Financial institutions have unique challenges in planning and executing their HR compensation and sales incentive processes. With compensation accounting for a large percentage of operating expenses, institutions are looking towards solutions that are capable of tackling their complex requirements.
A focus on compliance in financial institutions is paramount, with risk reduction a clear priority for many. Annabel highlighted three specific focal points:
- General Data Protection Regulation (GDPR)
- Gender pay equity
- Overall financial scrutiny
Since its introduction on May 25, GDPR has been a primary concern for financial institutes, as they aim to meet the laws and obligations around personal data, privacy, and consent.
Another is gender pay equity. The latest regulatory and legislative initiatives from across the US and Europe requires financial institutions to understand how best to address the gender pay gap and be more accountable for compensation discrepancies and open the discussion to why the workforce is still skewed in favor of male employees.
The last piece is around overall financial scrutiny by the financial regulators. In the US the Office of the Comptroller of the Currency has jurisdiction over retail banks and insurance companies, and there is concern about making sure that their sales incentive plans are transparent and auditable so that they can produce the appropriate reporting for their financial regulators.
Through marrying and digesting a lot of transactional data, institutes can place compensation at the center of any discussion. People analytics continues to be at the heart of talent acquisition, talent retention, and pay for performance. To know whether initiatives around talent management are working, the C-Suite needs the appropriate level of insight that can be analyzed from marrying all of their data in one place and reporting on it. It's hard to know whether programs or initiatives around talent management or pay equity are effective, without having the compensation piece married to things like attrition and historical benchmarking data. To make sure institutions stay competitive, there’s an increasing level of interest in benchmarking both internally and externally against peer groups.
The third priority for financial institutes is on achieving greater operational efficiencies. For most financial institutions between 70 and 90 percent of their operating expenses are related to compensation, and without being able to drive automation throughout that process, it's very difficult for financial institutions to achieve the greatest level of operational efficiency.
“For most financial institutions, between 70 and 90 percent of their operating expenses are related to compensation.”
There is a trend occurring through a lot of financial institutions. Regardless of the stage of HR transformation, many institutions are aware that compensation is the missing piece to their HR core platforms. Operation excellence can’t be achieved without a focus on compensation—it’s the last mile of their HR transformation. To close the critical gaps in compensation practices, you need to make sure your processes are automated, your data secured, and everything is running as efficiently as possible.
Download the financial services industry case study to see how some of the world’s leading financial institutions take advantage of beqom to provide transparent compensation processes and link employees more closely with organizational strategy.