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A new dawn? Harnessing talent in a ring-fenced world

Read more on the importance of people and talent management within the ring-fence strategies of UK financial institutions.

Overview

Of all the challenges raised by the Independent Commission on Banking’s proposals, the implications for people and talent management have received arguably the least attention.

Yet these implications are profound, and will become increasingly critical to banks’ success in the coming years, as they plan, implement and communicate their ring-fence strategies. The importance of getting the people factors right is underlined by the ring-fence’s fundamental effects on the key people-related drivers of business performance and compliance, including leadership quality and succession, organisational culture, talent management, workforce planning and employee engagement.

A new dawn

 

Download the full report. [PDF, 1.17MB]

Background

When considering the people implications of any business strategy or strategic organisational change, Accenture takes a holistic view of the people elements required to enable and deliver that strategy, across the areas of talent, organisation, leadership and culture – which we refer to collectively as the ‘human capital strategy’. In implementing the proposals from the Independent Commission on Banking, banks need to revisit all aspects of their human capital strategy in the light of decisions such as the location of the ring-fence and the structure of their support services.

Analysis

Accenture has identified four key focus areas around people that we believe should be prioritised.

  1. Leadership – The composition of boards is crucial to the creation of new governance structures. The proposal from the Independent Commission on Banking states that the ring-fence board must only have one member in common with the group. Such restrictions mean succession management and maintaining senior executive ‘bench strength’ will become increasingly challenging and important.

  2. Talent – What technical, functional and soft skills are needed to implement and realise the new strategy? The new operational model will require a different mix of skills and capabilities, so talent management and workforce planning will be key to managing the implementation of operation of the ICB-inspired regulations.

  3. Culture – What is the target culture of the entity within the ring-fence and how does it differ from the current culture and the broader group culture? Without cultural and behavioural change on both sides, the ring-fence will not operate as it needs to.

  4. Governance – What are the best governance models for entities within the ring-fence? Realising the goals of the new regulations will require banks to implement and align new structures and organisational systems and processes, including reshaped reward structures and performance management.

Recommendations

As banks prepare their ring-fence approaches, Accenture believes there are four human capital priorities they should focus on now to maximise their chances of success. Firstly is culture. To ensure compliance with new regulations after the separation of balance sheets, banks must create and instil a culture of risk prudency, integrity and strong business ethics. Second on the list is leadership and succession management. There will be a need for new governance structures within the ring-fence and the board composition and succession management for senior executives in light of the new rules. Thirdly is engagement; there may already be an impact on perceived job security. Finally is new ways of working and learning. A gap analysis of the bank’s current talent and skills and future post ring-fencing needs should be followed by tailored development and recruitment.