Our Take: Wounded Animal Spirits
Hopes for a mid-year rebound in the sell side's hiring and compensation outlook are fading fast. Here are some coping tactics.
The deal pipeline for Wall Street, which gradually unwound over the second half of 2007 after financing for leveraged buyouts suddenly shriveled, shows no sign of picking up. Banks' advisory fee revenue is down about 50 percent from a year ago, and lending revenues have collapsed 84 percent. Other segments - like securitization and some types of money-market instruments - are all but frozen. Even pure equity business is off big-time. A mere $12.2 billion of initial public offerings priced in this year's first two months while almost twice as much IPO business ($21.4 billion) was shelved, according to Thomson Financial data.
As we've observed, a prolonged economic and market downturn portends far deeper job losses than announced thus far. Under the headline "Grim Reaper of Jobs Stalks the Street," Tuesday's Wall Street Journal trumpeted - if that's the word - executives' predictions that banking employment could ultimately shrink as much as 20 percent. There is a historical basis for that figure. During the last major downturn, from 2001-03, the peak-to-trough decline in employment in securities, commodity contracts, and investments within New York state came to 19.5 percent, or about 42,000 jobs.
How much has Wall Street's headcount thinned in the present cycle? Just 3.3 percent (7,100 jobs) through January 2008, based on non-seasonally adjusted Labor Department data for New York. Nationwide figures, which presumably include a bigger share of commodity futures and buy-side jobs, show no decline at all. In January and February, industry employment posted record highs, based on the seasonally adjusted nationwide series. Both history and anecdotal evidence suggest the bloodletting has barely begun.
Tips From the Trenches
How can candidates adapt to an environment where jobs are both harder to find and harder to keep? Here are a few tidbits gleaned from recent visits to the trenches, including a full-day career fair organized by the CFA Institute.
Last November we speculated that as layoffs proliferated, hiring managers might be less prone to bypass unemployed job candidates. Alas, recent feedback from a well-placed source suggests we were mistaken.
Being jobless does carry less of a stigma now than it did as recently as six months ago. But a chat with an in-house recruiter at a major non-bank financial institution pointed up a different hurdle that unemployed job-seekers must overcome. With a radically enlarged pool to choose from, his institution is delving more deeply into the motivations behind candidates' career choices. "There has to be a reason better than money," the HR manager explained. This works against jobless candidates, due to the natural assumption they're jonesing for a job (and a paycheck) as quickly as possible.
So if you interview while out of work, think hard about how to persuade the employer your joining his team represents the logical and ideal culmination of the sequence of events that make up your resume - and indeed your entire life. (Even if you're working, that's a good plan to take into an interview.)
What Does a Recruiter Want?
Since January, recruiters have told us they're deluged with resumes. Candidates are under more pressure than ever to stand out. Here, we stick with our advice from that November column: "Standing out" is overrated. Instead, when tailoring both your resume and interview persona, strive to fit in with your target employer's culture and current business needs. You don't want to "stand out" for qualities an employer isn't looking for.
As one retained search consultant said at the CFA Institute event, the ideal candidate is already doing the exact same job at a firm nearly identical to the prospective employer. So if you still feel compelled to follow the old chestnut of listing your accomplishments along with each job on your resume, first assess whether each accomplishment would advance the business goals of the particular employer and the particular role you seek.