Talent and Capacity Challenges and Solutions - is it time to collaborate?

Increased regulatory scrutiny, demand for substance, and sheer growth in business volumes, has conspired to create a scarcity of talent, especially in certain pockets. Adding to this, a post-pandemic assessment of work/life balance after experiencing the merits of home-based working, is causing many employees, especially the so-called “frontaliers” to question whether a domestic role with greater HBW flexibility is better than a tortuous commute each day.

Scarcity of supply of employees inevitably results in salary arbitrage, and higher turnover. We see some employers “high-fiving” a fall in staff turnover to below 30%! It has become a sellers’ market; employees are in control, and employers have to “sell” vacancies to convince and attract good people at least for the moment.

Adding to this, Luxembourg is a nation of subsidiaries/branches, where local management often lacks autonomy over local decisions on hiring, compensation, working practices, and obligated to conform with Group policies (note how many locally currently have hiring freezes imposed upon them by their Group Parent). Competition has expanded beyond traditional peers; for example, the FinTech sector offers intellectual stimulation, freedom from corporate rules, and often the prospect of equity rewards. Employers are being pushed increasingly to source people from outside the EU, causing the work permit demand to explode and outpace government visa approval capacity.

Finally, there is a need for a change in leadership style for a more remote-minded and empowered workforce; leaders have to be coaches, not managers, offering more “trust” and less “instruction”… this will be imposed by the new generation.

To make a material difference, the response has to be substantially at an industry level, and collaboration between industry, technology, and government appear essential elements. We list below eight ideas to debate and validate whether some or all could help ameliorate the problem:

• Large scale collaboration across industry/sector to organise a mass and sustainable hiring program, where each “intake” is put through academy or “boot camp” essentials and made available as “graduates” to subscribing employers. Such a program would obviously prioritise roles in most demand or shortest supply and focus heavily on practical not academic knowledge. Following Germany’s example of dual study programmes could also help to integrate theoretical and practical education to make the young generation “fit” for the market;
• Technology mutualisation, where industry adaptation will allow harmonised data standards, capture and reporting, in addition to the more obvious investments to eliminate mechanical tasks and focused on “alerts” to offer effective, efficient, and intelligent oversight;
• Government support to align work permit capacity with demand, and with an increase of affordable housing initiatives and international schooling capacity;
• Tactical solutions around satellite offices spread along the three borders, but in a way where such locations are not considered “satellite” but “core”. Collaboration to create procurement leverage on rents can also encourage premises of a higher standard and local facilities to grow around a larger cross border community;
• There is a growing army of semi-retired expertise and skills in Luxembourg, untapped in any organised way. Many would welcome opportunities for secondments or interim roles which allow them to retain the flexibility of semi-retirement. Again, a professionalised “utility” approach to centrally forming a panel of such expertise and matching them with demand could make a significant difference. We could look at the example of the UK, where part-time work for retired professionals is designed as an attractive source of extra income.
• Similarly, an increasing number of regular employees may prefer the flexibility of “freelance” status, able to pick and choose when and where they work during any year. Employers may need to consider how to tap this rich seam of talent, made easier with a centralised “utility” approach;
• Interns used to be regarded as excellent makers of tea and useful for photocopying; that is of course dinosaur thinking, and today with an internationally minded and well-educated European population, that first “rung” on the ladder as an intern, if properly managed, defined, mentored and motivated can often lead to more permanent and very loyal employees with huge potential. It is currently very under-used as a tactic in encouraging talent to Luxembourg;
• Why are so few indigenous Luxembourgers employed in finance? We estimate less than 5% of the asset management and asset servicing sectors employees are Luxembourgish. The finance sector is a flagship success for the country but not so much for its indigenous working population it seems. Given the importance of the sector to Luxembourg’s economy, why is there not an aligned University Master's Degree, each year seeding the sector with bright, well educated, motivated future seniors and decision makers? We must aspire to offer a “profession” not a “job”. While the Luxembourg university has already established an ESG certificate, perhaps a university chair for Alternatives and/or Asset Servicing should be set up to meet the lack of resource in this booming market.