By Daniel Halstead, CEO Kite Consulting Group
Shifts in Financial Market Infrastructure (FMI) over the last 10 years have changed the profile of people that FMI businesses want to hire. There used to be little competition for key hires between CCPs and exchanges, mainly because there was little competition between these businesses. Exchanges and clearing houses were mostly interconnected and naturally no one wanted to hire their partner’s staff.
Today that relationship has notably changed. There is greater competitiveness between CCPs,and regulatory change is driving new opportunities for revenue gain – take mandatory OTC clearing for example. There is an ever keener focus on cross margining and collateral management, and vertical clearing models for trading venues require talented management to deliver post trade competition like never before.
Huge shifts and commercial opportunities are happening right now and the businesses that win the competition for market share can realistically enjoy dominant positions, historically considered the preserve of listed venues for centuries. New territories are being created and boundaries redrawn and at the front line of the battle for domination sit the most skilled people working in FMI, as we call them the ‘A-Players’.
FMI businesses now require people who are skilled to support the rapidly changing environment and to represent their businesses in the competition for OTC market share. Though A-Players are reported to deliver 400% output compared to an average performer, the rate of return in financial markets should be calculated as being a great deal higher due to the significant long-term revenue opportunities being carved out and the multitude of commercial opportunities available to major exchange, clearing house, client services and Prime brokerage businesses.
Placing the right senior manager in FMI today could feasibly establish an income or revenue stream which then continues to be highly profitable for many decades, meaning the current value derived from an A-Player could be at an all-time high for OTC & FMI businesses. It is well documented that businesses compete to hire A-Players, but in a market as small as European FMI there aren’t many experienced, relevant and available A-Players to compete for. Businesses have to be smart and to become expert at recruitment if they want to hire top-performers consistently.
The starting point must be to explore where these businesses can find the A-Players that will write the future history of their firms. From our experience in representing some 90% of all FMI firms, I’d offer the following suggestions as a guide to hunting down the very best, yet very scarce talent.
Be flexible and hire opportunistically. Take on top performers when they are looking for work and find something for them to do before the specific need arises. Granted this sounds ideal on paper, however in practice this can be something of a challenge, and we applaud those employers with the foresight to take this bold and winning step.
- Hire A-Players You Already Know. This is the gold standard of recruitment, and at Kite we advise all of our clients to start with this method. This offers the least risky path and is most likely to deliver an A-Player, and an added bonus is it is also a very low cost approach. When Hiring an A-Player you already know, whose work output has been exceptional in a similar environment, you can be pretty confident of a successful outcome.
- Hire an A-Player Through a Trusted Source. Use contacts, a trusted professional services firm and/or a trusted recruitment supply route that genuinely cares about the quality of your hire and who has evaluated the applicant’s past performance in a similar environment. This is the most sustainable and reliable method of hiring A-Players you don’t already know, and carries an acceptable level of risk. Combine this with a well-structured interview process, you should be in a strong position to hire an A-Player every time.
- Don’t Be Average. In my experience average recruitment methods almost always result in average success rates. Given your corporate success and competitive objectives, will average cut it? Every organisation seems to follow the same recipe, writing adverts and interviewing people solely on their CV, which is why they hire average people.
- Expand Your Network. Every day our team invests time in building and expanding our FMI network, seeking out the industry A-Players and asking others whom they rate. We recommend every senior executive does the same. That’s where talent is uncovered and let’s face it, peer recommendation has to be one of the finest forms of flattery.
As we all know, the financial services industry was born and thrives on the principles of scarcity and competition. Gaining and maintaining an edge requires imagination and fresher thinking, and from our experience of serving the evolving FMI industry, securing scarce A-Player recruitment is no exception.