Across industries, organizations were already facing a shortage of highly skilled IT talent—and fierce competition for a limited pool of available candidates. The Great Resignation has only intensified this significant IT talent gap, prompting banking and other financial services (FS) organizations to dramatically rethink their approach to hiring and retention.
One of my recent blogs addressed how financial institution (FI) CIOs and CTOs should think about confronting the war for IT talent. My team is currently conducting new best practices research to help our clients rethink their approaches to attracting and retaining talent in this environment.
This post covers six questions that members of our Financial Services CIO/CTO Practice Research Council have asked consistently. It provides perspectives that IT leaders can use to frame the business case for reinventing talent management.
The war for IT talent has impacted banking and FS since the turn of the century; what’s different or more challenging about it now for FIs?
Today’s IT talent challenge is different in several ways than it was only a few years ago. The onset of the global pandemic accelerated a generational shift in the workplace. Early baby boomer retirement has caused skilled workers to exit the labor pool at a faster rate, while younger workers are switching jobs at an increasing rate (i.e., the Great Resignation). Younger cohorts entering or advancing in the workforce, particularly Gen Z, are seeking greater flexibility in where, when, and how work is done.
In addition, the preponderance of advanced, emerging technologies and methodologies means that there is a highly limited pool of workers (internally and externally) with the specialized skills needed in growth functions like data engineering and machine learning.
Together, these characteristics have heightened pressure to reinvent talent attraction and retention strategies.
How is the Great Resignation that we hear so much about impacting the banking/FS industry; are there unique aspects that industry HR and IT leaders are struggling to address?
The Great Resignation is driving much higher levels of turnover across all levels (experienced and junior) impacting IT in the banking and FS industry.
Strategies and approaches that FIs have traditionally leveraged to attract and retain talent are less effective in achieving talent outcomes in this climate. For example, reward packages don’t create incentives to stay with organizations for the long term (e.g., defined contribution plans) or adjust rapidly to changing labor market realities (e.g., salary structures).
Many FIs do not have comprehensive or formal career pathing initiatives. Combined with learning and development programs that aren’t suitably focused on upskilling/reskilling for higher caliber IT functions like cloud architecture, many employees perceive (or realize) a lack of options for career mobility inside their organizations.
How is the IT talent crunch impacting progress on and success of enterprise IT priorities and function initiatives that CIOs/CTOs lead?
Digitalization and business model transformation put a premium on acquiring talent for newer skills and roles that are emerging where current workforce capabilities are lacking.
Enterprise IT priorities are driven by projects that depend on innovative technologies like APIs, native cloud services, and AI/machine learning models and methodologies like the Scaled Agile Framework (SAFe). The need for skilled IT talent in these areas is acute. If organizations can’t get the specialized skills required to execute, then projects are at risk or delayed at best.
One strategy that has become more prominent is leveraging adjacent skills to build workforce capabilities internally, whereby employees can be reskilled or upskilled (e.g., ETL and ELT in data engineering to organize and model large data sets). FIs have not traditionally emphasized identifying current and emerging roles with related skills to invest in skills-based learning and workforce mobility approaches.
What are the critical, innovative skills and roles where FIs face the toughest competition for talent? How has the competitive landscape evolved during the pandemic?
Critical roles and skills in enterprise architecture, cloud and data architecture, machine learning (including algorithm builders), data engineers/big data, cybersecurity, robotic process automation, and Agile product development (especially at manager and leader levels) are the toughest to attract and hire for given the scarcity of highly skilled talent in the labor market and the ongoing demand across industries.
FIs face intense competition with global brands outside of FS in software/online services and fintech startups that makes continuing to focus primarily on buying (i.e., hiring) talent to fill emerging roles unrealistic and ineffective.
How are Aite-Novarica Group clients addressing the war for IT talent; what strategies and practices are being reimagined or adopted in this current environment?
As part of a comprehensive IT talent strategy, CIOs and CTOs should prioritize two major initiatives: 1) early career talent pipelines and 2) workforce skills development for future readiness. FIs must create a more formalized approach to early career talent that pulls in candidates before they enter the labor market and creates pipelines to the associate level. For example, organizations are partnering with universities and vocational schools on curriculum development, developing internships in key functions, and hosting social events on campus to build a reputation among students well before graduation.
Workforce development focusing on the critical, innovative skills required to leverage advanced technologies is now essential. The primary focus is not traditional formal learning programs. Instead, FIs should assess the specialized skills needed to execute on business transformation objectives, audit their current in-house capabilities/bench, and focus learning modules (and other practices like mentoring/job sharing) on enabling employees to build adjacent skills through upskilling and reskilling.
How will Aite-Novarica Group’s FS CIO/CTO Advisory Practice help members reshape their talent strategies to improve hiring and retention?
Our upcoming research includes a best practices checklist that CIOs and CTOs should consider in addressing the war for IT talent in the context of the Great Resignation. We will partner with member executives to identify concrete talent management approaches based on the checklist to help them improve hiring and retention outcomes for the specialized IT talent their organizations need.
Interested in learning more about how our strategic insights can help you respond to the war for IT talent and changing world of work?
Email me to schedule an introductory conversation on our Financial Services CIO/CTO Advisory Research Council.