Although challenged by corporate restructuring and cost cutting, banks and financial firms can't afford to overlook talent development, which could impact their long-term performance. Brenda Wilson, Mercer's Asia-Pacific leader of talent development consulting, says regardless of the current economic cycle, banks must be careful with redundancies to avoid losing key people and draining their talent pool. While banks may face training budget restraints, talent development programmes should be maintained as these will help build a workforce that can overcome challenges and deliver results in the future, says Wilson. 'Organisations that don't have a clear strategy around their workforce needs and retrench the wrong staff could end up facing stiff challenges during the next economic upswing,' she adds. Wilson says surveys show that firms which cut the wrong segments of their workforce struggle to make profits even when markets recover. 'If a company cuts the wrong 10 per cent of its workforce, there is a risk that it is cutting 100 per cent of its value,' says Wilson, citing the need to keep experienced bankers and skilled technicians who would be difficult to replace. Wilson explains that when job cuts are necessary, human resources (HR) departments must assist management in evaluating workforce risk and the business impact of job cuts. 'Economic cycles come and go, so banks need to look at their short, medium and long-term strategies and the workforce they need to achieve their objectives,' she says. 'In many cases, if it is necessary to downsize the workforce, a surgical rather than an aggressive, invasive approach could be more effective.' She adds that once lost, employees with skills and experience can be difficult to replace. 'There remains a core Asia-Pacific issue of labour supply and demand imbalance, which impacts talent development. Ageing populations and labour immobility are two of the contributing factors,' says Wilson, adding that leadership development is a key concern among CEOs in the region. Dora Wong, managing director at talent and career management firm Right Management, says talent management is often a case of what banks are not doing rather than what they are doing. Wong says talent development is not simply a case of providing one-size-fits-all multiple training programmes. Instead, it should focus on identifying the 'right' talent and providing them with training and support. She says employees selected for development programmes also need to be supported with coaching and mentoring to help them absorb company values. 'To build and maintain a workforce that remains competitive, talent development needs to follow a strategic and holistic approach that aligns business objectives and future strategies. Often, banks look at the top or bottom line and overlook the talent component which helps to drive business,' says Wong. HR professionals and business leaders need to evaluate how they previously approached talent management by looking beyond the next quarter earnings cycle and taking a long-term view of maintaining a talent-rich, balanced workforce. Wong says that even if banks had to make job cuts, they should still consider the structure of the workforce they would need in 12 to 18 months. 'There are plenty of potential candidates looking for jobs, but banks need to consider if new hires will replace the talent that has been let go. Also, would new recruits quickly adapt to the company culture? And how long will it take and how much will it cost to train and develop that person?' says Wong. 'The decision to release key employees must be looked at carefully and the case for redeployment - to ensure knowledge and experience stays within the organisation - may well be a better solution.' When redundancies become inevitable, Wong says management should formulate clear and concise messages to reduce anxiety and improve understanding between staff and management. 'If organisations fail to handle downsizing effectively, there is a risk they will lose key members of their workforce within three or four months, leaving behind less capable employees to fill in the skills gaps,' warns Wong.