Leading firms in the financial services sector are failing to adapt successfully to the post-crisis environment according to a report from Hay Group, which says leadership patterns need to change.

The management consulting firm's report Appearances can deceive compared leadership approaches in the financial services industry with those of market-leading companies in other business sectors. The findings suggest nearly half (43%) of financial service leaders rely heavily on the 'coercive' leadership style compared with 34% across all sectors. As a result, 55% of them are creating demotivating climates that make employees less inclined to give of their best.

Two thirds (67%) of financial services employees describe their firm as customer-focused compared to 79% of the world's best, while 10% fewer employees in this sector (72% versus 82%) agree their firm attemptsto understand customer needs. Less than two-thirds rate their customer support well, compared to three-quarters of top companies.

Similarly, the study found that just 53% of financial services employees rate their firms' capacity to innovate,compared to 70% of high-performing companies.

Despite these figures, the research revealed that financial leaders have little interest in changing their mindset. They consistently score themselves higher in emotional and social intelligence than others rate them. Hay Group says that while this is common amongst all managers, the gap in perception is greater for financial services leaders and this overconfidence is limiting their ability to see the need for change.

Jean-Marc Laouchez, Hay Group global financial services sector leader, said: 'Many are locked into ways of working suited to the boom but out of step with a new world of squeezed margins, disenchanted customers and new competitors. To succeed in this new market place, financial leaders must first take a look in the mirror and examine how they can drive the change that's needed.'