The recent Financial Sector Compensation and Benefits forum brought together leading reward practitioners looking for insights on how adapt their compensation and benefit strategies to ensure fair pay, maintain competitiveness and translate regulation into policy.
Our Three Takeaways
Gender pay gap
With the latest regulatory and legislative requirements looking to address gender pay gaps, the financial services industry faces the challenge of understanding how best it can respond. It requires a deep analytical understanding of where the gaps exist. By analyzing the compensation data and the historical allocation of pay you can start to understand any unexplainable gaps that exist and deal with them appropriately.
Many organizations have started initiatives to confront the financial industries traditional company culture. From removing conscious or unconscious bias among hiring managers to enabling some form of flexible working options—building a diverse and inclusive culture will make progress towards that cultural change. However, the need for an agile and flexible compensation solution that will allow managers to close the gap has never been more apparent. No longer can they rely upon spreadsheet-based systems, with no checks and balances linked back to the company objectives.
The gender pay gap in financial institutions highlights the fact that the workforce is still skewed in favor of male employees. Although promoting diversity has long been a key component of good corporate governance, the financial industry still has to ask how can more women and diverse professionals rise up the levels.
From actively incorporating policies that ensure equal rights, attracting more women into organizations with rewarding benefits systems, to the use of alternative benefits to best engage and retain female employees, there was agreement that initiatives need to be in place to attract a more diverse workforce.
Another interesting topic discussed at the event was about the poor remuneration policies and practices identified by The European Banking Authority (EBA). They have identified these inadequate policies as a key driver of miss-selling of retail banking products and services. The new guidelines aim to provide a framework for financial institutions to implement remuneration policies and practices that will improve links between incentives and the fair treatment of consumers.
HR has been brought to the frontline with these new regulations, as the responsibility of participating and informing on the design on any pay for performance of the whole salesforce now lies with them. An additional administrative burden arises as all compensation decisions now have to be documented and kept for five years, available anytime for a full audit.
Financial institutes have traditionally kept HR and Sales separate, although the inclusion of HR within these new regulations means that they will be wise to start considering them together—aligning technologies and processes from both areas to comply with the documentation requirements.
It was evident over the three days that a lot of institutes are concerned about making sure that their compensation plans and processes are transparent and auditable so that they can not only produce the appropriate reporting to meet the new regulations but also compete in the current landscape—with a need to balance the perception of fair pay with attracting and retaining top talent.