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Blog: Leveraging SM&CR to win the war for talent

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It’s no secret that firms are having to rethink how they get the right people into senior positions, non-executive directorships and even onto the board itself.

Regulation that places increased responsibility on the shoulders of individuals has potentially changed the hiring field.

While some firms have seen their hiring processes impacted by the implementation of the Senior Managers and Certification Regime (SM&CR), this regulation should really be seen as an opportunity to win the war for talent. SM&CR is, after all, an incredibly positive step forward, with senior roles now more likely to attract individuals who are willing to stake their professional reputations on a given company.

To that end, there are many opportunities for HR departments, hiring managers and talent development teams in this new regulatory environment.

Now is the time to review the different aspects of your firm’s brand to ensure that you are ‘telling the right story’ to potential candidates. The best talent in the field will now be searching for a firm that aligns with their values, goals, personality and desired culture. The tricky thing will be finding how to attract them to your firm and, when you do, ensure they do not simply ‘land and leave’ if they find the alignment is not quite right.

Though some see this regulation as something of a complication, it is entirely possible to overcome the perceived challenges of this regime and turn them towards advantage.

The importance and impact of SM&CR

SM&CR, originally rolled out for banking institutions, is now being implemented across the entirety of the financial services industry, from insurers to consumer credit firms. The goal of the regulation –reducing harm to customers and markets by ensuring that staff and senior managers are ‘fit and proper’ and accountable for their decisions – is partly a reaction to the financial crisis of 2008.

The perceived failings within some of the world’s biggest firms turned the public’s attention towards the culture and governance of large corporate entities like never before. Ultimately, then, it is a regulatory ‘step in the right direction’, towards an environment of improved company culture, transparency and more effective governance.

For firms and their incoming senior managers, the new duty of responsibility underlines the importance of robust controls around delegation, reporting lines, appraisal processes, and risk identification.

The heightened expectation of responsibility and reputational risk that comes with senior roles has led to some firms reporting a reduction in candidates applying for senior positions. The requirement to assess and certify, on an annual basis, that a senior manager or certified individual is ‘fit and proper’, is putting extra pressure on hiring managers and boards.

Of course, this doesn’t mean that there are fewer suitable senior managers in the field, simply that candidates are now well aware of their responsibilities under the regulation and are far more selective in their search for their next job. They will be looking for reassurance that the risk they are taking up is reduced as much as possible. They will be looking for a firm that fully embraces SM&CR and has built a suitable culture and set of controls and processes to support it.

Candidate attraction: an enduring challenge

Firms need to find new ways to attract the right talent. It’s no longer enough to advertise a senior position and wait for CVs to fly in. Firms need to showcase the alignment between culture and governance much better than before. Think about what stories you, and your people, are telling, not just through job postings, but also through marketing efforts.

Evidencing the culture of your organisation will be the first big step to increasing hiring ability under SM&CR. Firms need to be explicit about what they stand for, who sits in senior positions, and what social causes they support. It starts with tone from the top.

However, this should not stop at organisation level – the make-up of the board is also a critical element of an organisation’s culture. Though there are many ways to evidence this – from ‘meet the board’ discussion groups to a branded corporate newsletter – every firm will have a different approach to ‘selling their people at the top’. Board members, directors and other senior managers should spend time meeting candidates in person; getting to know them and figuring out if they are the right person, not just for the job, but for the responsibility and regulatory scrutiny that comes with it.

By being open and deliberate about their day-to-day culture, firms can ensure they will attract senior talent who are willing to dedicate their time and attach their name to an organisation that makes them proud. People want to join an organisation that they know will place responsibility appropriately, and that has a strategy around providing the controls, support and upskilling required. Transparency will ensure smooth transitions for incoming talent and reduce any initial reservations.

Hiring managers should also consider new ways of assessing candidates for cultural fit. The questions asked during an interview should be designed with the aim of not only uncovering a senior manager’s potential impact within the make-up of the board, but they should provide other vital information about their values and goals. Pay special attention to the examples they share and the language they use to describe themselves and their history.

Winning the war for talent

Although some firms may view regulation as an added burden, especially something as personally impactful as SM&CR, we believe that this regime offers forward-thinking organisations a chance to refine their talent attraction, assessment and recruitment processes for the better.

By better understanding how to align business and personal values and improve the ways in which your firm champions its culture, you will increase your chances of standing out from the competition. Those firms that best showcase their culture, through board support and clearly outlined expectations, will be the ones able to attract and develop exceptional talent.

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