17 | Resources in Banks
Regulation is creating change and uncertainty within the financial services industry—and impacting the wellbeing of a bank’s greatest asset: its people.
The financial crisis changed everything. We have lost banks that were considered the bedrock of the financial world, and some financial institutions that were once the most profitable in the world have required state intervention and finance to survive.
Banks have been prompted to de-leverage their balance sheets and de-risk their business. This has led to a reduction of lending to once-traditional sectors, such as small and medium-sized enterprises, infrastructure, and consumers.Banks have restructured and divested themselves from ‘risky’ businesses, such as commodities.
These changes are altering banks’ business models, with many banks being pressured to focus upon offering ‘plain vanilla’ services.
As banks withdraw from certain sectors and services, new players such as asset managers and financial technology companies are entering the market to capitalise on these opportunities, further changing the financial landscape.
Regulation is placing enormous pressure upon bank employees and changing their roles. Senior executives who joined firms as financial innovators are becoming compliance and risk managers.
Many are spending their time and resources obtaining expert advice to understand the impact of regulatory changes upon their businesses and customers. They are under significant pressure to ensure that changes are embedded within their organisation and that staff are adequately educated and trained.
Some executives even fulfill their duties with the additional pressure of political and media scrutiny. They face enormous demands upon their time and energy and face an increase in personal liability if something happens ‘on their watch’.
Regulatory pressures are damaging their well being, and we have seen high-profile departures—most notably Sir Hector Sants, former head of the Financial Services Authority, who resigned as head of compliance from a major financial institution after being diagnosed with exhaustion and stress.
Regulatory changes have greatly increased the burden upon middle management and line managers, who are often responsible for implementing change throughout an organisation.
Managers are making increasingly difficult decisions as they deal with restructuring and redundancies. They are managing their staff through highly uncertain and stressful times.
Managerial responsibilities may have increased but remuneration usually has not, due to public and political pressure to limit ‘bankers’ bonuses’ and curtail an excessive pay culture.
In a recent online poll of Chartered Management Institute (CMI) members—principally CEOs, directors and senior managers—47% of respondents said that that employee well being was higher up the corporate agenda compared with five years ago; 52% stated that employee well being was the responsibility of the chief executive and line managers, not HR.
A bank employee’s workday has also changed in response to regulatory pressures. Staff are frequently attending compliance training, filling forms or completing administrative tasks for audit purposes. They have to fulfill these new duties in addition to their regular jobs, meaning many bank employees are working longer hours than usual, which is placing them under further pressure.
Some bank employees are still responding to the fallout caused by the financial misconduct of former employees and are fearful that a minor mistake will trigger a regulatory investigation.
Many employees struggle to manage change and uncertainty, and there appears to be a slow stream of departures from the banking sector to non-bank financial institutions or other industries.
The Bank Workers Charity, which provides assistance to current and former bank workers and their families, foundthat one of the key workplace drivers of ill health and reduced productivity was a concern that the job was likely to change in the future. Work pressures will impact non-work pressures—over 60% of bankers reportedly suffer from poor quality of sleep—which in turn impacts work productivity, as concentration and decision-making are affected by lack of sleep.
Significant amounts of continued stress have a detrimental impact upon an employee’s well being. It is also likely that increased levels of stress will lead to some form of sickness and absenteeism. It is reported that 50% of long-term absences in non-manual workers are accounted for by stress, with absenteeism in the UK costing £29 billion a year. In the US, the total annual costs related to lost productivity due to absenteeism is estimated at $84 billion per annum.
Stress can cause a spectrum of issues, including high rates of sickness absence, high incidence of litigation and claims costs, and ‘presenteeism’ (employees present at work but with low productivity).
Banks and other companies are increasingly seeking specialist risk advice to minimise the impact to staff well being from regulatory changes and other pressures.
Some employers are proactively meeting the leadership challenge of identifying stress and burnout in employees before these conditions manifest as sickness absence.
In conjunction with risk advisors, employers can deploy targeted measures to improve nutrition, health, lifestyle, claims defensibility training and leadership priorities, all of which offer affordable outcomes that help protect and monitor staff well being.
With many economies and banks still recovering from the financial crisis and responding to regulatory change, the challenge for employers to find, retain and protect talent is increasing. Banks and firms that are able to adopt a proactive approach to these issues are protecting and promoting well being, and enhancing the resilience of their greatest asset—their people.
Co-authored by Jagdev Kenth and Nigel Plowright. Nigel is Project Leader for Employee Risk Management in the Willis UK Employee Benefits team and is responsible for the day-to-day management of the MOD’s Service Life Insurance ‘SLI365’.