Goldman Prepares to Shift Some London Staff to Frankfurt

Goldman Prepares to Shift Some London Staff to Frankfurt

Goldman Sachs has put more than a dozen of its London-based bankers, salespeople, and traders on notice that their roles will be relocated to Frankfurt in the coming months, Reuters reports, amid uncertainty over the ability of banks to conduct continental European business from the UK after it leaves the EU:

After months of patience and private lobbying, the U.S. investment bank has decided it can no longer wait for clarity from lawmakers on how its business might be impacted by Britain’s exit from the trading bloc and is taking the steps to minimize disruption to clients.

It has informed members of its London-based derivatives and debt capital markets teams working on German accounts that their activities will be relocated to its base in Frankfurt and to make the necessary preparations to move to those offices by end-June, the sources told Reuters.

A source tells Financial News that these transfers are part of a broader strategy to move staff closer to their clients and not part of Goldman’s Brexit contingency planning. However, the report comes just days after UK Prime Minister Theresa May that the divorce agreement would not retain the existing arrangement of “passporting” rights that allow financial firms to sell their services across the EU upon being licensed to do so in just one member country. The financial sector and industry groups have lobbied the government to maintain the passporting agreement, but May said Britain would not become a “rule taker” deferring to the authority of Brussels and would instead seek “a new relationship on financial services based on this concept of mutual recognition.”

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London Has Largest Gender Pay Gap Among UK Regions

London Has Largest Gender Pay Gap Among UK Regions

Bloomberg’s David Goodman highlights a new report from the UK’s Office for National Statistics showing that whereas London had the narrowest gap of any region in the UK in 1997, today it has the widest. While London’s gender pay gap has narrowed only slightly in the past two decades, from 15.1 percent to 14.6 percent, this has been eclipsed by huge progress in every other part of the country, with gender pay inequality the lowest in Scotland, Wales, and Northern Ireland (where women actually earn slightly more than men). Unfortunately, London accounts for a substantial share of the UK’s economy and workforce, so overall, the country is making sluggish progress toward closing the gap:

In the public sector, the wage gap has stagnated in the country as a whole, with women earning 13.1 percent less per hour, from 13.5 percent in 1997. While the gulf is bigger in private industry, at 15.9 percent, the sector has seen a dramatic improvement from 23.8 percent two decades ago. Among part-time workers, the picture is very different, with women earning more in all U.K. regions.

The gender pay gap has come under greater scrutiny this year in the UK, where new regulations came into effect in April requiring organizations with 250 employees or more to collect and publish data showing any gender discrepancies in their payrolls. The impending deadline of April 2018 for employers to report has many HR leaders worried about how to publicize and explain gaps that they know exist, but may not have the power to eliminate.

As we have found in our research at CEB, now Gartner, the global gender pay gap is significant, but the part of it rewards professionals can directly address is limited. UK companies are rightly concerned, however, about the reputational costs of reporting a wide-looking gender gap, as our research also finds even perceptions of pay inequity can harm employee engagement and retention.

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Relocating From London After Brexit Will Cost Banks Millions

Relocating From London After Brexit Will Cost Banks Millions

One of the industries that stands to be hit hardest by Brexit is the financial sector, as many banks have headquartered their European operations in London and rely on EU passporting rights that allow them to access the entire single European market without dealing with regulatory authorities in each country. Like other organizations, banks have also benefited from the free flow of talent among EU countries, which the UK’s withdrawal from the union will close off.

While the uncertain future of post-Brexit Britain is motivating many banks to transfer many of their London staff to other European countries, these relocations are proving extremely costly, Bloomberg Businessweek’s Gavin Finch reports, with banks expecting to spend $500 million or more. These costs reflect the shortage of experienced bankers in alternative hubs like Dublin, Paris, and Frankfurt, as well as the reluctance of employees to leave London:

“There’s no doubt that the costs are significantly bigger than the banks originally expected,” said Jon Terry, a partner and pay specialist at PricewaterhouseCoopers LLP. “There aren’t enough qualified people in local EU markets to meet the needs of the banks, so they are going to have to rely on moving more expensive staff from elsewhere. And a lot of those people don’t want to move.”

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ReimagineHR: Common Challenges in Learning and Development

ReimagineHR: Common Challenges in Learning and Development

At CEB’s ReimagineHR event in London on Thursday, CEB Principal Executive Advisor Clare Moncrieff led a peer benchmarking session for around 30 learning and development leaders (along with some executives with other profiles who are involved in L&D at their organization) to discuss the challenges they faced and share success stories and ideas about how to meet those challenges. The conversation focused on two key issues:

How do we measure the impact of L&D?

A quick poll of the room revealed that half the organizations represented in the room used “smile sheets” to gauge the effectiveness of their L&D programs, while fewer than a quarter performed ROI analysis and a few measured impact through testimonials or by looking at engagement or time to promotion. The conversation that ensued focused mainly on the difficulty of measuring the ROI of learning and what strategies the participants had found to do so.

One organization found that for their leadership program, measuring the cost of developing a leader internally against the cost of hiring one from outside was the most accurate. Their ROI analysis also includes other metrics like communication and productivity, which this participant said were more subjective but also showed a positive impact. Another participant, whose organization’s L&D program is focused specifically on building digital skills throughout the company, said they had simply applied the same principles they used to measure the ROI of marketing campaigns, including sales metrics and sentiment analysis.

There was some debate over the usefulness of 360-degree performance reviews. One participant said their organization used 360s at the start and end of a learning process to measure its effectiveness, but another noted that at their organization, they found that with too many 360s, scores tend to go down even as real performance improves. To correct for that glitch, they use a more targeted “180” at the end of the program, focusing on learners’ direct managers and functional leads, and getting feedback both on the quality of the program and the performance of the individual employee.

One participant asked a particularly intriguing question: Why measure ROI at all? Do we need to prove that L&D is useful, or are we wasting time measuring the obvious? One of their peers, with a background in operations, said their organization took what they called a bolder approach to measuring impact: They collect the usual feedback on how learning programs went, but use engagement scores as a metric, comparing the engagement of employees who did and did not take part in an L&D program or event. At the end of the day, if the program is effective, it should be having an impact on these measures, and that impact should be independent of market factors such as might influence other metrics such as sales performance. Another participant from an organization that employs a lot of science and technology professionals pointed out that L&D is part of their attraction strategy for these employees, so ROI is about more than direct, specific learning results.

What is the best way to develop leaders?

Asked which critical talent segment they were most focused on developing, half the attendees in the session said leaders. When Clare asked how many participants felt confident about their leadership development program, not a single hand went up, so this led into a discussion of the challenges they faced in designing and executing L&D programs specifically for leaders.

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ReImagineHR: The 7 Habits of Highly-Effective Change Leaders

ReImagineHR: The 7 Habits of Highly-Effective Change Leaders

At CEB’s ReimagineHR event in London last Thursday, CEB Principal Executive Advisor Clare Moncrieff moderated a panel discussion among three HR experts who helped lead major cultural transformations at their organizations. John Harker, CHRO of al-Futtaim Group; Bernardo Quinn, Global CHRO of Telefónica; and Gerlinde Silvis, an organizational consultant and executive coach who has served as CHRO and on the board of Rabobank, discussed the elements of their initiatives that made them successful, the lessons they learned from their experiences, and what HR leaders need to think about when attempting to change their organization’s culture. Here are some of their key insights:

Engage stakeholders from the start

Alignment is essential to successful culture change, and getting leaders, managers, and other key stakeholders (including front-line employees) on board very early on in the process is an essential tool for achieving alignment across the organization. Commitment at the top of the hierarchy is particularly important, as it demonstrates that the organization is serious about the change, but can also be hard to obtain. It’s important early on to develop a core group of enthusiastic evangelists for change; once a critical mass of stakeholders is excited about it, Silvis said, their enthusiasm will tend to spread organically throughout the organization. That doesn’t mean you can stop pushing at that point, but laying those critical foundations, getting the right stakeholders on board early on and securing commitment from leadership, makes a big difference in the long-term prospects of your change effort.

An effective way to get stakeholders on board from the beginning is to give them a role in the design process, Harker said—and that’s something we’ve found in our change research at CEB as well. Getting to be a part of the change design process gives people a sense of ownership and prevents a backlash to decisions being made that affect them without their consent. Bringing managers and employees into the strategic planning conversation can also improve the strategy itself: Quinn described how last year, Telefónica opened up their strategic conversation to 130,000 employees on social media. This didn’t generate new ideas out of the blue, but did helped to reinforce and validate that certain ideas from leadership were right.

People will have feelings about change, so let them

Culture change can be an emotional process, especially for those with attachments to the “old” culture; Don’t run away from these emotions or encourage people to bottle them up. At Rabobank, Silvis said, they held two-day modules for top leaders, management, and employees to align stakeholders with the culture change process but also to have a candid conversation about how it was affecting them. These meetings began with check-ins that included three simple questions: How am I feeling, is there something preventing me from being present, and what are my objectives for this meeting? These check-ins gave people permission to be open about their feelings, got them thinking and talking about their behavior, and gave them the opportunity to connect emotionally with their colleagues, allowing for a more productive conversation and driving home the idea that they were participating in this experience together.

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UK: Scotland and London Can’t Have Their Own Post-Brexit Visas

UK: Scotland and London Can’t Have Their Own Post-Brexit Visas

The British government ruled this week that individual regions of the UK cannot have their own visas, seemingly eliminating the possibility that London and Scotland will be able to carve-out their own special visas in the hopes of avoiding the negative talent ramifications of Brexit. The government ultimately concluded that “applying different immigration rules to different parts of the UK would complicate the immigration system, harming its integrity, and cause difficulties for employers with a presence in more than one part of the UK.”

The official ruling, which was signed by immigration minister Robert Goodwill, came in response to report encouraging an independent post-study work system for Scotland.

(Hat-tip: Greg Pitcher @ CIPD)

Management News Recruiting // 

CIPD’s Peter Cheese: Brexit Is ‘Another Ripple in the Pond’ for HR

CIPD’s Peter Cheese: Brexit Is ‘Another Ripple in the Pond’ for HR

Peter Cheese, CEO of the CIPD, gave a keynote presentation at CEB’s ReimagineHR event in London on Wednesday to talk about the impact of Brexit on HR and workforce development in the UK. Here are some of the key issues and insights that came up in his conversation with CEB’s Talent Solutions Architect Jean Martin:

The biggest risk from Brexit is paralysis.

Prior to the presentation, a quick show of hands among the HR leaders attending the event showed that most were taking a wait-and-see approach to Brexit and had not made definite plans for how to deal with the aftermath. One of the confounding factors in responding to Brexit is that nobody really knows how the results of June’s referendum will ultimately shake out. Cheese described a recent event he attended at which the editor of the Economist polled the room as to whether they thought Brexit meant Brexit (the UK leaves the EU and that’s that), Brexit meant breakup (Brexit leads to a larger-scale disintegration of the EU as other countries pull out), or the UK wouldn’t ultimately go through with Brexit at all. Each answer got about a third of the vote, he said, indicating that even the most informed observers of the situation have no idea what to expect. So the biggest risk for organizations, he stressed, is in not planning, not acting, and behaving as though the outcome is entirely outside their control. To survive and thrive in a post-Brexit world, organizations need to adopt the mindset of leaders, rather than victims, of change.

Brexit reflects an environment of eroded trust, which has many other implications for business and HR.

One of the circumstances that enabled the Brexit referendum to pass was a high level of public distrust in institutions—the EU, the government, the media, business elites, and so forth. This distrust of “the establishment” has manifested itself in numerous societal challenges, not only in the UK but in other countries as well. In a time of frequent and disruptive change, trust issues become very dangerous, as Cheese noted that people become more resistant to change in the absence of trust, and organizations today need employees, middle managers, and leaders to be fully open to change in today’s work environment. Workers also need to feel that their organization trusts them, he added, or they will be less likely to speak up at a time when their input is more valuable than ever. Young people, in particular, won’t stand for not being listened to.

One solution to this trust deficit is transparency, Cheese said. Corporate scandals have eroded public trust in business, yes, but so has a lack of transparency and accountability. Organizations should be more open about their people, their diversity efforts, and how they are investing their resources. On the other side of the coin, they must demonstrate real willingness to listen to their people. After all, with so many new channels of communication available to them, employees are talking whether or not their employers are listening. To fix this situation, the CIPD chief recommended, leaders need to show humility, starting by listening and engaging with their people and building an environment of trust.

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