating in the VUCA world
Constant transformation is the new normal when it comes to Fintech. Regulation, competition, consumer preference, and market dynamics change very soon. Additionally, every employee must be treated differently according to their capabilities, to harness their potential in the best manner possible. Thus, our performance systems, in order to accommodate all these changes, should be adaptive by design. It’s critical to provide greater freedom about the way employees set and accomplish their goals – while aligning to the organizational goals and objectives. The managers should also adapt their managerial styles to fit the development level of their different team members. They should be mature enough to customize the system at their end– be it the frequency and timing of feedback, the content of the communication, or the need for recognition.
Emergence of disruptive skills
In the last couple of years, we have seen the emergence of numerous skills –Machine Learning, Big Data, Artificial Intelligence, and Technical Program Management. With limited avenues for formal skill upgradation available in the market, it has been quite challenging to hire candidates with the right skills and ensure they stay relevant for the job. In such a scenario, managers must be enabled to 1) define targets & expectations that can be subjective to an extent and can be improvised upon spontaneously, 2) integrate development of these skills with the appraisals and enable their team members to change gears basis org priorities and 3) schedule regular performance conversations that sets and measures the right expectations
However, it will be interesting to see how well FinTech organizations try to find answers to these challenges. Some fundamental questions that need answering are:
- How do we ensure that every employee feels they are rightly rewarded for the efforts put in?
- How do we build managers' capability in the times of byte-sized learning?
- How do organizations keep pace with this evolving industry and derive an adequate value for all stakeholders?