Why hiring mistakes keep happening in finance - and how to fix them

‍The finance sector’s high turnover rate is testament to organisations’ continued struggle to hire people who add value long-term. But what causes poor hiring decisions? And how can recruiters improve their odds of hiring the right person first time? Keep reading. 

‍

Financial services recruitment is massively buoyant right now, as firms battle to hire the right talent to keep pace with changing market needs, new technologies, and each other. 

‍

Finance recruiters are under enormous pressure to build a reliable, consistent recruitment function that delivers the right people into the right places.

‍

But the truth is, poor hiring decisions are common. Just look at finance’s high turnover rate of 19.8%: almost a third more than the typical benchmark across industries of around 15%. 

‍

(Retention is an important metric for understanding quality-of-hire, because good hiring decisions result in productive, long-term employees. On the flipside, high turnover is a strong indicator that something’s not quite right in the recruitment process.)

‍

Despite best efforts, financial institutions still often hire the wrong people. There’s a huge risk involved with that. Hiring mistakes in banking and finance can have an astronomical impact:

‍

• Insufficient working capital and cash flow problems
• Long-term mismatch to market needs; missed opportunities
• Delayed long-term growth and stalled trajectory
• Erosion of all-important customer trust and reputation damage

‍

This situation isn’t for want of trying. Veremark work with lots of financial firms and we see first-hand how hard finance recruiters are working to hire right. 

‍

So why do these hiring mistakes keep happening? Let’s talk about the factors that contribute to poor hiring decision-making. 

‍

Then we’ll show you how to start solving them, to move towards better hiring decisions that result in more productive, more trustworthy employees who stay longer. 

‍

What drives poor hiring decision-making in finance and banking?

‍

Let’s be explicit about one thing: poor hiring decisions don’t happen because of recruiters’ lack of skill.

‍

The industry is inundated with talented finance recruiters working incredibly hard to deliver some great outcomes, in challenging conditions. But the issue is, the odds are often stacked against you. 

‍

1. Complicated requirements

‍

Most finance organisations are hiring for a wide range of roles, often across multiple jurisdictions with different regulatory and skills requirements. This means recruiters’ attention and efforts are spread thin. It’s difficult to build competency, strategy, and take a proactive long-term approach within any one area. The old ‘jack of all trades’ conundrum.

‍

2.  Skills shortages

‍

Practically every industry is battling skills shortages. But these are especially pronounced in financial services because of the pace of evolution here.

‍

For instance, ICAEW report that 28% of finance execs believe not having the right skills on their finance team is a problem for the adoption of AI and other new technologies. 

‍

There’s huge demand for emerging skills capabilities like cloud computing, AI, crypto, and cyber-security, and supply hasn’t yet caught up. The upshot is, recruitment for these skills is hyper-competitive and challenging. 

‍

3. Unproven candidates

‍

Another implication of finance’s emerging skills needs is that prospective hires often haven’t had a huge runway to prove themselves. That often means you’re making hiring decisions with less data than you might have from, say, a finance manager with a decade of experience. This can translate into hires who don’t work out. 

‍

4.  Time pressure

‍

One major consequence of a competitive hiring market is the pressure to hire faster. Many financial services organisations are losing great people to competitors because they’re not hiring fast enough. 

‍

This pressure drives poor hiring decision-making because it pushes recruiters to make hurried decisions, or to settle for their second- (or third-, fourth-, and fifth-) choice talent.

‍

5. Lack of hiring manager support

‍

Hiring managers are often reluctant to contribute to recruitment because they’re slammed focussing on business-as-usual. And there’s often little business incentive for them to change, because it’s business-as-usual that brings in the money.

‍

But without manager support, it’s hard to make good recruiting decisions. Recruiters can often find themselves left with a shopping list of requirements with little context around importance and priority. 

‍

Maybe you’re going to market with an unrealistic set of requirements, for example, but aren’t empowered to tweak them to increase your hiring odds. Does that finance clerk really need a degree and two years’ experience? 

‍

Or maybe you’re struggling to assess candidates meaningfully, because you don’t fully understand the true need and team culture. 

‍

‍

6 – High regulatory burden

‍

Complex checks and balances are an unavoidable part of life as a finance recruiter — and for good reason. But these screening processes are often slow, clunky, and bureaucratic, causing a shoddy candidate experience that means you lose great people. 

‍

Organisations with a positive candidate experience are 70% more likely to hire a top-quality candidate, to put that into context. You can’t get around these regulatory requirements (and nor should you!) but you can embrace better screening processes that are as smooth, swift, and streamlined as possible. 

‍

7 – Poor perception of HR 

‍

The perception of HR has undergone a huge shift over the past decade or so. Once seen as an administrative function and cost-centre, many organisations are now embracing HR as a strategic partner that drives business value. 

‍

But that’s far from universally true, especially in a finance industry that can be slow to evolve. 

To make better hiring decisions, recruiters need to shift towards being more strategic and less reactive. But this is challenging without buy-in and support from across the business.

‍

8 – Legacy tools and processes 

‍

If recruitment is seen as an admin-heavy cost-centre, this translates into under-resourcing. The situation becomes the perfect storm for poor hiring decisions, because you’re over-burdened with complex challenges but under-resourced to solve them.

‍

Do you have the right applicant tracking system to support you, for example? Or are you spending hours manually transferring data from one system of record to another, and correcting manual errors?

‍

Do you use modern screening providers who leverage technology to make the process faster and smoother? Or are you having to wait months and double-check everything anyway? If you don’t have tools you need, you can’t build the recruitment function the organisation needs. 

‍

Better hiring needs better tools

‍

For finance recruitment teams to make better decisions, you need a modern hiring function with bandwidth to evolve and strategise — not plough through endless admin.

‍

That demands technology and partners to reduce manual input, accelerate processes, and improve efficiency throughout the recruitment process. Organisations must be willing to invest appropriately in recruitment, to build a swift, modern function that can rise to the challenges of the market. 

‍

Nothing can guarantee a perfect hire every time (we wish!) but having the right tools makes better hiring decision-making dramatically more likely.   

‍

High-impact recruiters have high-impact partners. Talk to Veremark about safe, swift finance background checks that help you bring trusted people into your organisation faster. ‍Learn more about Veremark for screening your finance and banking candidates and candidates.

‍