Ten years ago, in the mid-nineties, the financial sector faced four main challenges: market globalization, financial freedom, non-intermediation, and the importance of new technologies in business practices. Today, the first three challenges have been met, while the fourth is still being grappled with.
The fourth challenge, technology, is the main obstacle facing every financial entity—from banks, savings banks, and rural banks, to credit unions, insurance companies, and other financial intermediaries. How technology can be harnessed in the case of human resources is particularly challenging. Specifically, how can human resources be efficiently managed through knowledge-supporting technical tools.
Generally speaking, technology solutions must be used by organizations seeking to maximize human resources. Moreover management has also become more complex, or, at least larger due to the growing number of people that comprise an organization. The old concept of personnel cards, for example, has paved the road for "people management" tools. They have become necessary, particularly in an environment such as the financial sector, where resources have become global, and more complex management methods are needed to administer people.
Making functionality more professional
Also, compared to a decade ago, human resources function has become more professional and technical. Old personnel management methods evolved into human resource management and has now emerged as a modern, people management concept. This evolution is due to three decisive factors, present since the mid-nineties: the diminishing number of jobs in the market and the battle for talent; the idea that human resources are the most important asset in a company; and, the need to introduce technology with technical support. Together with the need to organize and manage knowledge about and for people, tools and solutions have been created with varying degrees of success. Most of the solutions use an extensive approach, which can be applied to every functional area in non-specialized organizations or companies. Additionally, only a few of the larger software companies have intensively focused on classical management functionalities.
Technology-based solutions that help companies to efficiently manage their resources are defined by sector. A specific activity sector, such as finances, demands solutions that have a good fit and are customizable. Solutions should be as flexible as the business is, changing with the sector, and adapting to the evolution of an activity's parameters. The financial sector also demands that implementators be responsive, innovative, and creative. In the case of human resource function, it has had to overcome an crucial obstacle: how to create joint value. This is essential for its consolidation as a core part of a business. Human resources has gone from being perceived as a secondary activity, as described by Michael Porter in Competitive Advantage, to becoming a primary activity that needs to improve to avoid being outsourced. Human resource function has reached high efficiency and effectiveness due to its professionalism. It has also been helped greatly by management tools.
The possible future of the human resource function can be defined by seven challenges that it will face in the upcoming decade:
Finding and retaining talent. As intellectual capital becomes more and more important, organizations are paying more attention to finding people that are able to satisfy its organizational needs. Until recently, staff in a company was perceived as a fixed asset instead of a variable asset. To solve this, companies now demand a personalized contract between them and their employees, and try to create an image that is attractive to both their staff and customers. The only way to achieve this is through personalization that uses tools allowing this type of management and "one-to-one" hiring.
Perceiving training and development as keys to the company's success. New formulas are being created to help develop professionals within organizations. Words such as "coaching", "mentoring," and "360 feedback" are constantly used in conversations and to implement them, companies require personalization and efficient tool management. This will allow a company to obtain all the advantages the tools offer and to use them throughout the whole organization.
Expanding the salary criteria. In companies, people do what they are paid to do and not what they are expected to do. However, permanence in a company and talent retention are gaining greater importance. Companies are adopting concepts such as "emotional salary," even if employees are expecting to be paid at the end of the month, or if the job description and corresponding salary were agreed upon when a person was hired. Therefore, salary management is a key factor to compensate employees appropriately.
Perceiving communication as an emerging organizational element. Companies that are becoming larger and more complex require mechanisms that allow efficient communication. The large amount of information and the great volume of knowledge that companies have today need to be managed in some way. The broadening concept of knowledge management applies to the way information is produced in businesses and companies.
The importance of an organizational government. This depends not only on the compliance that a company must meet, but on its employees' desire to belong to a company they can be proud of, or at least a company they are not ashamed of. All the scandals that have occurred in the last few years are indicators that employee loyalty depends greatly on the social role a company plays.
Leadership. This is a revision of an old concept that is currently overseen by a company's human resource team. The development of a company's external leadership in the market requires having leaders in a company. Thus, successful leadership requires creating an internal brand through which a company will develop leaders that represent its core values.
Goals. Maintaining the sustainable commitment of employees is the current goal of the human resource team. Being efficient, decentralized, and sharing information and making management become a partner that helps people in the organization, are key.
Finally, this new horizon involves challenges for the person(s) responsible for human resources. They need to perceive themselves as a "human system architect" and as a "network and relationship designer" instead of a pattern creator. They need to be a solution provider instead of a problem solver.
The future of financial businesses
There are other factors that must be considered in all businesses, sectors, and specializations. In particular, the person responsible for human resources in a financial entity must help answer the challenges that the financial business will have to face. Emilio Botin, president of Grupo Santander, wrote an article last year stating that the three largest challenges facing companies wanting a new, modern beginning are the challenge of dimension, the challenge of responsibility, and the challenge of efficient management. He writes "We, as financial business managers, have a great responsibility to our customers, employees, and shareholders. We must avoid distractions that can disorient us and destroy value."
How the financial sector is investing in human resources
According to the last IDC report about the payroll and human resource management market in Spain, published in 2003, the financial and manufacturing sectors are areas that have made the largest investment in this type of software. Further, the financial sector is not only the main IT investor, but the first sector to request these investments. This area is also notable because, while the customized tools have penetrated between 20 to 30 percent of companies in other sectors, this type of development is almost non-existent in the financial sector.
SOURCE:http://www.technologyevaluation.com/research/articles/people-or-resources-the-financial-sector-in-a-crossroads-17925/
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