The typical job for recent graduates as they land for the first time in a top investment bank usually includes 90 hour long weeks working with spreadsheets and presentations. However, many junior bankers see Wall Street and its exhausting work rate as a necessary step to a more gratifying and less stressful position. Young professionals feel increasingly attracted by other sectors, such as technology or private equity firms and banks, and banks are being required to double their efforts to retain talent.
For Derek Loosvelt, editor at Vault.com, job offers for junior bankers need to be much more appealing, and, instead of focusing on pay and bonuses alone, also need to start making reference to responsibilities. This is what millennials demand as they kick-off their professional careers and exactly what the technology industry has been offering them for the past five - maybe ten - years. Speaking to the Wall Street Journal, Jeanne Branthover, head of financial services at Boyden, said that this generation demands a balance between their personal and professional lives, and that is why many times they will choose jobs that look good on their resumes as bridges to other ones offering better conditions.
The technology industry sees millennials as a generation at the cultural vanguard and rates them as true experts in the different fields in which they specialize. However, investment banking is still ruled by seniority principles and sees these younger ranks as inexperienced, and is therefore reluctant to grant them the responsibility they demand.
It is evident that wages are not the only thing that move these young talents, as in Wall Street, analysts* can earn about $80,000 dollars a year in their first or second year.
A survey conducted by Financial Times revealed that between 2008 and 2015 the likelihood of graduates from the 10 best MBA programs choosing a career in investment banking had dropped by 40%. In fact, only 4% of graduates from the Harvard Business School in 2015 were interested in working in investment banking. Alan Johnson, Managing Director at Johnson Associates, a Wall Street consulting firm, said that a combination of regulation, supervision, politics and bureaucracy contributed to diminish quite significantly the appeal of investment banking.
In this context, banks found themselves in a quagmire, where they took upon training new employees just to, in a matter of months, once they felt they had built the level of experience and expertise they deemed necessary, see them transition towards a more attractive position in which they felt more valued. This combination of factors has forced top banks to take a good look at what kind of junior banker experience they should be offering.
Citi CEO Michael Corbat says that back in the days when he was a junior banker, what mattered was how many hours you put in. Now, he says, “what matters is how productive and good you are.” This statement reflects the change in vision that is taking hold in the industry.
Banks, in an attempt to present themselves as a place where people can lead successful and long-lasting professional careers, are implementing new approaches to retain all these learned graduates.
Goldman Sachs, for example, decided to cut the time it takes to promote from analyst to associate from three to two years, and allows employees to switch to new teams during their third year to gain more knowledge. JP Morgan has implemented a program to assign a senior mentor to each junior, thus promoting cooperation at both levels. The company has also banned bankers from working during weekends, unless they are working on imminent deals. Credit Suisse wants to stimulate mobility within its bank also among its juniors, allowing them to benefit from more diverse experiences within investment banking.
In Bank of America, analysts have to take at least four days of every month. Citi has developed programs that allow younger employees to take part in four-week projects to help set up micro-companies in Kenya, and also offers them the chance to take a one-year leave (earning 60% of their salary) to collaborate with an NGO. Moelis, finally, offers one sabbatical year, after five with the bank.
The situation of European and US investment banks has worsened in recent years and face a profitability challenge, but institutions still need to take care of the younger generations.
Certainly, these tactics appear to be nothing short of essential at the moment, and banks need to make sure they start ingraining them into their DNA to convince the brightest young minds to stick with them for the long haul, instead of being used as a mere launch pad for their careers. What is yet to be seen is if it is already too late for this reaction.
*In investment banking , the job title hierarchy in increasing order of responsibility is the following: Analyst, Associate, Vice-President, Executive Director and Managing Director.