Right man for the right job – Resource allocation

Published on October 29, 2014 by Guest Blogger

Finding the right analyst for the right job is never easy…

We are a firm full of bright financial analysts, but the work our clients send us is highly diversified, very domain-focused and always comes with high expectations. Ensuring we find the right analyst within us to work on a new engagement is quite a challenge.

Let me explain with some real situations. When we staff Equity Research engagements, we look at whether the work involves modelling or investment note writing. Within modelling, we assess whether the task involves historical results and forecasts or valuation as well. For investment note writing, we try and understand if our analysts are expected to produce end-to-end initiation notes or write certain sections of stock reports.

We also need to understand if it is vital that analysts have good knowledge of the sector, such as telecoms or healthcare, and, if so, to what level. This is important because of the diversity and the depth of knowledge required for different regions; for example, US telcos are very different from Asian telcos! In the fixed income/credit space, we have to gauge if the client wants support for investment-grade or high-yield bonds. If the work is related to credit ratings, familiarity with Acuity and S&P ratings methodologies is important. A few years ago, we had a team solely focused on modelling distressed companies and we needed distressed debt specialists to handle the work!

We struggled for years to find a solution to staff such complex engagements to ensure success. We know that assigning the right analysts to an engagement is the most critical recipe for success.

Four years ago, we embarked on an exercise to create a Skill Competency Framework for the whole organization that actually assesses the technical skills of our analysts and assigns him a Skill Based Title (SBT) in addition to his HR designation. Our competency framework has nine key skills into which we have aggregated our analyst pool. So there are analysts who can do rules-based work, others who can handle judgment-oriented work and those with deep domain expertise who can handle sector and domain-heavy tasks. Within each skill area, we have further defined five levels of complexity.

For each of the nine skills, we have detailed definitions of technical competencies, which the analyst needs to be assessed for. So each year, our financial analysts write skill-based examinations to get certified for each of these nine competencies. These assessments are conducted each year by our training and knowledge management teams with the support of our senior delivery managers, to ensure we are constantly pushing our analysts to upgrade their skills. The results are stored in an automated tool, which captures the skill title of each analyst.

Today, when we get a new client who requires modelling and DCF-based valuation support for its US-based coverage universe, we go to our tool and look for analysts with Level 3 modelling skills and assign such an analyst to this new role. Eureka! It works

This path-breaking proprietary competency framework that we have evolved has simplified one of our most complex problems around finding the right man for the right job!

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