The Hidden Costs of Hiring the Wrong Employee in Financial Services
Engaging in a costly internal staffing process must result in hiring the wrong candidate for your business. Making the right hire becomes critical in the banking world, with its rigorous legal and regulatory compliance requirements. A financial services hiring mistake might significantly damage an institution’s reputation and, subsequently, its bottom line.
Let’s examine the myriad costs of a bad hire in banking, including fines due to regulatory compliance issues. Use this information to engage in a more proactive and ultimately effective staffing process. In the end, partnering with an experienced financial staffing agency like Workway reduces the risks of any hiring effort.
Why Hiring the Right Talent is Critical in Financial Services
Financial services companies strive for success in a very competitive business sector. The FinTech movement offers evidence of this competition, as firms leverage AI and machine learning to gain operational efficiencies. Subsequently, these organizations need talented professionals with the right expertise to stand out in a high-stakes business sector.
However, any internal staffing process remains costly and fraught with risk, especially of making a hiring mistake. In addition to wasting the time and resources spent hiring that candidate, your business suffers a loss in productivity. In short, the damage from one bad hire ultimately ripples throughout the entire organization.
The True Cost of a Bad Hire: Breaking Down the Numbers
Let’s examine the damage caused by a financial services hiring mistake in more detail. Use these insights for a better understanding of the importance of an effective staffing process. We cover financial losses, lower productivity, and the adverse impact on your business’s office culture. Avoiding the cost of a bad hire in banking remains critical for your company.
Direct Financial Losses from Employee Turnover
As noted earlier, the resources spent recruiting and onboarding a financial professional become sunk costs with the wrong hire. A standard formula estimates recruiting expenses to be 25 percent of a candidate’s annual salary. This spending highlights the fact that when hiring a financial professional, you need to choose the right candidate!
Lost Productivity and Training Expenses
A new hire that fails to pull their weight significantly hampers your business’s overall productivity. In addition to a less efficient organization, that recent hire’s training expenses contribute to the ledger of sunk costs. It’s the wrong approach for building a profitable company.
The Impact on Team Morale and Workplace Culture
Of course, building a financial institution with a great culture and high employee morale becomes difficult with constant turnover. An effective staffing process ensures that you cost-effectively hire talented banking professionals. Expect a more successful organization as a result.
Compliance Risks and Legal Consequences
Compliance hiring risks also need to be considered. Employees without the right regulatory expertise might cause your firm to incur fines and tax penalties for being out of compliance. Let’s take a closer look.
The Financial Impact of Non-Compliance Mistakes
Failing to comply with a constantly changing slate of tax and legal rules remains a critical risk for financial organizations. This situation illustrates the importance of employing professionals with significant experience in regulatory compliance. Anything less remains too risky for any successful company. Workway understands this issue and provides a candidate pool filled with experienced compliance professionals for your organization.
How Unqualified Employees increase Regulatory Risks
As highlighted above, employing financial workers without a significant background in managing compliance risk remains unwise. You need to hire someone who pays close attention to the consistently evolving federal, state, and local regulations. It requires finding candidates with a keen mix of financial insights, legal know-how, and relevant experience. Recruiting this talent becomes very difficult when using your company’s internal staffing process.
Costly Fines and Reputation Damage in the Financial Sector
Thriving financial businesses tend to be the ones with sterling reputations. Running afoul of regulatory compliance requirements serves to damage your company’s standing within the local business community. At the same time, any fines and/or tax penalties result in similar problems to your organization’s balance sheet. These potential issues emphasize the need for a focused and effective staffing process for financial professionals with regulatory experience.
Customer Trust and Reputation: The Unseen Damage
Of course, being a trusted financial business also influences your company’s relationships with clients and customers. In short, your reputation goes beyond successfully managing regulatory compliance issues. As a result, your company needs to employ talented and personable customer service representatives.
The Role of Frontline Employees in Client Relationships
Customer service professionals and client-facing financial managers both serve on the frontline of your organization. As such, they play a significant role in building relationships and helping your business achieve its goals for success. You need talented professionals with a strong mix of financial knowledge and excellent people skills. It ultimately plays a critical role in ensuring your organization builds trust while generating new business.
How Poor Service and Mistakes Erode Trust
Customer service mistakes and poor trading advice only serve to harm your organization over time. In short, poor service ultimately results in eroding the trust in your organization from both customers and clients. Expect fewer sales, a reduction in assets under management, and eventually lower profitability levels. This scenario highlights the importance of partnering with an experienced financial staffing agency like Workway.
Real-World Examples of Financial Institutions Suffering from Bad Hires
Struggling financial businesses typically suffer from poor hiring practices. For example, analyzing the influence of FinTech on the industry highlights the importance of recruiting talented tech professionals. Institutions suffering from a skills gap in AI lack the capability to leverage emerging concepts like predictive analytics. It highlights why working with staffing agencies with FinTech expertise remains vital.
How to Avoid Hiring Mistakes in Financial Services
Throughout this article, we covered a variety of problems for financial businesses caused by simple hiring mistakes. Now, let’s examine a few strategies for avoiding these staffing problems. Use these insights to develop a more effective hiring process supporting the needs of your organization.
The Importance of Thorough Screening and Background Checks
The high-stakes nature of the financial sector requires your business to employ skilled professionals with clean backgrounds. This situation requires your HR team to conduct thorough screenings of each candidate, as well as checking their references. Some smaller companies might lack the resources for this extra work and make hiring mistakes as a result. Using a staffing agency with a pre-vetted candidate pool, like Workway, makes perfect sense.
Leveraging Data-driven Hiring Strategies
Financial businesses making great hires increasingly leverage a data-driven recruiting approach. Modern applicant tracking systems (ATS) powered by AI rely on data to automate résumé analysis. This capability allows them to quickly find candidates matching the skills and experience required for their open position. Adopting this strategy allows your organization to greatly reduce the risks (and costs) of a bad hire.
Partnering with a Specialized Financial Staffing Agency
Simply stated, partnering with a modern financial staffing agency offers meaningful benefits to your business. The best agencies boast well-honed processes for analyzing candidate résumés with thorough screenings and detailed background checks. They take advantage of data-driven analysis to find the right candidates for their clients. It’s the right strategy for growing and running a successful financial organization.
How Workway Can Help Financial Firms Make the Right Hire
One of the top financial staffing agencies in the country, Workway regularly helps our clients find the right talent. Our modern processes for recruiting and vetting candidates ensure these businesses avoid making financial services hiring mistakes. Let’s explore our unique recruiting capabilities and expertise in more detail.
Our Expertise in Financial Services Recruiting
Workway has a long history of successfully recruiting talented finance professionals, building significant expertise in this area. We understand how to find candidates with regulatory compliance experience, as well as skills in banking, trading, and mortgages. No matter your organization’s hiring needs, expect us to quickly recruit talent ready to make a positive impact.
Access to Pre-vetted, Top-Tier Financial Professionals
One way we reduce the time-to-hire for our clients involves our large candidate pool filled with previously vetted professionals. As a result, expect to onboard somebody with the right skills, cultural fit, and a sterling background. It’s how we eliminate the risks of a bad hire for our clients.
Tailored Hiring Solutions to reduce Turnover and Compliance Risks
Workway crafts bespoke hiring solutions to meet your company’s specific needs. This includes finding candidates with the right cultural fit to improve employee retention. We also eliminate your compliance hiring risks by recruiting vetted professionals with the right expertise.
Investing in Smart Hiring for Long-Term Success
The value of a successful hire greatly outweighs the costs of a hiring mistake for your business. Adopting a strategic hiring approach ultimately becomes easier when partnering with the experts at Workway. In the end, it gives your firm a meaningful advantage over your competition.
Connect with the team at Workway to take your company’s financial hiring process to the next level. Schedule some time with us to discuss your current hiring plans and ideal candidate profile. As a result, expect to onboard talent to help your organization thrive in a competitive financial world.