Data-driven KPIs – a secret weapon for talent management
The financial services job market is extremely volatile at the moment. As recently as late June, City AM were reporting that financial centres around the world were in the grip of a hiring frenzy, with vacancies up “more than 100% compared to last year” in some areas.
Now, under pressure from the aftershocks of the pandemic, the war in Ukraine, and record-breaking inflation, Business Insider reports that Wall Street is tightening up recruitment, with many firms – including Goldman Sachs, BlackRock and others – slowing down hiring. Goldman Sachs has also said it plans to reinstate its famous annual performance reviews, a policy they paused at the beginning of the pandemic.
Firms around the world may be feeling pressure to follow suit in this tough market. But does pulling back on recruitment mean losing a competitive edge, or slowing down the development and evolution of the business? Isn’t that a terrible risk when harder times seem to be on the horizon for the finance industry?
The good news is that firms don’t need to pursue sky-high recruitment targets to continue to develop. In fact, many may already have all the talent they need, it’s simply a question of managing that talent effectively. That means ensuring employees are well supported, nurtured and managed. Monitoring how your workforce is performing based on strong, comprehensive and data-driven KPIs will make the most of a firm’s greatest assets: its people.
But implementing a system of KPIs to manage and nurture your employees represents a range of challenges. Of course, there are aspects of performance which can’t be easily quantified in this way, such as teamwork or innovation. Then there’s the added challenge of widespread remote and hybrid working making it harder to get an idea of how employees are performing by glancing over at their desk or pulling them aside for a quick chat. But for many, one of the biggest challenges is establishing measurable, data-driven KPIs.
A 2021 survey revealed that 75% of investment banks and IRPs struggle with data availability and quality when it comes to measuring employee performance. And even when the data is collected effectively, many require better analytics, alerting, reports and comparison tools.
Despite these difficulties, implementing data-driven KPIs into talent management strategies will not only support your people to perform at their best, but it will also help to nurture them as they develop, enriching your business even further. By using KPIs to compare performance across individuals and teams, financial organisations can gain valuable insights to support
So which KPIs should financial organisations focus on to gain these benefits? 80% of respondents in the survey cited revenue as their key metric for measuring employee performance. But an even higher proportion (83%) acknowledged that revenue can be problematic: it might present attribution issues, can be highly complex and difficult to interpret, and often lags behind other possible measures.
A better approach is to select a range of measurable, broad, and easy-to-interpret indicators to ensure a comprehensive and up-to-date picture of performance. These can be broken down into effort, effectiveness and expense.
Effort measures indications of each employee’s activity level by looking at things like number of meetings, call logs, reports produced, etc.
Effectiveness interprets the impact of effort on business activities by linking it to revenue, renewals and growth.
Expense looks at return on investment for costs associated with undertaken activities. This means examining the cost of things like face-to-face meetings, or the engagement generated by contact with a senior vs a junior analyst.
In this fraught market, many firms are having to cut back on new hires. But it’s certainly possible to remain competitive even in difficult times. In an industry where the value of a company is determined in large part by the talent it nurtures, investing in tools which will allow management to measure and analyse employee performance can be the key to business success.
Singletrack’s suite of engagement-tracking tools and high-level analytics captures high-quality, actionable data on all activities, making it easy for sell side financial organisations to incorporate data-driven KPIs into management decisions.
Ready to see for yourself?