Steen Foldberg is probably one of the few bosses that gave one-fifth of his staff a 5%-25% raise without them asking. That’s part of what the managing director of Aberdeen Standard Investments in Luxembourg considers treating employees “fairly”. He spoke with Delano in February. The interview has been lightly edited for length and clarity.

Aaron Grunwald Is there a war for talent in the funds industry?

Steen Foldberg I think the starting point is always to look for the signs of a war. I think that the signs are when you see increasing salaries, when you see that you have open positions longer, when you have fewer candidates applying for jobs, then you start to realise that there is a war for talent going on. This is also something that we, as an organisation, have experienced. And just before we met, I took a look [at online job boards and] right now there are 325 open positions in the compliance space, 225 senior finance positions, 150 in risk management and nearly 100 in fund accounting. So I think that when we talk about war for talent, then these numbers say it all.

It’s been about a year and a half since the merger. How have things changed in the Luxembourg office?

One of the main measurements is, of course, assets under management, and that grew from €56bn before we started our project to €92bn [at the end of 2018]. Then, on top of that, due to the fact that the combined company doubled and in the Brexit context, new funds are being launched in Luxembourg. So we now have a larger distribution [network] that is requesting us to launch new funds. [We have also diversified] into alternative investment funds. So we have a big pipeline of products. As a consequence of the merger and the trend to have more alternative investment, we have recently been granted a licence to do private equity investment and also infrastructure, which is new.

You’re about 50 people now. Are you planning to grow?

We’re actually here on 19 February and we have officially closed our Brexit project. It’s completed. So that’s obviously something that I’m extremely proud about. And I think that the next exercise that we have to do is that we are going to streamline our suppliers and we’re going to optimise the workflow that we have. We’re also going to have a fund rationalisation, as two companies are coming together. And then we need to rightsize the team to meet those requirements. If we look at, in particular, where we still have open gaps, where we still need to recruit people, then it’s in the finance area, it’s in the compliance area, it’s in product management, especially in the alternative investment space, where we need individuals, and then with the increased number of entities that we look after here in Luxembourg. I think it’s around 160 entities that we look after as Aberdeen Standard. We’re also looking for people in the corporate sector space.

Where are you going to find your people? Are you recruiting from the UK or Frankfurt, or trying to find people already in Luxembourg?

I would say that, if you like, the starting point is, of course, that we look to use our existing talent and we try to relocate people where we can. This is not always very easy because some of these positions are senior, and then it can be difficult to relocate families from different jurisdictions.

In some cases we have been able to source people internally. So we’ve just recruited a new lawyer who has started two weeks ago; she came from London. We had our chief oversight officer [recently join]; he lived in Glasgow but worked in Edinburgh. So it is possible for us to also attract talent within the group.

Obviously we go out on the market. Because one of the other aspects is that it’s good to get people who know the Luxembourg regime. Clearly when we get people moving in from other jurisdictions, we can relatively quickly cross-train them. But if we get people who understand Lux Gaap [account standards] or compliance people who understand the [Luxembourg regulator] CSSF circulars, it’s a little bit easier. They hit the ground running.

Is it hard to convince people currently working in Edinburgh or London to move here?

When you move a complete family, it’s not easy. I’ve been in Luxembourg since 1990 and personally I have probably been directly or indirectly [responsible for relocating] as many as 250 people.

I would say it was a bit easier earlier because the taxes were lower than today and, more importantly, the cost of living was a lot lower [than] today. One of the issues that we have today compared to the past is that the financial equation was easier. It worked out much better. Nowadays if you want to have a decent place to live in Luxembourg, we’re not actually talking about relocating one person, you need to relocate two people, otherwise it’s impossible to buy or rent anything. The cost of living is very expensive. If you want to bring your children into an international school, then this can also be very, very expensive. And then, obviously, you move people away from their environment. That said, of course, Luxembourg is still a very attractive place to relocate in many, many aspects. But it’s not as easy as it used to be.

Have you changed your retention programme recently?

[We conducted] a major benchmark study in terms of remuneration of individuals. We identified that 20% of our team were paid below the market. And we then made corrections to that. So you can say that proactively we went out and we absolutely want to pay our people a fair and market competitive salary because… it’s not very helpful if you… bring in talent and you’re not paying them the right amount of money, then they will leave again.

There are a lot of other things that need to work, but compensation is a very important part.

Steen Foldberg joined Aberdeen Standard Investments as managing director of its Luxembourg operations in October 2017. Photo: Mike Zenari

What sparked you to conduct the salary study?

This was a strategic move, not because we suddenly saw that 20 people walked out the door. It was a strategic move to see what’s going on in the marketplace. And we could see when we were recruiting new people what they were asking was not in line with what the existing team were paid. If I bring someone in, and I have to pay more than for a long-standing, loyal employee, I know that I’m creating a problem for myself. Whether this information is public or not, we need to treat people fairly.

Was it a challenge justifying the pay rises to your boss?

Of course, you need to justify that, but I think the business case is quite simple. Because if you look at the alternative cost, then that’s much higher. For the sake of argument, say that we have someone who’s leaving. First and foremost, I would hate that someone is leaving if the only problem is the salary… a workplace is far more than just the salary. Remuneration, of course, needs to be OK, and it needs to be fair and competitive, but there are a lot of other things. But when it comes to situations where a person leaves and that would only be down to the salary, the cost of us replacing the individual is [too high]. You’re in a situation where it maybe takes three to four months to identify and get the right candidate sourced. [By the time they start then] you’re maybe five to six months down the line where you’re missing that resource.

[Then] you get someone in who doesn’t understand the company’s policies and rules, then you have the business disruption, from that you always have the risk that this individual then [doesn’t really] fit in the team at the end of the day. So, obviously, when we came up with the [pay rises coming out of] the benchmark survey, we needed to get the acceptance of the group, and yeah I wouldn’t say it was a walk in the park, but I would say that the business case was quite well made [and] the numbers were easily [understood].

What can the industry and government do to help on a sectoral level with recruitment and retention?

Where Luxembourg for Finance or the government could get involved is to help and create some certification programmes, so that we would raise the bar. [I] come from Denmark. There you have much more tailor-made education that people have to go through. That means that you have certain qualifications and academic standards before you get a job. Here it’s a little bit more by experience. But [certificate programmes] would allow the younger generation quickly to get up to speed if they had some education that they can take.

What’s the outlook for the sector?

Let me paraphrase the question, is this sustained growth or is this Brexit related? I think, if I’m looking at the horizon then the momentum that we have in Luxembourg right now is still extremely positive. [But because of the war for talent] the industry, to a certain degree, has had to compromise on certain positions…

Do you mean compromises with hiring employees?

What I mean is, what you ideally like to have, if you put out an open job position, is to get 200 good CVs and ten very well qualified candidates that you pick and choose from. But when you’ve had a situation where everyone has been running around for the same talent… maybe you get 50 CVs today and maybe you don’t get ten strong profiles, maybe you get four today.

In a [normal] job market you have approximately 15% [of your workforce] that are prepared to look for another job, but with the situation that we’ve had this time around, with so many jobs around, I think as much as 35% or maybe 45% of everyone working in the fund industry have been called, not once but several times, from headhunters and this has led to... a bit more merry-go-round. On the whole, the job market has been extremely fluid. Even those people that are risk averse and don’t necessarily want to [switch jobs] have this feeling that, ‘hey I’m being called ten times a week for a new job’, then you think that ‘if it’s not working [at the new employer] then the likelihood is that I’ll get another job’. Obviously, that’s not my career advice because you don’t want to have a tainted CV where you’ve been a hundred places. And we do see some of these.

This article was originally published in the April/May 2019 edition of Delano Magazine.