A recent Harvard Business Review article stated, “Great performance can never come without great people and culture, and the opposite is also true – great people and culture are affiliated most with high-performing organisations.”
Over recent years the financial services industry has seen the harmful results that the wrong culture can cause, both in terms of performance and reputation.
To help prevent further financial crises and scandals, a number of financial institutions are building corporate cultures to put people’s needs at the heart of decision-making. This has to be fuelled by having the right people at the top of those organisations.
Research from HireRight, involving HR directors in the UK’s largest financial service firms, assessed the best ways to identify if and how the most suitable people are being recruited to lead.
In the highly regulated financial service industry, it might be assumed that recruitment processes, especially for senior positions, would be robust and consistent. However, the research found that this is not always the case and identified three main areas where recruitment processes are falling down.
1. Robust processes for senior leaders
More than two in five (43%) of financial service firms use a different process every time a board member is recruited, suggesting that the hiring process to find the best leaders is not tried and tested.
Often (41%) it is assumed that those applying for senior positions have not lied. Yet in a worrying proportion of financial service firms (43%), the HR department has experienced a person lying on their CV to try to secure a leadership role.
A robust process is clearly needed to recruit the people who have the skills and experience to make strong decisions and drive genuine culture change.
2. Consistency at each level
Some financial service firms spend less time checking their senior employees than those on the frontline: currently, in 45% of cases, graduates go through more tests and interviews than CEOs during the selection process.
This suggests that in some firms there is not a process in place to assess the level of risk associated with each job role, and so ensure that the appropriate amount of due diligence is carried out each and every time. Senior leaders pose more risk to reputation and profitability than other employees so a more thorough amount of research into their background should be carried out before appointment.
3. Relying on connections
While industry reputation and personal connections are useful to make employment decisions many organisations are relying too heavily on them. In over a third (39%) of cases, people win senior-level positions through their industry connections.
Many businesses are now looking towards acquiring a more diverse workforce that can bring fresh ideas and insight into a company, rather than sticking with those they already know.
With the Financial Conduct Authority’s senior persons regime coming into effect in March, senior leaders will be under more scrutiny than ever. Those at the top need to be confident before this regulation is introduced that they have a culture in place within their own organisation that encourages the right decisions to be made at every level. With great people in place, great performance will follow.
Steve Girdler is managing director for EMEA at HireRight, the global candidate due diligence company