Get Ready For the Wind in Your Sails

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The financial services industry's ongoing recovery is brewing a fresh set of challenges for HR professionals and recruiters. Job-seekers, conversely, are poised to benefit from a vigorous post-New Year recruiting period.

At this time of year, bonus anticipation is high on most everyone's minds. But bonus season is usually followed by a period when employers both cull their own ranks and poach talent from rivals. While culling dominated a year ago, the outlook for early 2010 is entirely different. Bidding wars, retention concerns and selective headcount expansion will replace the focus on cost control and maintaining morale that held sway through most of 2008 and 2009.

The backdrop is well known: huge trading profits, low funding costs, credit spreads back at historically normal levels, recovering corporate finance and M&A activity, and for the buy side, robust returns for both traditional and alternative investment strategies.

Of course, the lineup of players and market share looks considerably different from two years ago. There are fewer bulge-bracket firms around, and some surviving ones - Citigroup, Bank of America and RBS, for instance - are operating under direct government control of compensation decisions. And the eventual removal of taxpayer-sponsored liquidity that sparked the recovery will present challenges for markets and economies. Still, employers show no indication of retrenching any time soon.

Counter-Offers and Guarantees Back in Style

What will the banking talent market look like in 2010 and beyond? More like the pre-crisis landscape than you'd think. Most business lines are reviving or will revive in one form or another. That's true even for sectors at the epicenter of the crisis, whose long-term prospects appeared bleak as recently as a year sgo: mortgage-backed securities, asset-backed securities, structured credit, and financial sponsors groups.

Notwithstanding rearguard actions by Goldman Sachs and other banks to repair the industry's battered image, the blizzard of headines about record bonuses will have an effect opposite of what the headline writers probably wished. Rather than make bonus recipients or decision-makers feel guilty or squeamish, the ongoing junk-journalism epidemic more likely will heighten competitive pressure on managements to pay generous incentives in order to avoid disappointing valued performers.

Opportunities to jump among employers will grow dramatically after bonus season, when budget constraints lift and employers no longer need reimburse new recruits for the past year's forfeited bonus. Counter-offers and guarantees - including multi-year for those institutions not legally barred from making them - could quickly become the norm again, as they were pre-crisis.

Forward-thinking employers also will begin judiciously restoring various employee perks, ranging from the consequential (intercity business travel; tuition reimbursements and other professional development expenses) to the seemingly trivial (car service for late-night office workers; high hurdles to obtain consumable office supplies; sodas in the kitchen).

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