Big Business Is Losing The Recruitment Race As Today’s Young Talent Flocks To Trendy Start-Ups
24 April, 2019 / Articles
You could say that when Will Rocha-Thomas landed his first job it was somewhat ill-timed. In 2008, he joined Lehman Brothers on an industrial placement as part of his degree at the University of Bath. Within three months, global financial markets had spiralled into meltdown leading to the collapse of the fourth largest investment bank in the US, and battering swathes of other financial institutions beyond recognition.
Tens of thousands of people lost their jobs and the global economy crumbled. Reflecting on that time, the now 30-year-old understands that he was much more fortunate than some of his older colleagues. As a bright-eyed graduate he was swiftly snapped up by one of the global investment banks that had emerged from the crash bruised but still breathing. He stayed with that organisation until 2012, when he took five months off to go travelling.
“I was completely uninspired,” Rocha-Thomas, who now lives in Cambridge, says of his former employer. “The IT team I was part of was so far removed from any kind of purpose,” he adds. So when he got back to the UK, he decided to join The App Business, a start-up which helps large companies build mobile apps. At the time the company had 20 employees. In the seven years that Rocha-Thomas has been there, the workforce has ballooned to almost 200 and he feel like he’s been instrumental in driving that expansion. He says it’s been incredibly rewarding and has given him an immense sense of purpose.
“Ultimately, I believe many big companies strive so hard to de-skill work and scale, that they lose any sense of adaptability and creativity,” he explains. “They are scared to decentralise decisions and give away too much autonomy. That’s off-putting to many in this working generation and something [large companies] need to tackle openly.”
Rocha-Thomas’ story is becoming increasingly common. Although graduate schemes at banks, consultancies and accounting firms for years represented a well-trodden path for many bright youngsters leaving top universities, signs have emerged that even some of the most prestigious employers are starting to lose their shine.
According to a study published last year by High Flyers, a market research company which specialises in student and graduate recruitment, employers in eight out of 13 key industries and employment areas hired fewer graduates in 2017 than the year before, with the biggest drops in recruitment at the top accounting and professional services firms, and banking and financial companies.
Just 9.6 per cent of all graduates surveyed applied for roles in investment banking, which represented the lowest proportion since 2009 when banks halted graduate recruitment in the wake of the global financial crisis. And over the past year, that trend is expected to have continued. While some of the move is likely to have been driven by companies cutting their recruitment budget in the face of Brexit uncertainty and other economic pressures, experts say that increased competition from booming tech companies and entrepreneurial start-ups is also to blame.
Several studies have highlighted that young people are no longer as motivated by money as they used to be, and are increasingly prioritising a sense of purpose over pay. Start-ups are tapping into this sentiment by offering professional newbies the opportunity to have an impact from the get go – something that would ordinarily be unthinkable in a large multinational.
Gian Power worked at Deutsche Bank and PwC after graduating from Aston Business School in 2014. He quit big corporate life in 2017 to set up his own company called The Lion’s Club, which brings together motivational speakers on subjects around well-being, work-life-balance, and overcoming challenges to reach your full personal and professional potential.
“When working at PwC, my hours were long and I spent most weekends studying. It was a sacrifice I chose to make but it was hard to find time to explore my own interests and purpose,” he says. “I wanted to be my own boss, I wanted to craft a life that makes me happy and allows me to do things that bring me happiness.”
Edwin Lee’s experience echoes this. He interned at RBC Capital Markets before joining JP Morgan full time in 2006 in New York, and rising to the position of managing director. At the end of 2017 he resigned and joined a friend who was setting up his own company, Castle Ridge Asset Management, that uses investment strategies informed by artificial intelligence.
He tells The Independent that, particularly during his final few years at the Wall Street stalwart, work-life balance became “a serious issue”.
“I ran the corporate trading desk which meant I was at work before the markets opened and didn’t leave until the bankers were done,” he says. Lee often worked more than 15 hours a day and if calls weren’t taking over his weekends and evenings then travel to London, Hong Kong and Tokyo often was. His wife had just given birth to their daughter and he felt like he was not seeing her grow up. “It had to change”.
Of his current job he says that it was a “once in a lifetime opportunity” and that the autonomy was a considerable incentive. “It would be our team and our firm to build exactly as we like.”
Purpose over pay
Already back in 2014, McGraw-Hill Education commissioned a survey of hundreds of US graduates which found that 73 per cent prioritised finding a job that they enjoy over one that pays well. And almost half of respondents said that they would favour a career that is beneficial to society.
Lovell Corporation, a Canadian marketing company that focuses on connecting businesses with young professionals, published a research report in 2017 based on a survey of 2,000 young people, that found Generation Z – or those born between the mid-1990s and early 2000s – to be a generation of “change-makers”. These are the young people currently entering the workforce.
The top career choice for that demographic in the survey was entrepreneur, with a large proportion also citing the not-for-profit sector as their top pick.
“These statistics demonstrate the inclination of younger workers to seek meaningful work that fulfils their personal goals and creates impact,” the study concluded.
Other studies have shown that the generation of people entering today’s workforce is also more sensitive to issues around diversity and inclusion, and that those people are increasingly looking for a company that reflects those qualities. Scores of banks, professional service firms and consultancies are still marred by a reputation of being dominated by white men, and progress towards a more diverse workforce is proving sluggish. Gender pay gaps are stubborn and that’s spoiling the appetite of not just young women.
Speaking recently at Goldman Sachs Asset Management’s annual Future Leaders Conference, Ruwan Weerasekera, the chief operating officer at Softbank Investment Advisers, the manager of the massive Saudi-Japanese backed technology fund, said that almost everyone working at his company was previously at Deutsche Bank, UBS or Goldman Sachs.
Softbank attracts talent, he said, by being diverse, forward looking and representing an “intersection between finance and technology”. Many of the firms his company invests in are focused on social responsibility, which he says is also a big driver for a heterogeneous pool of potential hires, and is likely one of the reasons why his current employer is the only place he has worked where “white men are in the minority”.
Doing well by doing good
So what are large institutions, like investment banks, doing to combat the start-up-driven brain drain? Kathleen Hughes, a partner at Goldman Sachs, tells The Independent that her firm has recognised and acknowledged the need for change to address the priorities of the next generation.
“Around 60 per cent of Goldman Sachs’ workforce is millennial and they have very particular values. As they start their career, they will value things like giving back and making an impact,” she says, adding that this is something Goldman has started tapping into.
In recent years, Goldman launched what it calls the Analyst Impact Fund which provides an annual opportunity for the most junior workers to pitch their cases to invest in non-profit organisations they deem to be most worthy. A sizeable grant from the firm is then allocated to the winning organisation. “Giving back is important,” says Hughes, “and that’s what we’re addressing.”
Acknowledging issues around work-life-balance and presenteeism is also high up on Hughes’ list of priorities. She says that technology has represented a sea-change for the better in that flexible working is now an integral part of company culture.
And the initiatives seem to be resonating where it matters. Arianna Roccio, a recent graduate who has been at Goldman Sachs for three years, says that flexibility has evolved dramatically even in the short time that she has been at the company. “It’s not really about face time in the way you might think,” she says.
Crystelle Pereira, another recent graduate who works at Goldman, says that when she first joined she felt like she was competing in “both a marathon and a sprint”. Since then, however, the dialogue between graduates and their managers has improved, “especially around the importance of balance and downtime”.
Other banks have also implemented measures to sweeten career prospects for potential employees and tune into the zeitgeist. Chuck Teixeira, chief administrative officer and head of transformation at HSBC‘s global banking and markets division, tells The Independent that his company has had to “completely change our approach”.
He says that they’ve recently launched internship and graduate programmes, in which new professionals are introduced to careers in data science and engineering – areas not traditionally associated with banking.
“To attract talent to these programmes, we have had to get on campus face-to-face, run meet-ups and hackathons where engineers and data scientists work together to rapidly prototype products,” he explains. “We realise that HSBC is not front-of-mind for these capabilities so we are reaching out to the global market and positioning ourselves differently, including targeting talent in other industries,” he adds.
Will Rocha-Thomas, who these days serves on his company’s team that is responsible for hiring and retaining talent, is also encouraged by the progress. But he says that large firms still have their work cut out for them, and it’s not always straightforward for the entrepreneurial start-ups either.
For example, he says that while today’s generation of graduates and young employees may be prioritising purpose over pay, that doesn’t mean that money isn’t important – especially in places like London where the cost of living is high and the property ownership unattainable for many. “Money does still matter to people, but largely because they equate it to self-value,” he says. “I’ve noticed people might not gravitate [towards] the place they can earn the most, but they will reject an offer if you go below what they’ve asked for, or what they think is reasonable.”
Finally, he says that another simple thing that many large and small firms are still getting wrong, is that they are not taking action in response to feedback. “This sounds obvious but it’s a struggle for many big, centralised companies where making a simple change is a huge endeavour,” he says. “When people feel unhappy about something, and feel like there’s nothing they can do to change it – even if they give honest feedback – they generally quit,” he adds.
Former JP Morgan managing director Edwin Lee agrees. While he admits that there are a lot of things large institutions are able to do to improve the satisfaction and work-life balance of staff, the shift has to first occur in the fundamental, cultural DNA of the firm. Only then can practical changes be implemented. And that’s where he sees the hurdle.
He says that measures like paid leave, flexible working arrangements, sabbaticals or even mobility opportunities – that are frequently a given at start-ups and newer tech companies – are still often at odds with managers’ immediate objectives. Those, in turn, often centre around short-term goals and the next earnings report.
So perhaps the first step is to simply expand the horizon: teach managers that change happens gradually and that the long-term satisfaction of employees is as critical to the long-term health of the firm as the next quarter’s profit is. Delving into the unknown is always scary, but once you’re in, the opportunities might just surprise you positively.
