Tackling the talent war

By David Cartwright Forbes, Gallagher

Published: 20 September 2021

The challenging environment of the past 18 months has resulted in significant consequences for many businesses and industry sectors, with their primary focus being on survival over anything else. While certain industries have been affected  more than others, many asset managers have experienced incredible levels of growth during this period.

And with that growth, we’re seeing the emergence of a new challenge.

While those firms that are continuing to grow are actively seeking to bring in new talent, at the same time their peers are desperately trying to keep hold of the talent that they have. Helping employees feel different about work is the principal challenge now facing hedge fund CEOs.

Investment talent will no doubt continue to be a key hiring focus, as firms look to secure those who can generate revenue and help the business grow. The investment industry has largely operated successfully in a remote working environment. The hedge fund sector saw strong performance in 2020, returning +16.63% for the year[i].

As we look ahead to the remainder of 2021 and beyond, the question is how long can this performance growth continue if firms fail to attract or hold on to the talent they require? Our research indicates that, in the long term, culture and purpose matter more than any other indicators. Winning the talent war will depend more on a firm’s culture than its pockets.

The capacity to earn significant income will always rank towards the top of the list of reasons to join one firm over another, but retaining those people will likely be short-lived if the culture of those top-paying organisations is not right. Increasingly employees are seeking an environment where they can thrive and where their employer has fostered a culture of trust, collaboration, understanding and empathy.

The hiring firm should be able to articulate and demonstrate the entire employee value proposition (EVP)  ̶  what it means to be an employee in their company over and above what they are paid. The focus should not be solely on the perks and benefits that an employer provides, from the level of healthcare to the amount of retirement savings they contribute, but also on the ‘why’.

It is said that: “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

When looking at ways to attract people to an organisation, we must consider what is important to the employees as well as what matters for the business. As one asset manager said to me recently:“When we’re hiring talent, we’re no longer just being compared to other investment firms, we’re now being compared to the likes of Google and Amazon.” And he was right.

The employer/employee relationship has evolved to be two-way, where employees are now making demands of the employer, whether explicit or not. Employees want to work in an environment where they can learn, work collaboratively with their colleagues and experience professional growth. They want to work for an organisation that puts its people at the heart of everything it does. Ultimately people want to feel different about work and move closer to that ideal of truly loving their job.

How can firms differentiate themselves to win the talent war?

An article from HBR[ii] in early 2021 stated: “The pandemic has given business leaders increased visibility into the personal lives of their employees, who have faced unprecedented personal and professional struggles over the last year. It’s become clear that supporting employees in their personal lives more effectively enables employees to not only have better lives but also to perform at a higher level.”

The article goes on to cite that by late March of this year, 68% of organisations had introduced at least one new wellness benefit to aid their employees during the pandemic. Mental health-related absence has been on the rise for some time, however, over the past 18 months, this has been a key focus for all businesses. The firms that take a more progressive approach to managing people noticed this increase early on and have taken steps to address it.

How big of an issue is it?

The demanding work environment and performance pressures, lack of commute time to de-stress and mentally offload, and the inability to switch off and separate work from home have all contributed to this ‘always on’ culture, which has understandably led to stress and burnout. Some may have believed that not having to commute would put more time back into people’s lives, but 90% of employees have reported swapping their commute time for additional work time[iii].

No organisation has been immune to the effects of the pandemic and mental health-related concerns are now right at the top of businesses’ agendas. For the asset management sector, employees have gone from being predominantly office-based to being 100% based at home. This was a huge culture shock that took hold during the most severe of lockdown restrictions and will likely alter long-term working patterns.

The value of culture, collaboration and face-to-face interaction should not be underestimated.

In AIMA’s paper “How alternative investment managers are managing organisational culture during COVID-19” Rosie Reynolds, Chief Commercial Officer at Aspect Capital, commented: “Collaboration really underpins our culture. Without a fulfilled and content group of employees, it would be hard to maintain productivity.”

Many spend upwards of a third of their day at work, so we must make an effort to ensure that the work environment we create for ourselves and our people is both positive and enjoyable. Aside from the obvious wellbeing benefits this has for employees, there is a crystal clear link between employee happiness and their engagement, productivity and output.

When employees are happy and engaged, productivity soars. When employees are unhappy and disengaged, it can contribute to an unpleasant working environment and a toxic culture. This can extend way beyond the four walls of the office. It is a reason many people choose not to join an organisation, or why they choose to leave one.

What’s in store in the future?

Leading hedge fund managers are now turning their thoughts toward how they will respond and lead in the near future. Whilst how the remainder of 2021 plays out will largely depend on the coronavirus and its impacts on the economy, our people, investment activity and asset valuations, the talent war problem is not going away.

Although many things remain unknown, one thing is certain. The way employers position themselves and the messages that they deliver to the talent they want to attract and retain will be led by the culture that exists in their organisation. And that culture, good or bad, will ultimately determine their success or failure.

Our research demonstrates that asset managers recognise the importance of culture and understand the need to adapt. Over 70% of asset managers who are planning changes to their employee benefits offerings will be enhancing the benefits they offer, and 43% are looking to improve flexibility to give people more choice[iv].

Culture is attributable to our values, both as individuals and as a business, and every organisation has its own unique culture, whether deliberate, specified or otherwise. Businesses that get the culture piece right will be able to communicate a clear set of values that should be shared by every person in the organisation – not just influencing what they do, but also how they do it.

When company values are well-communicated and understood by all, they will be adopted. This helps foster a positive culture that not only attracts the right employees and clients but also turns your employees, investors, suppliers and service providers into true advocates of your business. The secret will then be to offer company benefits, rewards and incentives that embody and promote those values to ensure performance and rewards are aligned with business values.

Will your extra perks or employee benefits make the difference when hiring and keeping hold of talent? Probably not. But will your overall employee value proposition, which shapes and defines your organisation, set you apart? Absolutely!


[i] 2021 Preqin Global Hedge Fund Report

[ii] Harvard Business Review | 9 Trends That Will Shape Work in 2021 and Beyond, January 2021

[iii] Gallagher, ‘Tackling Risk’ research based webinar October 2020

[iv] Gallagher 2021 Benefits Strategy Benchmarking Survey