All recruiters and HR managers strive to recruit the best candidates. A great hire can improve productivity, boost office morale, and positively impact the company’s bottom line.

But what is a bad hire? And how does it happen? Consider: Some candidates may misrepresent things in their resumes and applications. This can range from exaggerating educational or work experience to blatantly lying.

No matter how well you think you know someone, talking to the people he’s worked for in the past yields new insights and clarifies existing ones. References are invaluable free resources that prevent costly mistakes.

Costs of a Bad Hire

• Dampened Morale — Employee morale correlates with increased productivity, organization loyalty, and higher profitability. The wrong employees kill workplace morale.
• Increased Turnover — Every organization needs great employees. But there’s one thing which good employees can’t stand – that is having bad employees as their colleagues or managers. They’ll quit.
• Decreased Teamwork — Teamwork is critical to organizational success. Bad hires don’t work well with fellow employees.
• Decreased Productivity — Workplace morale and teamwork are critical factors for boosting productivity.
• Reputational Damage — A bad hire has a negative impact on employee morale and increased turnover will soil an organization’s reputation. When a company gains a reputation for hiring the wrong individuals, it will start having problems attracting top talent. A bad hire interacting with customers can damage an organization’s image to its customers.
• The Confidence Factor — When you hire and keep the wrong people, your team questions your ability to make smart decisions. No one is more affected by this than top performers.

Significant Financial Costs

Financial costs can vary widely depending on the position for which the hire was made. Estimates range from $7000 to $10,000 as the average cost of hiring the wrong individual for an entry or mid-level position. The cost of wrongfully hiring a manager can be in excess of $40,000.

While the financial impact is quantifiable, chief financial officers actually rank a bad hire’s morale and productivity impacts ahead of monetary losses.

Have you ever calculated your direct costs of replacing someone who shouldn’t have been hired in the first place? They include:

• Hiring (advertising, interviewing by human resources and management)
• Onboarding (training, management, and oversight)
• Lost productivity, engagement, opportunities and customers
• Hiring externally

It doesn’t matter if you are hiring an entry-level minimum wage employee or senior executive. The cost of a bad hire is significant and can bring down a team, a manager, or the entire organization.

While there are no guarantees, taking the time to cast a wide net and
doing your due diligence in selecting employees is well worth the effort and will minimize the chances of a bad hire.

“The toughest decisions are people decisions: hiring, firing, and promoting people. They receive the least attention and are the hardest to ‘unmake.” — Peter Drucker

Seventy percent of financial services CEOs see the limited availability of skills as a threat to growth.

These days survival and success within this fast-changing marketplace demand people who are creative, digitally-savvy and can adapt quickly to constant change.

The Old Operating Environment

But few CEOs say they’re changing their focus on the skills and adaptability of their people. Companies in every industry usually have one thing in common. They hire for the operating environment that used to be. Talent is recruited for the world that was, not for the one that’s coming.

A new world is bearing down upon financial services. In no segment is this truer than in private-wealth management.

The question most hiring managers have failed to answer — How do I hire for a demographic that’s going to dominate my business for the next 30 years?

What follows is an overview of the new operating environment, the transformation already underway and the talent imperatives necessary to win in today’s world.

Click below on The New Imperative for Recruiting Talent in Private Wealth Management pdf to find out more and learn more.

There are blue skies ahead for the asset management industry and asset managers. But, clouds are also looming.

The threat of disruption is imminent. Automation and robo-advisory offerings are commoditizing large parts of the business.

The quest for scale is likely to see a wave of acquisitions and strategic alliances with tech companies shaking up the market in the coming years. Changing demographics and markets will thrust the asset management industry to center stage.

The rise in the volume of investable assets is set to increase from around $64 trillion today to $102 trillion by 2020.

Inspired by platform models in other industries, clients are also advancing new demands regarding the immediacy with which they interact with their providers. At the same time, regulators are doing their best to prevent consumers from being sold inappropriate products, often the most lucrative for providers.

The result? Regulatory costs continue to climb while fees are falling and a battle rages over ownership of clients.

Fundamental drivers of the new asset manager are:

• A new emphasis on cost, scale, and efficiencies critical to global success.
• Economies of scale. Some global managers will become mega-managers.
• Fewer managers who rely on commissions. They will need to develop alliances with fee-only distribution channels.
• Large alternative managers will need to fund their expansion by tapping the capital markets, or through strategic relationships.
• The gap between specialist firms and mega-managers, who compete everywhere on everything, will widen dramatically.

The Future of Asset Management Talent

• Job seekers are no longer being asked to simply take standard data and analyze it better than competitors. Companies are now looking at the challenge of information itself – what to use, how to get it, and figuring out which questions it is best suited to answer.
• Technical skills are essential. Firms need people who can create efficient, scalable tools to organize and analyze data. STEM backgrounds and coding skills have long been critical attributes in research hires.
• Portfolio managers with expertise in investment and portfolio strategy across fixed income and equities will continue to be in high demand.
• Compliance managers and data specialists continue to be hired while regulations get tougher and investments in technology increase.
• If a volatile market prompts investors to pull their money, asset managers will face more pressure from competition.
• Asset managers will put attracting and developing talent at the forefront of their efforts to retain and enhance their
  competitive position.
• Across the firm, there will be the flexible use of technology allowing for economies of scale, specialization of needs and improved reporting.

Pressures on The Asset Management Industry

1. COSTS – Rising costs of complying with regulation and commercial cost pressures will as firms grow their distribution networks.
2. FEES – Fees will be under continued pressure amid the push for greater transparency and comparability.
3. TECHNOLOGY – Investment in technology and data management will need to be maintained or increased to drive customer engagement, data mine for information on clients and potential clients, operational efficiency, and regulatory and tax reporting.

What Are The Gamechangers in Asset Management?

• Regulation will hinder banks and insurers by forcing them to abandon proprietary investing and other core businesses.
• As the world ages, retirement and healthcare will become critical issues that only asset management can solve.
• Asset managers who are willing to see the client as their compass are set to thrive in this environment, while the rest are likely to face accelerating headwinds.

Conclusion

How do you know what you want to be if the vast majority of jobs that will be available in a decade or so don’t exist now?

In a job market where change is the one constant, and today’s knowledge may be tomorrow’s ancient history, how do you retain and even increase your professional value? The same way that enterprises remain competitive amid constant change:
By being adaptable.” – DXC.technology