Skill-based recruiting in the financial sector

About Magnit

Hello Mr. Läpple, in a nutshell: what exactly does Magnit do?

Magnit is a comprehensive external HR management solution for companies. To put it simply, the purchasing and HR departments outsource the procurement and administrative processes for all external staff to specialists.

All processes are digitalized using special software that takes all relevant legal aspects into consideration. This ensures a transparent visualization and cost control for everyone involved in the company. What is particularly interesting is that Magnit covers all types of contracts – from temporary employment to service and work contracts.

Why are you concerned with recruitment?
Recruitment is a matter close to my heart, because the success of a company depends on the motivation and expertise of the employees working on its projects.

It is crucial to not merely find the right person for a job, but also to ensure successful collaboration between employees. In an increasingly competitive environment, motivated employees with an innovative mindset give companies an advantage over their competitors.

Recruitment in the financial sector: we need to break new ground!

What is your view on the current challenges surrounding recruitment in the financial industry?
In principle, almost all industries are facing similar challenges. In recent decades, many companies – especially from the financial sector – have become more and more digitalized, i.e. they have turned into IT companies to a large extent. As a consequence, these companies are in direct competition for talent with the IT and overall tech sector, which is often perceived as more innovative and attractive.

Whether we are talking about insurance, cryptocurrencies or traditional banking services, they greatly rely on software and IT. The ratio of talented workers that are self-employed is way higher in this environment than in other industries, and most IT departments of large companies communicate in English. Moreover, many of their projects do not require physical presence. All of this allows companies to draw on a larger talent pool and employ highly qualified IT staff from other countries. This is a particularly important factor in these times of skills shortage.

You mentioned that traditional recruitment is reaching its limits and that more agile approaches are therefore needed. What exactly does agility mean in the context of recruitment?
Agile recruitment refers to a company’s flexibility, adaptability and responsiveness to the ever-changing demands of the labor market and applicants as well as to changing internal needs. It is about recognizing new trends and establishing an adjustable recruitment process.

By regularly obtaining feedback from both talents and employees, agile recruitment teams can continuously adapt and optimize their processes. This works particularly well if they stay in close touch with the specialist departments. The feedback process allows the recruitment teams to identify new requirements in the specialist departments, such as when new skill needs emerge.

Agile recruitment also comprises the integration of technologies such as AI, automation and data analytics in order to improve the recruitment process, increase efficiency and be able to make informed decisions. In sum, agile recruitment refers to a company’s ability to effectively attract, select and retain qualified talent in the long term, even in a dynamic working environment.

Skill-based staff selection

Also, companies have to be quick and pragmatic and set a stronger focus on the skills they need when selecting new staff. How should they design the relevant processes in order to attract suitable talent regardless of industry, formal qualifications or contract type?

Skill-based staff selection is more about the skills and competencies of applicants than about their traditional formal qualifications. Employers that follow this approach do not primarily focus on traditional references, but rather on whether a candidate has the right qualities and behavior to perform excellently in the respective position, not only in terms of subject-matter expertise, but also with regard to organizational aspects. There are various tools such as skills profiles and tests that allow companies to identify suitable talent, for example by assessing a candidate’s skills in different areas and determining how well they match the requirements of the respective position.

Together with our clients, we go one step further and try to replace silo recruitment with a more strategic and holistic approach.

What can and must companies do to position themselves appropriately in this context?

To this day, many companies use different recruiting approaches for internal and external positions: while internal staff is traditionally recruited by HR / talent acquisition, the responsibility for recruiting external staff often depends on the type of contract; it may lie either with HR / the respective specialist departments or – in the case of service/work contracts – with the purchasing department. The decisive factor for the type of recruitment is therefore often the contractual form of employment rather than the skills.

However, companies should always aim for skill-based recruiting – regardless of the type of contract. To this end, they need to comprehensively realign their HR management strategy – by using software that creates transparency about the skills available at the company as well as the pool of applicants and all external staff.

In addition, the following applies: retaining and upskilling employees is always a better solution than having to fill their roles with someone new because they have left the company. Companies are thus well-advised to regularly analyze their workforce and see what needs to be done to retain their employees.