For the first time ever, financial services is not represented in the top 20 Best Companies for Leadership – and the industry is split on the best way back.

1. Financial services:
industry at a
crossroads
For the first time ever, financial services is not represented in the top 20 Best
Companies for Leadership – and the industry is split on the best way back.
Goldman Sachs. HSBC. American Express. Citigroup. This climate, along with ’deleveraging’ efforts and restrictions
JP Morgan Chase. on proprietary trading activities, has lowered business volume
throughout the industry. Loans that were once routine are now
Over the years, these and other blue-chip financial services subject to lengthy reviews, dramatically slowing the velocity of
companies have earned a place among the top 20 Best business opportunities. Profitability has suffered, and so too have
Companies for Leadership. the rich bonuses that the industry once relied on for recruiting
and retaining young, talented executives.
In fact, there has been at least one financial services company
among the top 20 every year Hay Group has conducted the Moreover, since the financial crisis was worsened – and, some
study – until this year. believe, caused – by the industry’s own practices, there has
been a rupture in trust between financial services providers and
That may not be entirely surprising. Firms are still struggling
most of their principal stakeholders: clients, business partners,
to engineer their recovery from the most severe financial crisis
shareholders and employees.
in a generation. As part of the aftermath, government control
and regulation have been substantially strengthened around In the face of these difficulties, sector leaders and observers are
the world, particularly in Europe and North America. At the divided as to the best way to navigate through the turbulence,
same time, virtually all firms have tightened their internal risk and position financial organizations to take advantage of
management processes. opportunities when the climate improves.
©2012 Hay Group. All rights reserved

2. Financial services: industry at a crossroads
Which way forward?
On the one hand, some believe the current global managing director for the financial
situation is an extreme instance of a normal services sector at Hay Group. “But they also
dip in the long-term business cycle. These must take action to rebuild trust and develop
leaders advocate adapting business-as-usual dramatically different – and better – client-
practices for weathering a downturn: reducing centric approaches to the marketplace.”
costs by improving operational efficiencies and
If that weren’t enough of a challenge, Laouchez
trimming staff, while preparing for the upswing
notes, the industry must also cope with the
by developing new products and relationships
sweeping changes affecting all businesses –
based on past successes. Trust will be restored
significant realignments driven by powerful,
by traditional, solid business success.
long-term megatrends in demographics,
Other industry leaders, including the financial attitudes and technology.
services team at Hay Group, believe that both
In particular, new technologies have made
the rules of the game and the game itself have
financial products more transparent to
changed fundamentally and irrevocably. In this
consumers, who now find it easier to compare
view, the way forward requires fundamental
the costs and returns of similar products offered
changes in the way companies do business.
by different organizations. This has the effect
“To emerge from this current cycle in a strong of shifting more buying power to clients – and
position, financial services firms must take places a greater premium on both client service
care of the basics, cutting costs and updating and differentiation through effective product
traditional products,” says Jean-Marc Laouchez, and organizational innovation.
The case for innovation
The Best Companies for Leadership from other empowerment; and emphasizing collaboration
sectors have responded to similar challenges by to drive cross-fertilization and innovation.
committing to disciplined, long-term initiatives
Results of the 2011 Best Companies for
aimed at creating a culture of innovation. They
Leadership study suggest that the financial
have implemented strategies and practices that
services firms are now lagging behind the
invite and support new ideas: focusing on client
top companies in all these dimensions:
needs; embracing multiple, diverse perspectives;
promoting organizational agility and
 Top 20 Best Companies for Leadership
Financial Services Firms
Client needs:
Employees spend much time discussing customers’
future needs.
Broadening perspectives:
In my company, employees are encouraged to learn
outside their area of expertise.
My company has a balanced mix of local and
international talent in senior leadership positions.
An appreciation of global issues is a key job
requirement in this organization.
Agility and empowerment:
My company evaluates the performance of its leaders
based on their agility.
Self-organizing project teams are the main way work
is accomplished in this company.
Collaboration:
My company takes clear action when a leader is not
collaborating (even if he/she has strong business results).
Supporting innovation:
My company’s leaders regularly celebrate innovation.
My company runs unprofitable projects to try
new things.
0 20 40 60 80 100
©2012 Hay Group. All rights reserved

3. Given that money, in one form or another, is the Hay Group believes the greater risk lies in not
principle product of these firms, the choice of trying new things. Experience shows that, in
short-term profitability over client-service and practice, harnessing the power of talent and
innovation may be predictable. But with the innovation quickly and positively impacts near-
magnitude of the challenges facing the sector, term profitability.
Trust and the leadership
challenge
Trust is more fundamental to success in financial committed effort across the industry,
services than in any other industry. Clients particularly from its leading organizations.
and employees remain associated with banks,
These efforts must begin within each
insurance companies, assets managers and
organization, by re-engaging and re-energizing
other financial services organization when they
employees, and re-aligning their interests with
believe they can rely on them. Yet as a result
those of shareholders and clients. However,
of the financial crisis and the revelations that it
when it comes to rebuilding trust, the results
triggered, trust in the sector is unfortunately in
of the Best Companies for Leadership study
short supply. Regaining it will require a
suggest that the industry has work to do.
 Top 20 Best Companies for Leadership
Financial Services Firms
Leaders in my company have the ability to
generate personal and organizational loyalty.
My company evaluates and rewards our
leaders based on their ability to build excellent
relationships with their peers.
0 20 40 60 80 100
Historically, organizations in financial services have no matter how gifted; it requires extraordinary
rewarded managers who have delivered superior leadership skills. Hay Group believes that financial
returns through finely honed commercial, services organizations should display innovative,
technical, analytical or other specialist skills, collaborative and other leadership skills in their
rather than those who have exhibited strong managerial ranks today. But measured against
leadership capabilities. the best companies, those in financial services
once again fall short regarding practices that
The job of refocusing a large, global or matrix
develop and nurture leadership talent.
organization, however, is not a job for a technician,
 Top 20 Best Companies for Leadership
Financial Services Firms
This organization actively manages a pool
of successors for mission critical roles.
In this company, everyone at every level has
the opportunity to develop and practice the
capabilities needed to lead others.
Leaders in my organization create a work climate
that motivates employees to do their best.
Leaders in this organization demonstrate
self-awareness.
0 20 40 60 80 100

4. Financial services: industry at a crossroads
Forward looking companies
will be able to
chart a new direction
There is some good news, however: in their  keeping people engaged in a new
leadership development practices, financial environment of ‘responsible reward,’ while
services organizations do rank higher than the striking the right balance between growth and
survey average. For example, financial services risk in both systems and peoples’ mindsets
companies rank significantly higher than all
 developing the ‘third generation’ of leaders
companies in the survey in actively managing
to address these challenges and drive the
a pool of successors for mission-critical
transition to a better performing model.
roles, and in giving people at every level the
opportunity to develop leadership capabilities. “For all the challenges they face, I am confident
These practices create a foundation that that forward-looking firms will be able to chart
resourceful leaders can build on. a new direction for themselves,” Laouchez
concludes, “combining world-class efficiency
They will need that foundation, because to
with product and organizational innovations
survive and succeed in the changing business
that will strengthen their client relationships
landscape, financial services firms must
and ultimately rebuild trust and lift profitability.”
overcome significant hurdles, including:
These are the firms that will be best positioned
 reducing costs without cutting human
to prosper when economic climates return
and relationship potential
to more positive and uniform growth – and
 rethinking operating models to provide undoubtedly the organizations that will lead
meaningful client experiences, improve the industry back into the ranks of the Best
transparency, and renew trust Companies for Leadership.
About Hay Group’s Best Companies for Leadership study
Hay Group has researched the Best Companies for Leadership since 2005. This year’s
survey includes responses from nearly 7,000 individuals at more than 2,300 organizations
worldwide. The survey was based on the organization’s response to an online questionnaire
and peer nominations. Respondents that completed the survey were from 103 countries,
with 11 percent from North America, 35 percent from Europe, two percent from the Middle
East, 21 percent from Asia/Pacific/Africa and 31 percent from Latin America.
About Hay Group
Hay Group is a global management consulting firm that works with leaders to transform
strategy into reality. We develop talent, organize people to be more effective and motivate
them to perform at their best. Our focus is on making change happen and helping people and
organizations realize their potential. We have over 2600 employees working in 85 offices in 48
countries. For more information please contact your local office through www.haygroup.com
©2012 Hay Group. All rights reserved