Effective leadership is key to navigating the challenges facing the financial services industry, but the demands on leaders are changing. How are companies identifying the high-potential employees that will best fit these new needs?
In the financial industry, as in many other fields, successful leaders have traditionally thrived by navigating a complicated system â one that responds to rules, expert knowledge and rational processes. Todayâs workplace challenges, however, are rapidly becoming more complex, with too many interrelated variables to be resolved by rules alone.
For example, teams within financial institutions may need to deal with the complicated structuring of a particular transaction, but also to contend with the complex challenge brought about by disruptive fintechs.
âThe move from complicated to complex systems means that leaders who are very good at analytical, linear, structured problem-solving need to move to adaptive leadership, which is more about recognizing patterns, joining dots, and a lot around sensing,â said Rian Raghavjee, Global Head of Asset Management at global leadership advisory and executive search firm Egon Zehnder.
A helpful way to picture this shift is âmoving from the dance floor to the balcony,â he said. âWhen you're on the dance floor, youâre worried about where to put your foot and the next step, not crashing into something, and youâre looking at the immediate space around you. But adaptive leadership is being able to step out onto the balcony and look at the entire floor, and recognize the patterns and the flow.â
Raghavjee said that in this new reality, people need to be able to evaluate leaders ânot just on their âwhat,â but also their âhow.ââ This encompasses things like: âWhatâs their ability to drive collaboration and innovation? How accountable are they, versus how they hold other people in their respective organizations accountable?â
Inspiring others
Historically, leaders have been identified among people who are good at their jobs, said Rebecca Kellogg, Global Head at UBS University, the bankâs in-house learning and development institution. âBut being good at their job is not always a one-to-one equation with them being good at inspiring others to do that job as well as â if not better than â they do.â
Thatâs why itâs crucial to create programs âto help those people transition into effective leaders,â said Kellogg. âWe invest in a combination of solutions to do that: self-directed learning, case studies, simulations, peer practice, peer coaching. The goal is to get the leaders to shift their focus from âwhat I doâ to âwhat we do, and how we come together as an organization, how we show up, and how we are accountable.ââ
In line with the growing need for leaders to be agents of change, another emerging shift is a greater emphasis on coaching as a leadership style, said Mark Hoban, Chair of the UKâs Financial Services Skills Commission (FSSC). âThis partly reflects demographic changes: how do people now want to be managed?â
Hoban said that by adopting a coaching style of leadership, firms can encourage all their people to learn for themselves and strive to adapt to a complex world. âItâs probably better in embedding longer-term, more sustainable approaches to organizations,â he said.
Notably, in its latest Future Skills Report, the FSSC, using data from consultancy EY, observed that coaching has a very large proficiency gap, where available skills fall short of the required level. This indicates a pressing need to upskill significant numbers of people in coaching (see Figure 3).
Forging leaders
Lara Partridge, HSBCâs Head of Talent Asia Pacific, believes that leadership development stands to be the biggest beneficiary of the industryâs transition to a skills-based approach.
âLeadership can often be quite an amorphous concept,â she explained. But as technology enables much more data to be collected from a variety of sources and analyzed in a much more granular way, âweâre going to be able to break it down into much smaller, more measurable parts.â
Hoban said that as firms begin to develop comprehensive assessments of their workforcesâ skills, they will be able to identify with greater ease those employees that have leadership potential.
âYou should definitely include leadership skills in there, including who self-identifies as wanting to be a leader in the future,â said Hoban. âSome people might want to be subject matter experts â they might not want leadership responsibilities.â
âIf you know what your pool of potential leadership candidates is, and you understand their current skill levels, then that helps you think about what more do you need to give these people by way of training for the future,â he added.
Partridge said that having comprehensive data on each facet of employeesâ leadership skills will pave the way for leadership training to become much more personalized, rather than have the same standard leadership development program for a group of 20 people.
âWe can be much more individualized about optimizing leaders,â said Partridge. âThatâs what Iâm most interested in: if weâve got someone whoâs great, how can we get another 10% or 15% out of them from a leadership or a commercial outcome perspective? Weâre going to be able to do that in a much more measurable and personal kind of way.â
External perspectives
In some instances, rather than cultivating leaders from within, firms might be better off bringing new ones in from outside.
âSometimes you want to bring in a fresh perspective and break groupthink,â said Raghavjee. âYou have many people that have been there for decades, and this might be an opportunity to freshen things up.â
Kellogg at UBS agrees that a new perspective can be valuable, whether it comes from inside or outside the organization. âItâs more about whether the leaders can see things from different perspectives and different angles, and then weave the story together to be able to inspire others. And to be able to produce as an organization, be part of the whole, not part of the one.â
Raghavjee cautioned, though, that bringing in leaders from outside can sometimes go wrong â although usually not because of a lack of competency or skills. âThe big one is cultural fit â crudely referred to as âorgan rejectionâ â where they donât fit in the culture. That may be because they try to bring in a revolution youâre not ready for â you just want evolution. Then thereâs character, temperament, things like that.â
Another risk of bringing in leaders from outside is that high-potential people within a firm âmight look at that and say, âwhat about me?ââ They could well be disheartened because âthey thought they were really good, but now the firm is signaling that theyâre not good enough.â
Thatâs why talent development and management is so important, said Raghavjee. âFor the most part, I would also recommend looking at and developing your high potentials â knowing who they are and developing them in a thoughtful, careful, rigorous way.â
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