Last year, the largest banks underwent a fundamental transformation in how they approach the recruitment and retention of the top graduates in the U.S. This change was not predicated by the markets or new regulations, but rather a shift in employment preferences. Many of the U.S's best and brightest are opting for careers in technology, or starting their own businesses as entrepreneurs, rather than joining Wall Street.
The new competition for graduates
The tide has been turning for several years. Harvard Business School reported that the technology sector attracted 17% of graduates in 2014, up from 7% in 2006. Conversely, graduates choosing finance fell to 33% from 42% over the same time period. Massachusetts Institute of Technology had similar findings, as the percentage of finance recruits fell to 10% from 31% between 2006 and 2014.
Goldman Sachs and J.P. Morgan were effectively replaced on MIT's top 10 list of the biggest recruiters of straight-out-of-college candidates by Apple and Amazon. Morgan Stanley and Goldman Sachs both saw high-profile departures leaving to take chief financial officer positions at Google and Twitter, respectively.
The biggest banks have started to respond. Goldman Sachs promised in November that it would do away with grunt work and overly heavy workloads, promote people faster and raise the base pay for junior bankers. Barclays, Credit Suisse, Citi and UBS now all have fast-track systems in place for their analysts.
Clash of work cultures
Banks have long struggled to reach a decent work-life balance among their employees, paying big salaries to attract the top graduate talent. But according to Deloitte’s 2015 Millennial Survey, at least half of millennials say that money is not their primary motivating factor in choosing a career. Let’s face it though, between Silicon Valley and Wall Street salaries, there are no losers.
So if money is not the motivating factor, what can firms offer to attract and retain the leaders of this generation?
Most recent surveys cite a combination of a desire to make a positive impact on the world and also in the workplace, be given more immediate responsibility, and work with a mentor who can impart valuable job and life skills.
However, creating a culture that fosters such ideals is a slow process.
How Wall Street can respond
For ING’s wholesale lending group in the U.S., 2014 marked the first time a candidate for its ING International Talent Program (IITP) chose a technology firm, Google, over embarking on a career in finance. While the program had existed since 2010, the firm realized it had to improve.
We believe that the firm is stronger when leaders are built from within, so we made subtle yet important changes to the four-year program to empower analysts to lead. Anyone in the IITP program was given the opportunity to have three four-month-long rotations within different sectors of the business – one being a mandatory international position.
Now we provide analysts with mentors across the company who help them to define a career path with clear milestones. We encourage work-life balance through the promotion of outside activities such as sports and community service.
Employees play sports after work and each season generally includes between eight and 12 games, fully supported financially with company-branded uniforms. The New York office of roughly 500 employees also donated 3,400 hours of community service time in 2014, with the majority of the volunteer work done during the work day.
Other changes include:
- Restructuring the global training events to be more interactive, offering competitive banking simulations, a week-long camping event to celebrate the cumulation of the four-year analyst program, spend time being introspective about the program and discussing next steps in the analysts' careers;
- Listening more closely to what rotations the trainees want (rather than just placing them where there is the greatest business need) and working together to create detailed career development plans for their rotations; and
- Going on college campuses to interview and recruit graduating students, bringing alumni in the IITP who attended the schools we recruit from, which helps us to build a community of IITP trainees and also build our brand at top universities.
The results have been strong, as ING has seen the retention rate of IITP participants and graduates rise 17% from 2010 to 2012, and has stayed consistently high. In fact, since 2014, it has remained at 100%.
Much has been made of catering to the millennial generation, but changing work culture is nothing new to the financial industry. Every time a generation turns over, companies like ours are forced to address new demands and challenges from the next generation of leaders.
Hannah Vallerie is human resources business partner and talent manager, Americas, at ING.
Image courtesy of ING