Angus Ridgway, Co-Founder and CEO, Potentialife
Banks are seeking out new ways to attract and retain the best young talent – but are they looking in the right places?
Investment banks are engaging in a battle to retain young talent like never before. The last decade has seen bankers’ reputation and remuneration take huge hits, while greater regulation has meant additional, unexciting work to keep them at their desks until the early hours. It is no surprise, therefore, that the young, high-potential talent, that banks used to have their pick of, are leaving in droves. Over the last few years, banks appear to have woken up to this problem and have started taking serious action to counteract the trend. Competition for talent is now ‘phenomenal’, but are banks investing in the right initiatives?
Keeping up with the (Dow) Jones’s
Earlier this year, Credit Suisse confirmed its intention to overhaul its promotion cycle across Europe, Africa and the Middle East, to be in line with the US which already had significant changes in place by summer 2013. The changes to Credit Suisse’s promotion cycle offer big opportunities, particularly to analysts, who will be able to reach associate level within two years rather than the usual three. In turn, this means the company’s junior bankers will be able to reach Vice President Level within five and a half years instead of six and a half.
But it isn’t just Credit Suisse that is pulling out the stops to attract and retain the industry’s best young talent. In January, it was reported that Deutsche Bank is taking a new approach in the battle to retain junior talent, with some managing directors planning to make cuts to their own bonuses so they can pay their subordinates more. Keeping up with the (Dow) Jones’s, Citigroup recently announced that junior staff will be able to take a year out from their job to do charitable work, whilst still earning 60% of their salary. But the firm didn’t stop there, also confirming that junior bankers will be able to participate in a programme that will fast-track them to promotion, as well as offer greater mobility between company departments and cities.
But will these expensive investments really pay off? Is simply throwing money at the problem via bonuses or injecting a sense of meaning from tasks unrelated to the job, such as a year away, really solving the root causes of the dissatisfaction?
Research indicates that the younger generation desires multiple things from work: development opportunities based on an individual’s strengths, work that absorbs them and, perhaps most importantly, work that gives them a strong sense of meaning. In other words, work that provides a solid answer to the question: ‘why am I doing this?’ at the end of each day. These requirements stand in stark contrast to the traditional way in which work was framed within the banking industry.
Banks have typically adopted a transactional view to people development, whether it is in the form of remuneration, promotions or time off. However, capturing the hearts and minds of the younger generation will require a different type of approach that is more organic, long-term and individualised, rather than quick, temporary fixes.
Younger workers need to be given the tools and support that enables them to develop professionally as leaders and personally as whole individuals. These are the key factors that banks must remain aware of in the battle to attract and retain the best young talent:
- Character strengths
Most people believe that they will make better progress by fixing their weaknesses, but they are completely wrong. Various research studies indicate that the most successful people and companies focus their energy on playing to their strengths, essentially what they’re best at and enjoy doing most. Banks need to understand this – both in theory and practice. That means supporting young talent to better understand their true character strengths, and providing regular opportunities to practice them within their work context. Where this has been done elsewhere, it consistently drives positive morale, higher retention and superior performance.
- Understanding energy and reframing stress
Stress has a bad reputation. Walk into any bookshop and you will find shelves full of books on how to eliminate stress from your life. But there are two problems with this idea. Firstly, stress is inevitable. Secondly, when you look at the data, stress actually improves levels of creativity, mindfulness and productivity. The problem, therefore, is not stress in itself, but rather how we frame it and how we manage energy so that we embrace it. Stress can help with absorption and productivity, provided it’s balanced with sufficient recovery time.
As an example, Professor Alia Crum ran a study at a financial firm over the course of the most recent recession where, unsurprisingly, anxiety levels were high. Professor Crum showed employees a video that enlightened them on the value that stress can add. The video explained that moderate levels of stress can help people to focus, boost levels of energy and help to overcome challenges. Those who Professor Crum showed the video to experienced higher levels of physical and mental health, with these employees reporting that they had more energy, fewer physical symptoms and were happier and more focused overall. Crucially, those who watched the video had a significantly improved performance.
Recovery enables people to embrace the inevitable stress that comes with life and increase performance in those moments. To ensure we have sufficient recovery time in our lives, it’s important to identify the activities that recharge our emotional and spiritual batteries, such as reading a good book or spending time with friends. In particular, exercise has been proven to have a significantly positive impact on energy and happiness. Research reveals that exercising three times a week for 30-40 minutes can be as powerful as psychiatric drugs usually prescribed to people dealing with depression, sadness or anxiety.
Banks are typically stressful environments. If the industry genuinely wants to support high energy, stress-embracing staff, it needs to move away from a world where energy restoration activities such as sleep, exercise or breaks are confused with slacking and to a world where every employee takes active responsibility for maintaining high energy levels. As the famous quote from author and CEO of The Energy Project, Tony Schwartz, goes “manage your energy, not your time”.
- Mindful engagement
The working world in 2016 differs greatly from that of 20, or even 10, years ago. New technologies have bred working cultures where we’re ‘always on’, with many of us accessing emails around the clock and at our clients and colleagues beck and call. Employees should commit to being less distracted throughout the day by practicing mindful engagement. Whether or not we engage with an activity or situation mindfully is solely our own decision. The choice is to take inward control and recognise that optimum performances, and peak life experience, result from consistently focusing on doing one thing well at any given time.
Ray Dalio, founder of the world’s biggest hedge fund firm, Bridgewater Associates, claims he owes his success to meditation, “meditation more than anything in my life was the biggest ingredient of whatever success I’ve had”. According to Dalio, its benefits have included centeredness, calmness and creativity. Others in the banking industry should take note of this and, as Bridgewater Associates has done, aim to embed the practice of mindfulness into the heart of an organisation’s culture.
- Positive interactions
The command and control era is behind us. These days, we operate in networks with multiple stakeholders and rapid change. People have more choice over what job they want and, as banks have recently found out, the top talent is naturally the most discerning.
For young talent to stay put, they need to be driven by the best leaders. And research shows that there are two main factors that distinguish the best leaders from the rest: the positive energy they project and their personal authenticity. Highly positive and authentic environments lead to what are called psychologically safe teams.
Psychological safety, in a work capacity, is all about creating environments in which employees feel accepted and respected. There are ways to identify if the workplace is psychologically safe or unsafe. For example, in an unsafe environment it is likely that mistakes will be permanently held against you. Similarly, if employees do not speak their mind in meetings for fear of being judged, the environment is not psychology safe.
Senior employees in the banking sector need to take steps to build psychologically safe environments if they are to retain young talent. This can be done through being accessible, for example by shortening lines of communication or instituting an open door policy. Also, psychological safety can be advocated by leaders acknowledging fallibility, being open and disclosing their own mistakes and failures, and the insights they have learned from them.
There is a common misconception that success leads to fulfilment, but it is important to understand that it is actually the other way around; it is fulfilment that leads to success.
Don’t wait for exceptional standout moments such as a promotion or the end of a successful project to answer the ‘why am I doing this?’ question, instead, do it at the end of each day. This will help find meaning in your day-to-day activities and make it possible to live life fully in the present.
Organisations within the banking sector should ensure they regularly instill the ‘bigger picture’ into their teams, highlighting the role that individuals play in driving projects forward. Essentially banks should remind individuals of the purpose of their role and the value it adds.
Clearly, there is a land grab for young talent in the banking sector, so financial services institutions need to carefully consider their approach to attracting and retaining the best that the industry has to offer. Short-term, transactional fixes will only do so much; My advice for banks? Focus time and energy on considered, and more meaningful, initiatives that will help to retain and develop the best talent.