Payments and fintech is a rapidly moving industry, and this year has been no exception, with Europe based fintechs raising $12.8B in H1 alone, nearly 1.5x higher than in all of 2020.
Up until January 2021 hiring activity was relatively stagnant, but with the new year came renewed focus on growth and investment spend. So far the industry has seen a 330% jump in investment growth year on year, resulting in recruitment frenzy as companies try to hire enough talent to keep up with their own ambitions.
It is certainly unsustainable to believe that the pace of recruitment can ever match the pace of investment in a candidate short market, but clients can certainly exploit existing talent opportunities if they are willing to accommodate modern candidate expectations.
Talent engagement
Traditionally the industry has been locked in a struggle to acquire top talent with relevant experience. The gap has been hard to close with employers either having to pay more for the most experienced candidates or take a gamble on talented but determined industry novices.
Talent shortages are often cited as the plague blighting tech-based industries, but in the case of payments & fintech finding the talent is less of a problem than engaging them. The pandemic has given the market a certain stickiness, with candidates who survived the pandemic feeling reluctant to commit to a move.
LinkedIn has long been the primary tool for many, but talent engagement is not as effective through this medium as it once was. Despite working from home, many professionals have less time and have begun to withdraw personal information to avoid contact overload. This means that recruiters must rely more on reputation and referrals, something that can take a little longer than many clients want.
There is also an imbalance between what employers expect to be able to offer versus what a candidate is willing to accept. These days candidates expect more comprehensive benefit packages, stock options, flexible working and above all more money, much more.
Prices are going up
As the market continues to grow companies have diversified, with many honing in on particular services to establish a niche, something that requires specific talent. Specificity narrows supply, therefore increasing demand and thus price, meaning payments professionals are able to charge far more for their services. Only a few years ago it might be common to offer a 10% premium and have that be more than sufficient to secure a candidate. Sadly for employers that is no longer the case.
Specialisation has resulted in a huge spike in price, something that clients need to understand in order to have a chance of making an offer a top candidate will accept. A minimal premium on salary isn’t sufficient incentive for many candidates to offset the risk of moving and typically opens the door to counter offers.It is appropriate to expect to pay at least a 25% premium on a candidate’s salary in order to secure the strongest talent in key areas, e.g. Commercial, Compliance, Technology.
The effectiveness of buy backs and counter-offers is increasing also, as companies try to find what will best motivate the strongest talent. Such individuals are passive, not actively seeking a move, so the competition is on to entice and incentivise them with personalised offers, and the convenience of remote hiring processes, which allows candidates to “window shop” for opportunities, is also impacting decision making.
Clients need to sell
This issue is coupled with rising retention rates, making it all the harder to tempt candidates to investigate new opportunities.
To accomplish this, clients need to sell themselves, accepting that a candidate who is happy where they are is in the position of the buyer. Whilst this isn’t a one way street, clients do need to realise that they can’t simply list transactional requirements and expect to grab the best talent. Candidates are looking for a partnership, they want to feel valued by a prospective employer, a key player, not a hireling.
It’s human nature perhaps, but candidates at all levels respond positively to being made to feel wanted. In a competitive market they are therefore more likely to side with the business that has run a smooth, progressive process and demonstrated commitment to them.
A focus on presentation is key, what is so great about your company and role beyond the transactional requirements?What makes you different as a business and/or team?Culture, benefits, flexibility, equity etc. It’s not only about the salary, so a smooth and welcoming hiring process, followed by an excellent on boarding process is key.
Location limitations
It is important to remember that the UK is both an island and recently cut off from Europe due to Brexit and the pandemic, this makes free movement of cheaper talent into the country difficult.
Whilst remote roles continue to grow, they remain competitive only at a local level, rather than globally. So, whilst a position in Manchester might compete with London offers, it won’t compete across the pond in New York or Atlanta. Employers do hire remote employees on a long leash, but a leash nonetheless, reducing the size of the potential talent pool they can draw upon.
Lack of skills
One measure of growth is quantity, and in certain quarters arguably often valued over quality. Growing big teams is popular - there is a critical mass that firms want to reach, and is one reason for the focus on hiring juniors. Again, this is a supply versus demand problem that has yet to be solved.
Graduate schemes would be one way of combatting the lack of initial experience entry level candidates have off the bat, potentially generating the kind of loyalty that keeps employees long-term. But the wider issue is the lack of investment in proper skills, something the industry should seek to address through offering proper training to any motivated candidate, not just students. Adding to candidate value in this way could help break the current stalemate, allowing less experienced but ambitious talent a chance to break into the industry or specialise.
The millennial generation in particular is open to training as a means to enhance career progression, with up to 76% seeing learning as key to career development and 53% disappointed by a lack of personal development training when starting a new job. Employers that can harness the ambition of these hungry young professionals the right way stand to drastically increase retention rates.
Diversity is still an issue
The gender split is especially difficult to overcome for employers, something that must be addressed with a ground up approach. It is important to give consideration also to how candidates are approached and engaged with.
Building, maintaining and advertising an inclusive company culture will do wonders for attracting existing talent, but such talent is already so thinly scattered that companies need to think more long term if the balance is to shift.
Traditionally in many countries females do not take STEM subjects as readily as males due to societal norms and cultural values that we are still struggling to change. Companies can encourage diversity to flourish by supporting inclusivity initiatives such as Girls Who Code, an international non-profit working to close the gender gap in technology.
Other organisations such as Rubik, in partnership with The Conexus Group, are aiming to diversify the talent pool itself, through training opportunities designed to bridge gaps in inclusion, thus adding value to prospective talent.
Recruitment strategy
The process of identifying and connecting with potential talent isn’t the hard part when it comes to recruitment strategy. What is challenging is reconciling client expectations with current market dynamics; organisations expect to hire fast and loose at a time when candidate engagement is at a record low. Employers need to be realistic and build some breathing room into their recruitment plans along with more competitive packages if they want to snap up the best talent.
The disconnect between what candidates expect and what clients are prepared to offer can give the illusion that the right talent is really hard to find, but the reality is flipped; this is a candidate driven market, it’s all about finding opportunities with the most attractive organisations.
This is why clients need to work with a specialist consultative partner for a quicker talent turnaround. In partnership with a market specialist, organisations can build a competitive hiring strategy, and optimise their ability to secure the very best the payments market has to offer.
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Ineffective recruitment carries huge costs for businesses, it is often quoted that the cost of the wrong hire is 2.5x base salary, both in terms of delays and performance shortfalls. To learn more about how we are support you and your business please contact Andrew Cook at andrew.cook@head-count.com.