Pure Search’s infrastructure practice specialises in Tax, Legal, Finance, Treasury, Risk and Compliance search and selection across Commerce & Industry, Financial Services and Professional Services.
Pure Search’s consultants explain that within the Infrastructure space the hunt is on for those with both the technical and personal skills to deal with growing regulation and face the board.
Chris is a Founding Partner of Pure Search. He handles partner and team moves within Professional Services and director and MD - level assignments in Commerce and Banking.
Andrew leads Pure Search’s Finance and Treasury search practice, specialising in the placement of Finance Directors and Treasurers spanning EMEA, The Americas and Asia Pac.
Ewen is a Managing Director at Pure Search where he leads the tax business and focuses on recruiting at Director and Head of Tax level across all sectors of market.
Gavin is MD and Co-Head of Global Markets, with responsibility for all areas of Business Management and Controls with a specialisation in areas of Governance (Legal, Risk and Compliance).
How have regulatory pressures influenced Infrastructure hiring within Financial Services companies?
Are companies willing to pay for this talent?
What do you foresee in the future for the control functions?
Gavin: In a nutshell hugely. However, the real driver coming from these pressures has been an overwhelming desire by financial institutions to try and restore their public reputation and image. Regulatory bodies have brought about huge pressures. Companies can face significant fines, threats of closure, CEOs being hauled in front of parliamentary treasury committees or the US Senate, personal liability, and may need to seek approval from regulators for significant hires.
As a result the control functions particularly Compliance and Money Laundering Reporting Officers and Financial Crime Risk Officers, have been elevated in importance with budgets made available to address weaknesses.
Ewen: There’s a lot more pressure and scrutiny coming out of the authorities and the result of which is that Financial Services organisations don’t have enough skilled people in place to be able to do the job - on top of which the paper-chase is tenfold higher than it used to be. The effect that this has on headcount and talent management is that every business of a certain size is up-scaling to some degree and is also going through a major restructure of how the back office supports the business.
Chris: Workflow coming from the regulatory bodies is 20-times what it was previously and because of this large banks have told all their back office staff that for the next five months they will work every weekend. That is the impact regulation is having on the numbers and on work-life balance, which is creating a huge knock-on effect for us because these clients can’t get enough good people in those areas. There is both qualitative and quantitative issues in the market around the infrastructure areas.
Andrew: To be effective now in infrastructure roles requires a very different tool kit, to that of 5 years ago. The sheer pace and wholesale restructuring of infrastructures demands finance and risk professionals to possess the rare blend of project management, stakeholder management and technical knowledge as roles no longer operate in silos. This has significantly diminished the relevant talent pools in a hugely competitive candidate market. As a result of this, FS companies have been forced in part to return to retained search firms to implement some control and exclusivity over the pool of suitable individuals.
Gavin: They are now - we are in a very different banking world. Just a few years ago demands for extra resources were deemed as an increase to the cost base and invariably heads were told to make do with current resources. However, somewhat cynically, following greater public outing of certain events and the reputational damage caused budgets have been made available.
Andrew: Due to time pressures and size of highly specialised talent pools, candidates have found themselves in a position of strength. Whereas the bigger insurance firms learned a lot of lessons from salary requests spiralling out of control during the Solvency II boom, there remains the basic economics of supply and demand. Companies regularly find themselves with little choice but to adhere to ‘market rate’ and have little to no choice in importing regulatory specialists from outside.
Chris: Exactly. For the critical back office roles clients are really looking for top quality talent - talent that will not only do the job but explain to the Board and regulators what’s going on using the right people skills. And so, while they might benchmark a position with a £120,000 basic salary, if they have to pay £160,000 for the right person then they’ll do it. There’s a fair amount of flexibility for this top talent.
Ewen: It’s interesting because in the past you had a big disparity between what basic salary front office staff were paid and what basic salary back office staff were paid. But as the importance of risk has crept in there’s been more of a balance. Front office employees have seen a change in how their compensation packages are structured while back office employees, or those at the corporate centre of these businesses, have definitely seen an increase.
Andrew: Infrastructure roles have historically been seen as reactive and running to keep pace with the front office. With regulatory change impacting the very fabric of firms the controls function is required now to advise, challenge and dictate strategy to the Board. Risk and Regulatory experts have been thrust into the limelight and will continue to evolve into more of a true business decision support partner over the forthcoming years.
Chris: This is a consequence of the financial meltdown where there was a lack of control, a lack of regulation and a lack of compliance. What we’re now seeing is the reverse of that; Boards want to know what the Tax professionals are doing within their organisation. Tax used to be a very discreet function but now it is very high up in terms of reputation and risk – so the Board want to know about it. This is the same for Compliance, Legal and Finance.
This spike in back office is likely to last the next two or three years as the front office is being re-engineered, with banks restructuring from a ‘banking supermaket’ model to focusing on their core areas. But we anticipate that an equilibrium will happen again.