It takes more than a competitive salary to retain young employees.
Employee retention strategies have to change with the workforce. For decades, many leading financial institutions and accounting firms had a simple sell to new recruits — high pay and steady upward mobility, with promotions happening as more senior people left the firm. Sure, some people may have the same role for years at a time, but the pay, benefits and potential worked fine as employee retention strategies.
The Changes at Entry Level
In recent years, however, pay and stability have proven to be less popular with recent graduates moving into finance and banking jobs. Furthermore, promotion is less certain, as many firms have flattened their structures, leading to fewer intermediate promotion opportunities, and retirement ages have been increasing. Although the current generation of college graduates are more likely than their predecessors to have student loans, they care less about money. These are people who came of age in the aftermath of the 2008 financial crisis and in a culture that values diversity of experience more than it values consumer goods.
Many banks are changing their recruiting pitch, with less emphasis on starting salaries and steady promotion and more on the opportunities to learn and have different experiences. According to The Economist, big banking businesses will pitch themselves to potential employees by talking about the organization's corporate social responsibility structure as well as things like salary and benefits. Some banks are allowing new employees to defer their employment for a year in order to do nonprofit work at 60 percent of their pay.
Creating a Career Path Through Experiences
Employee retention strategies kick in after the start date, and many finance leaders are finding that fulfilling work is the key. For example, being a spreadsheet jockey may have seemed like fun 30 years ago, but now it is thought of as drudgery. Opportunities to help clients solve problems are more interesting to younger workers and, in many cases, at least as important as pay.
The career path matters to millennial graduates more than pay does. For some financial services businesses, this means investing in training and development and finding ways to promote people who perform well. Employees move up as they are ready, rather than waiting until they meet a predetermined schedule. If an employee with promise is not ready for a current opening, the finance leader should find a way to help build the needed experience rather than fill the position from outside. Otherwise, the employee will feel forced to look elsewhere, too, when it's time for a promotion.
Retaining Employees for the Long Term
Businesses can't solve long-term talent problems only by offering higher pay. In some ways, that's a good thing for the sustainability of margins in the long term, but it can create some changes in the near term. Investing in employee retention strategies can pay off in terms of a stronger, more engaged workforce.