2016 Articles

The Kingdom Reforms (Part II)

Saudi Arabia has announced a spate of cuts around compensation within the government and the public sector. While there may not be immediate ramifications of these curbs for the private sector, firms irrespective of their ownership structure, should be wary of these changing times. In this second part of the series, we explore what organizations in the Kingdom could do to effectively adapt to these circumstances.

The Troubled Waters for Retail Banking

Incentive opportunities and the mix of pay continue to be examined as the effectiveness, administrative burden, and risks of low dollar programs are under scrutiny in retail banking.

Further Ramifications of New DOL Fiduciary Ruling on FA Training

In addition to the compensation implications discussed previously, another area demanding firms' attention will be roles and training. Compliance departments will require additional staffing, including new roles dedicated to all things fiduciary.

Implications of New FLSA Minimum Salaries and DOL Fiduciary Ruling

It's certainly not a stretch to call 2016 a very challenging year for HR / Compensation professionals in the financial services industry as they respond to two sweeping regulatory changes: the Department of Labor's new fiduciary standard for Financial Advisors and new FLSA minimum salary rate for exempt employees.

Regulatory Update: Solvency II – Remuneration Requirements

Our consultants have summarized the Supervisory Statement (SS) on Solvency II remuneration requirements, released today by the Prudential Regulation Authority (PRA), and what it means for insurance firms in the UK.

What Next for The Kingdom of Saudi Arabia’s Capital Markets?

Recently The Kingdom of Saudi Arabia announced a grand economic vision to take the economy to 2030, diversifying the area’s reliance on oil. This comes at just the right time. Depressed oil prices and a tumultuous 24 months in the region, where state coffers have been tested and economic growth has lagged, has now been met with a new sense of optimism and a way forward. This has been further spurred on by the recent increase in oil prices that are back at approximately $50 USD a barrel.

McLagan Alert: The UK Decides to Leave the EU

On 23 June the UK voted to leave the European Union (EU). This historic decision is creating near-term volatility in the capital markets, but it is important to note that the full impact of this decision for the UK and European financial services sector will unfold over a period of at least two years as the UK negotiates the terms of the exit.

Employee Turnover Slows in Brazil, Even as the Tech Sector Remains an Economic Bright Spot

Voluntary employee turnover at technology companies in Brazil has slowed for the past four years, suggesting limited job opportunities amid the country's political and economic crisis. However, if we peel back the layers, we find sales employee turnover has rebounded in the past year and the Brazilian startup scene is attracting government support and foreign investment.

Corporate Titles: An outdated concept or a building block for excellence?

As we look across a set of industries—Financial Services, Technology, Fin Tech, and Consulting—we see dramatically different approaches to job architecture in general, and the use of corporate titles in particular.

Incentive-based Compensation Arrangements: A Summary of Dodd-Frank Section 956 (Part II)

The update provides an executive summary of critical strategic issues, a deeper dive on tactical implementation issues, and definitional clarity on key topics. McLagan has been in communication with members of several regulatory bodies and based upon those communications developed our perspective for this alert. While we believe the substance of each agency's proposal is aligned, we acknowledge the potential for nuances as the proposals range from approximately 300 - 700 pages in length, depending on the agency.

The Kingdom Reforms

The past few months have presented unpredictable consequences for oil exporting countries - the price of oil has nosedived by over 70% compared with June 2014 levels. The extent of the impact has been as unrelenting as the pace of the fall in the prices. These are troubling times for Saudi Arabia as the country faces an economic crisis of sorts - from its peak in 2014, Saudi reserves are estimated to have depleted by a whopping $150 billion. In 2015 alone, the Kingdom consumed $115 billion in reserves, when the crude oil prices averaged under $50 per barrel.

Incentive-based Compensation Arrangements: A Summary of Dodd-Frank Section 956

After five years, the interagency task force has re-proposed Section 956 of Dodd-Frank. This proposal is clearly more prescriptive and covers all financial institutions with balance sheet assets over $1 billion that are regulated by the six agencies.

EBA Consults on Draft Remuneration Guidelines for Sales Staff

On December 22 2015, the European Banking Authority (EBA) published a consultation paper on its Draft Guidelines on remuneration policies and practices for staff offering and providing retail banking products and services.

White Paper: Why Work?

If you won the lottery, would you quit your job? Our latest white paper draws on insight derived from interviews with CEOs at leading financial services firms and academics, to investigate the role pay plays in how and why executives work, especially in the absence of economic needs, and how this can help you retain and engage your top performers across your organization. 

White Paper: The Quiet Corner of Financial Services

Past sales practices within many banks are no longer tenable given the lack of transparency, risks, administrative burden, and confusion most incentive plans have instilled. This white paper explores the complex landscape of retail banking, including the values of the firm and the HR systems that support them. We have provided recommendations for navigating the gaps that exist. 

White Paper: The Modern Approach to Managing Compensation for Strategic Near Shoring Locations

​In recent years financial services firms have increased their focus on deployment of their workforce to strategic near shoring locations to help manage compensation and other expenses. As a result of exponential growth of the near shoring centers and increased competition from industries outside of financial services, firms have been facing new challenges in managing pay for support staff and applying regional differentials appropriately.

The Shrinking Pools

Burdened by low oil prices and macroeconomic instability, the regional banking sector is suffering from squeezed earnings as liquidity tightens and credit growth remains tepid. Given these conditions, many banks across the GCC will not meet profit targets, subsequently reducing bonus pool funding. How should banks in the region respond to the new economic climate and can they somehow convert this into an opportunity to derive competitive advantage?

Managing Compensation in a Downturn

It seems like we are in for a rocky ride in 2016. While underlying economies of many countries and the financial performance of many companies still appear solid, numerous firms are preparing for a tough year ahead.