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Wanted: professional expertise for new era banking
January 11, 2012, Wednesday
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JUST as the financial services sector in China expands, undergoes deregulation and becomes ever more sophisticated, hiring in that market is tightening. The need for skilled candidates is high, but talent is in short supply and salaries are heading upwards.
The government?s commitment to turn China into a financial powerhouse is driving the demand for staff. Chinese banks are bolstering their international presence. The China Banking Regulatory Commission is carrying out a liberalization program, and Shanghai is aiming to be a global financial hub by 2020.
For now, however, the city doesn?t have enough professionals, especially at the managerial level, to rival major banking centers. According to Goldman Sachs figures, the proportion of its workforce employed in financial services is just 3.3 per cent ? about half that of London and substantially lower than New York?s 7.4 percent.
The government is well aware of this problem. In late 2011, it announced a five-year foreign recruitment drive to attract 90,000 new employees to Shanghai.
Despite the enormous growth potential of the Chinese job market, many foreign banks reduced (or even froze) their recruitment in the fourth quarter of last year as part of company-wide cost cutting. As we enter 2012, global economic turmoil means international banks are still uncertain about the immediate recruitment outlook.
But remembering that foreign firms control only about 2 percent of the banking market, hiring levels this year across financial services should not differ drastically from 2011. Asset management firms, trust companies and insurers, for example, have strong staffing needs, and graduate recruitment continues apace at Chinese banks.
Strong demand
China is also not suffering redundancies on the same scale as those recently affecting banks in the West. And in the medium to long term, many foreign banks believe the country is a growth market for both revenues and recruitment.
In most banks, domestic or foreign, certain positions are likely to be particularly sought after this year. Corporate-banking relationship managers are near the top of the list because firms need revenue-generators with excellent client networks who can help win new business. The rising number of wealthy individuals in China means private bankers are also in demand, despite restrictions on the products they can sell in this underdeveloped sector.
As client-interface jobs expand, so too must the positions that support them. A constantly changing regulatory environment is also driving back- and middle-office recruitment at banks.
Second- and third-tier cities are facing the same fundamental challenge as Shanghai: a lack of specialist candidates. With its financial markets in an early stage of development, China hasn?t had enough time to build its workforce. Thus, when a regulation is relaxed and banks are allowed to offer a new product, they often struggle to cope with the subsequent spike in demand for talent. Different business cultures, management styles, working hours, compensation arrangements, and English-language requirements make it difficult for candidates to move between local and foreign firms, thus further constricting the job market.
Promotion chance
Not surprisingly in a candidate-led market, pay rises for people changing companies are higher in China than in more mature, less talent-short centers like Hong Kong and Singapore. Increases of 30 percent or more are common, especially in sought-after jobs, and attrition problems often plague international banks when employees know they can command higher salaries elsewhere.
Although staff loyalty is typically high in large domestic banks, foreign ones are paying more attention to improving retention. According to last year?s eFinancialCareers Job Satisfaction Survey, "opportunities for promotion" was the top motivating factor for employees, edging out remuneration. China's ambitious young financial professionals are keen to make their mark in the industry quicker than the older generation, and firms must offer clear career paths or risk losing their best talent.
In the short term, some of the current uncertainty in the job market should dissipate after the Chinese New Year, when candidates have pocketed their bonuses and are back in job-hunting mode. There is quiet optimism that hiring, even at foreign banks, should pick up in February and probably peak in the middle of the second quarter.
In the longer run, financial services will be a large generator of jobs as China continues to become more open and globally competitive in the sector, and as more foreign banks expand their branch networks and seek local incorporation.
Yet the skill shortage should not be underestimated. It will not go away quickly. As well as benefiting from government efforts to build the talent pool, firms should improve their own recruitment and retention policies. That means investing more in training and development, benchmarking compensation and benefits, strengthening employer branding, promoting a work-life balance, and attracting Chinese returning from overseas global financial centers.
Shanghai's future success as a financial center depends above all on how well employers can harness the skills of their people.
The government?s commitment to turn China into a financial powerhouse is driving the demand for staff. Chinese banks are bolstering their international presence. The China Banking Regulatory Commission is carrying out a liberalization program, and Shanghai is aiming to be a global financial hub by 2020.
For now, however, the city doesn?t have enough professionals, especially at the managerial level, to rival major banking centers. According to Goldman Sachs figures, the proportion of its workforce employed in financial services is just 3.3 per cent ? about half that of London and substantially lower than New York?s 7.4 percent.
The government is well aware of this problem. In late 2011, it announced a five-year foreign recruitment drive to attract 90,000 new employees to Shanghai.
Despite the enormous growth potential of the Chinese job market, many foreign banks reduced (or even froze) their recruitment in the fourth quarter of last year as part of company-wide cost cutting. As we enter 2012, global economic turmoil means international banks are still uncertain about the immediate recruitment outlook.
But remembering that foreign firms control only about 2 percent of the banking market, hiring levels this year across financial services should not differ drastically from 2011. Asset management firms, trust companies and insurers, for example, have strong staffing needs, and graduate recruitment continues apace at Chinese banks.
Strong demand
China is also not suffering redundancies on the same scale as those recently affecting banks in the West. And in the medium to long term, many foreign banks believe the country is a growth market for both revenues and recruitment.
In most banks, domestic or foreign, certain positions are likely to be particularly sought after this year. Corporate-banking relationship managers are near the top of the list because firms need revenue-generators with excellent client networks who can help win new business. The rising number of wealthy individuals in China means private bankers are also in demand, despite restrictions on the products they can sell in this underdeveloped sector.
As client-interface jobs expand, so too must the positions that support them. A constantly changing regulatory environment is also driving back- and middle-office recruitment at banks.
Second- and third-tier cities are facing the same fundamental challenge as Shanghai: a lack of specialist candidates. With its financial markets in an early stage of development, China hasn?t had enough time to build its workforce. Thus, when a regulation is relaxed and banks are allowed to offer a new product, they often struggle to cope with the subsequent spike in demand for talent. Different business cultures, management styles, working hours, compensation arrangements, and English-language requirements make it difficult for candidates to move between local and foreign firms, thus further constricting the job market.
Promotion chance
Not surprisingly in a candidate-led market, pay rises for people changing companies are higher in China than in more mature, less talent-short centers like Hong Kong and Singapore. Increases of 30 percent or more are common, especially in sought-after jobs, and attrition problems often plague international banks when employees know they can command higher salaries elsewhere.
Although staff loyalty is typically high in large domestic banks, foreign ones are paying more attention to improving retention. According to last year?s eFinancialCareers Job Satisfaction Survey, "opportunities for promotion" was the top motivating factor for employees, edging out remuneration. China's ambitious young financial professionals are keen to make their mark in the industry quicker than the older generation, and firms must offer clear career paths or risk losing their best talent.
In the short term, some of the current uncertainty in the job market should dissipate after the Chinese New Year, when candidates have pocketed their bonuses and are back in job-hunting mode. There is quiet optimism that hiring, even at foreign banks, should pick up in February and probably peak in the middle of the second quarter.
In the longer run, financial services will be a large generator of jobs as China continues to become more open and globally competitive in the sector, and as more foreign banks expand their branch networks and seek local incorporation.
Yet the skill shortage should not be underestimated. It will not go away quickly. As well as benefiting from government efforts to build the talent pool, firms should improve their own recruitment and retention policies. That means investing more in training and development, benchmarking compensation and benefits, strengthening employer branding, promoting a work-life balance, and attracting Chinese returning from overseas global financial centers.
Shanghai's future success as a financial center depends above all on how well employers can harness the skills of their people.
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