Institute Insights - Attracting & Retaining Talent in Financial Crime Compliance

Attracting and retaining competent professionals in compliance roles, particularly in financial crime, can be formidable challenge. The complexity of regulatory frameworks and the sophistication of financial crimes demand a workforce that is technically skilled and deeply committed. However, firms face difficulties with high turnover and a competitive job market, where the demand for seasoned compliance experts often outstrips supply.

This issue in financial services compliance stems from various factors. The nature of compliance work, frequently seen as stringent and procedural, can overshadow its importance in maintaining the integrity of firms and the wider financial system. Additionally, the constant flux of regulatory changes requires continuous learning, which can be both stimulating and stressful. Firms often struggle to attract and retain top talent, as professionals tend to seek roles with more satisfaction or advancement prospects.

Herzberg's Motivation-Hygiene Theory offers a useful framework to tackle these challenges. It suggests that job satisfaction and dissatisfaction are influenced by two distinct sets of factors: motivators and hygiene factors. Motivators, such as recognition and personal growth, actively foster job satisfaction. Conversely, hygiene factors, like salary and working conditions, might not motivate if present but can lead to dissatisfaction if lacking.

Applying Herzberg’s theory in financial services compliance can provide an effective approach to talent management. By enhancing specific motivators and addressing hygiene factors, firms can attract and retain the talent needed for effective financial crime compliance. This strategy involves reimagining compliance roles as careers that offer growth, recognition, and a sense of achievement.

Understanding Herzberg's Motivation-Hygiene Theory

Developed by psychologist Frederick Herzberg in the 1950s, Motivation-Hygiene Theory suggests that job satisfaction and dissatisfaction arise from two distinct sets of factors: motivators and hygiene factors.

Motivators, also known as satisfiers, are factors that inherently enrich an employee's job role. These include aspects such as achievement, recognition for accomplishments, the work itself, responsibility, and growth or promotional opportunities. When present, these factors actively create job satisfaction and enhance employee motivation. For example, in compliance roles, the satisfaction derived from successfully navigating complex regulatory challenges or being recognized for meticulous work can significantly boost an employee's motivation and commitment to their role.

Conversely, hygiene factors, or dissatisfiers, are elements that, while not necessarily motivating employees when present, can lead to dissatisfaction when absent or inadequately addressed. These encompass salary, company policies, administrative practices, supervision quality, working conditions, and peer relationships. In the context of financial services compliance, inadequate compensation, poor working conditions, or unsupportive management can lead to dissatisfaction, potentially resulting in high turnover rates and difficulty in attracting new talent.

The relevance of Herzberg's theory to the financial services compliance sector is particularly significant. The complexity and critical nature of the work require a high level of employee engagement and expertise. Understanding what truly motivates compliance professionals - beyond the basic hygiene factors - can help firms in developing strategies that not only attract skilled professionals but also retain them. It involves creating roles that are not only remuneratively and environmentally satisfactory but also intellectually challenging and rewarding. By focusing on enhancing motivators like recognition, responsibility, and opportunities for professional growth, compliance departments can cultivate teams that are proficient and passionately committed to their roles. This approach is essential in an industry where the stakes of compliance are high and the costs of non-compliance can be severe.

Applying Motivators in Financial Crime Compliance

Effectively leveraging motivators such as recognition, responsibility, and the intrinsic nature of the work can deeply enhance the attractiveness and fulfilment derived from these roles. Recognition plays an important part in elevating job satisfaction. For instance, a financial services firm could implement an 'Employee of the Month' programme, specifically acknowledging individuals who have demonstrated exceptional diligence in identifying and mitigating financial crime risks. Such recognition not only boosts morale but also highlights the critical importance of compliance in protecting the organisation.

Responsibility is another significant motivator. Empowering employees with greater autonomy and decision-making authority can lead to a more engaged and committed workforce. Imagine a scenario where a compliance officer is entrusted with leading a project to review the company's anti-money laundering (AML) strategy against new regulations or regulatory publications, such as decision notices. This responsibility not only supports their learning and development but also offers a sense of ownership and pride in their work.

The inherent nature of financial crime compliance work, with its complexities and impact on organisational integrity, should be inherently fulfilling. Firms can enhance this aspect by regularly communicating how employees’ efforts contribute to preventing financial crime and keeping the organisation save. For example, sharing success stories in team meetings or town halls about how the team prevented or detected money laundering or sanctions breaches can reinforce the meaningfulness and impact of their work. 

Addressing Hygiene Factors in Compliance Roles

Addressing hygiene factors helps create a stable and satisfying work environment. By attentively managing these factors, firms can prevent the dissatisfaction that leads to staff turnover and disengagement, thereby creating a more stable and committed compliance workforce. While not directly contributing to job satisfaction, hygiene factors can lead to significant dissatisfaction if neglected. Company policies, working conditions, and salary are paramount among these. Company policies provide the framework within which compliance professionals operate. Clear, fair, and consistently applied policies are essential in fostering a sense of justice and security. For example, if firms don't ensure transparency in their approach to promotions and bonuses, employees will feel undervalued and treated unfairly. Similarly, where risks highlighted by Compliance are ignored or downplayed on favour of profit, motivation and commitment to the organisation quickly deteriorate. 

Working conditions are equally important. Compliance roles often involve intense scrutiny and high pressure, so creating a comfortable and supportive work environment is critical. Hybrid working has become the norm, as it allows Compliance officers to spend time reading and analysing regulations or solving complex problems without being unnecessarily interrupted. Poor IT systems and technology that does not allow for adequate record keeping or generates poor data can lead to frustration and dissatisfaction. Transaction monitoring systems with a very high level of false positives or poorly tuned parameters are examples of adverse hygiene factors.

Salary, of course, is a critical factor! It must be competitive to attract and retain talent. Regular salary reviews and bonuses linked to both individual and team achievements can help in maintaining satisfaction levels. A bonus scheme rewarding teams for successfully passing external audits or for innovative solutions in compliance processes acknowledges the hard work and expertise required in these roles. 

Strategies for Heads of Compliance and MLROs

For Heads of Compliance and MLROs, effectively applying Herzberg's Motivation-Hygiene Theory can be transformative in attracting and retaining top talent. The key lies in implementing strategies that address both motivators and hygiene factors.

Firstly, to enhance motivators, it is important to recognise and celebrate the achievements of compliance staff. This can be done through formal recognition programmes or informal acknowledgments in team meetings. For instance, introducing an 'Excellence in Compliance' award can significantly boost morale and demonstrate the value placed on high-quality compliance work. Additionally, offering opportunities for professional development is vital. This could involve providing access to training programmes or sponsoring certifications relevant to financial crime compliance. Such initiatives not only enhance skills but also signal an investment in employees' career growth. Responsibility and autonomy are also powerful motivators. MLROs can delegate meaningful tasks to team members, allowing them to lead projects or parts of the compliance programme.

Regarding hygiene factors, competitive compensation is fundamental. Regular market comparisons to ensure salaries are competitive and fair are essential. Additionally, creating a supportive work environment is vital. This includes ensuring that company policies are transparent, fair, and consistently applied, and that the work environment is conducive to productivity and well-being. Heads of Compliance and MLROs should also focus on building a culture of open communication where feedback is encouraged and acted upon. This can be achieved through regular team meetings and one-on-ones, where employees feel comfortable sharing their ideas and concerns. Flexible working arrangements, such as remote work options or flexible hours, can also make a significant difference in employee satisfaction and retention.

Today's compliance landscape, with its complex nature, demands a workforce that is not only competent but also highly motivated and committed. Applying Herzberg's theory provides a nuanced approach to meet these challenges, ensuring that firms not only attract but also retain the top talent necessary for robust and effective compliance. 

About the Author

Dr Mario Menz is a member of The Institute Committee. He previously held the Head of Compliance (SMF16) and MLRO (SMF17) functions and is currently the Chief Examiner for the CISI Diploma in Investment Compliance' regulation and compliance exam.