Young talent time?

Milana Pokrajac takes a look at recruitment in the wake of the GFC and considers the impact this has had on the job market.

Some would argue that the recovery from the global financial crisis recovery is reflected in the recruitment drive within the financial services sector, as well as the number of new jobs that have recently come onto the market.

With Australian investors slowly but steadily returning to market, the demand for financial planners, paraplanners and back-office staff within companies is increasing, according to recruitment experts.

Recruiters are largely painting a positive picture for 2011. It will be a year when recruitment is expected to be more active than 2010 with both large and small businesses looking for new talent.

However, higher demand inevitably leads to skills shortages — an issue that will threaten employment growth over the next several years and will be exacerbated by low retention rates and aggressive hiring programs from overseas companies. So, what to expect in 2011?

Increased recruitment drive

Recruitment experts predict aggressive hiring in the first quarter of 2011, with large companies now, more then ever, ready to dig into their pockets and recruit fresh talent.

This, according to the director of Profusion Group, Simone Mears, would allow employees to easily seek out alternatives if they are not content with their current positions and the salaries they’ve had to hold onto during the global financial crisis.

“Pressure will come internally — people who have been sitting in jobs for the past three years not getting any salary increases are getting increasingly frustrated,” Mears said.

“There’s starting to be enough jobs in the market so that people are being offered alternatives if they don’t get those pay rises,” she noted.

The senior regional director of Hays Banking, Jane McNeill, noted employers would have to do more to retain good staff, as the hunt for quality talent in the financial services industry is well under way and employees need to be encouraged to stay. According to the last Hays Salary Survey, 40 per cent of organisations make a counter offer to departing staff, but two-thirds of employees still leave within 12 months.

“There is no doubt that professionals with skills in demand will expect a healthy salary increase in 2011, otherwise they will enter the jobs market,” McNeill said.

According to McNeill, bonuses will most likely remain a touchy subject and will be the space to watch in 2011.

Skills shortage

The market is now heading towards rampant skills shortages, a return to the status quo prior to the global financial crisis, according to Mears.

“[Prior to the global financial crisis] there was an endemic skills shortage in financial services because it was such a hot market,” Mears said.

However, according to Mears, skills shortages will not reach those levels for another two years. However, during 2011 certain pockets of the financial services industry will show signs of skills shortages.

“[In] those areas where there is the most demand we will start to see skills shortages emerging — the market isn’t strong enough at the moment for it to be lasting,” Mears added. [There has already been] a shortage of experienced distribution managers in Victoria over the last 12 months, Mears pointed out.

Robert Walters' director of banking and financial services, David Barr, supported Mears’ predictions, saying skills shortages — or the early signs of them — are appearing, which he said was evident in the number of contractors being engaged in banking during the last quarter.

Those operating within middle management are under most pressure, as companies tend to backfill senior roles vacated or made redundant during the downturn, according to Barr.

McNeill said a shallow pool of talent in many specialist areas would be the biggest threat to growth and “the catalyst for many of the issues we expect to dominate in 2011”.

Low retention rates and overseas careers

While skill shortages amid aggressive hiring in general is a nightmare for companies, experienced and quality employees will be provided with both greater job security and more options.

When the global financial crisis hit widespread redundancies occurred in a number of sectors, including the financial services industry. However, now that the sector is recovering, employees are back in charge of their careers.

As the Asian market came out of the global financial crisis in a far better shape than its North American and European counterparts, career opportunities in that part of the world have become very attractive to Australians.

Once again, many are heading overseas for work, while Australian-based employers use bonus schemes, health and life insurance, gym memberships, stock options or education benefits to try to stem the flow.

McNeill said it was time for more innovative tactics when it comes to keeping staff.

“This means looking at more than just salary and benefits towards the implementation of solid career development plans.”

She also suggested that a counter offer should involve more than just money and should address the underlying issue of why the employee decided to look for a new job in the first place.

According to Barr, Australian workers will be subject to very aggressive hiring programs from offshore.

Barr also predicted employee retention rates in the first quarter of 2011 would be their lowest since the global financial crisis “as professionals look to progress their careers again after putting their job search on hold during 2009 and 2010”.

Education standards and recruitment

The adequacy of industry entry-level requirements, particularly financial planning education standards, has been much discussed over the past year.

The Financial Planning Association had released a white paper proposing to the Federal Government that by 2015 university degrees be introduced as a requirement for all new financial planners entering the industry.

Since then, members of the industry have been quite vocal about the need to increase education standards for financial planners, and the Australian Securities and Investments Commission has announced a review of Regulatory Guide 146. This means entry-level requirements for the provision of financial advice may soon be lifted from their current level.

In recruitment terms, the implications of this may be a further draining of the talent pool within the financial services industry. eJobs Recruitment Specialists managing director Trevor Punnett is worried that financial planning as a profession is not popular enough to allow a group of candidates to be lost based on their level of education.

“Before increasing education requirements further, the industry needs to bolster its image and become the sought after profession it used to be,” Punnett said.

“I feel it is not the attractive profession it once was and, consequently, fewer students are looking to make a career in it, preferring other 'growth' sectors,” he added.

McNeill believes that increasing entry-level requirements would result in a significant shift in recruitment practices. She pointed out that many of the more experienced financial planners, while holding a financial planning qualification, are not degree qualified.

“Institutions would have to start introducing proper graduate recruitment and training programs and it would take a number of years to see sufficient graduates coming into the industry and gaining the experience necessary to make a good financial planner,” McNeill added.

However, despite the focus on professional standards, recruitment experts have not seen an increase in university degrees as a requirement in recruitment advertising — employers are still after people with relevant financial planning qualifications rather than degrees.

Impact of social media

The emergence of the Internet has inevitably brought new trends. The popularity of business networking websites such as LinkedIn is ever growing and will be used by employers to cross-reference candidates’ employment histories or to evaluate potential employees.

Social media checks in general will become more common in 2011, and not only will their professional profiles be checked but all public information available, according to McNeill.

McNeill said this meant the lines between social and business websites were becoming blurred and social media profiles would be viewed just as often as an employer searches a candidate’s name via Google.

“We also expect this publicly-available information to be used not just when recruiting, but also when employers consider promotion and succession planning,” McNeill said.

In 2011 it will not only be job seekers who need to ensure their online profile remains professional but also all employees, she said.