Despite recent changes at banks such as faster promotions intended to retain employees, many firms are still in danger of losing top talent, according to a new report, Reuters reports.
The study, released on Wednesday night by consulting firm Quinlan & Associates, said some banks are incurring up to $1 billion (816 million pounds) in costs annually associated with replacing employees who leave voluntarily.
With Wall Street firms bleeding talent to technology firms and compensation on the decline, numerous banks face a brain drain that can only be solved by radically shifting their cultures, the study said.
“Only when there is a fundamental re-engineering of a bank’s DNA to deliver a more holistic career proposition will they see a meaningful, lasting change in perceptions towards the industry as an employment choice,” the report said.
The problem stems in part from the financial crisis, which hurt public trust in the banking sector and made it a less desirable workplace. The industry has continued to be hit by an onslaught of fines, scandals and litigation over the last several years, while cost-cutting has eliminated hundreds of thousands of jobs.
Global headcount at the world’s 15 biggest banks is down 12 percent from 2011 to 2015. With their reputations burned and the axe-wielding showing no signs of ending, banks have fallen out of favour as employers of choice for top business school programs, the study said.
Banks are also having a more difficult time retaining current employees, with bonus pools on the decline and U.S. and UK regulators stepping in to curb compensation. Deutsche Bank AG (DBKGn.DE) cut bonuses drastically for 2016 as it struggled to turn a profit amid costly litigation, Reuters reported on Wednesday.
Recognising these challenges, banks like Goldman Sachs Group Inc (GS.N), Credit Suisse AG (MLPN.P) and Barclays PLC (BARC.L) have taken steps to keep junior staff happy, such as promoting analysts more quickly, providing more training and encouraging job rotation programs.
Those efforts have failed to fend off defections so far though.
According to a LinkedIn study of 12 global investment banks, analysts and associates who left their positions in 2015 had stayed in their roles for an average of 17 months. That compares to a 26 month average in 2005.
If banks want to retain their top employees and avoid costs that come from voluntary resignations, Quinlan & Associates recommended a range of options including transparency around bonuses and promotions; encouraging internal communications and mentoring efforts; and using technology to take out manual processes.
“With employee disenfranchisement and voluntary staff turnover on the rise, we believe talent strategy deserves the full attention of a bank’s board,” the report said. “Until then, employers shouldn’t bank on their best and brightest staying.”