Banking jobs are no longer cool
Institutions have responded by offering better incentives and more quality time
Hannah Vallerie started her tour of top university campuses about six months earlier than usual this year. The human resources manager for ING bank wanted to steal a march on rivals in an attempt to recruit graduates to the Dutch lender for its international leadership programme.
To make the job more enticing, ING, which typically hires an average of four out of 600 US applicants every year, moved the final event of the three-year programme from the group’s headquarters in Amsterdam to a remote training camp in Portugal. According to Cliff Belzer, a Harvard graduate who joined the “Orange leaders” programme in September 2011, it is stuffed with “fun” extra-curricular activities, such as staffing food trucks and painting rooms.
ING’s efforts come as demand for top-flight business school graduates is at a premium as they shun careers in banks for well-paid jobs in technology, engineering and health care. One candidate offered a place this year on ING’s leadership programme, turned the bank down in favour of taking a job at Google. “That was an eye-opener for us,” said Vallerie, noting that this was the first time ING had lost a candidate to the tech sector. “We made some changes based on that experience.”
Other banks, like Goldman Sachs and Morgan Stanley have hiked the base pay for junior bankers, some by as much as 20 per cent. Goldman Sachs unveiled new measures including faster promotions, guaranteed rotations and less menial work to woo junior bankers. Credit Suisse, meanwhile, has introduced a fast-track programme for top-performing analysts, as well as a mentoring programme to offer support to junior bankers and keep them motivated.
“There’s a tendency to focus on specific things as opposed to the constant process,” says David Solomon, cohead of investment banking at Goldman Sachs. “We’re trying to make sure that we have the best practices in the context of the way we recruit people, train people and develop people.”
Solomon said other banks might follow some of Goldman Sachs’ initiatives, but the bank can do enough to still give itself a differentiating edge. “Races aren’t won by 100 yards, races are won by steps,” he said. “You’ve got to make sure that your relative performance is a little bit better.”
Such measures, however, have done little to diminish the rising appeal of careers in technology relative to banks — as demonstrated by the roll call of top employers for MBA graduates from business school Sloan MIT.
Goldman Sachs was jointly ranked as the fourth biggest recruiter from MIT in 2008, while JPMorgan Chase and Lehman were also in the top 10. By 2014, there was not a single bank in the top hirers, but Apple had joined the list and Amazon had shot up to third place. Consultancies have also grown in popularity, with both Deloitte and PwC joining the list by 2014.
According to Harvard Business School, tech employed 7 per cent of its graduates in 2008. By 2014, that figure had increased to 17 per cent. Seven per cent of its graduates went on to internet services, a category that had not even existed in 2008.
Dispelling the myth
Bankers are keen to dispel the myth that graduates can become instant millionaires by choosing Silicon Valley over Wall Street. “Everyone going into Silicon Valley thinks they are going to be zillionaires,” says, Ros Stephenson, UBS’s Head of Americas and chair of corporate client solutions. Technology failures and modest success stories, she argues, still outnumber the stuff of Hollywood blockbusters.
Paul Baron, head of derivative sales at Bank of America Merrill Lynch says niche areas in investment banking are still proving attractive to some graduates because “the product is intellectually rigorous, it’s very interesting, bespoke, creative.”
Analysis by the Financial Times shows that graduates from the world’s top 10 MBA schools are 40 per cent less likely to go into investment banking now than they were before the financial crisis. Pay and lifestyle are the two biggest deterrents. Alan Johnson, managing director of Johnson Associates, a Wall Street pay consultant, estimates that the total pay pool across Wall Street banks will be down by about 10 per cent this year.
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The cuts are even bigger at some banks — in Europe, Deutsche Bank is reportedly cutting bonuses by 30 per cent after a $6 billion loss in the third quarter. “The deal with banking was that you worked really hard but got paid lots of money. Now the deal is broken people are looking at other paths,” said Lynda Gratton, professor of management practice at London Business School. “Certainly at LBS we have many students who previously would have been banking candidates now starting their own businesses.”
One former junior banker at a top US bank believes that other industries do a better job of selling their social value. She quit banking for the nonprofit sector because she wanted “to make an impact in my work”.
Recruiters say this desire to do something of “purpose” reflects this generation’s values. Millennials, or Generation Y, born in the early 1980s to 2000s, are also characterised as possessing less institutional allegiance than their predecessors. Many employers see them as impatient for responsibility and hankering after some semblance of work-life balance.
Young people, said Hazel Mulhare, vice-president at Kea Consultants, which helps recruit junior bankers to financial services firms, “don’t want to be a cog in the machine” and are frustrated by doing anonymous grunt work in large banks.
A New York-based banker who helps with recruitment says today’s graduates are “motivated by different things”. “If they started 10 years ago, the juniors would have been saying, yes, I want to work hard but I want the perks to work hard, concierge services, people to run errands, car services,” he says. “Now, it’s protected weekends and time off ... they say they value that.”
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