At a panel discussion on the banking industry I attended a few months ago, someone asked if it was possible to attract talent to senior positions without the promise of high, guaranteed bonuses. A senior HR executive from one of the major corporate banks and an academic both answered, quite confidently, that they thought it was. Bonuses, they agreed, could be much less than they currently are and banks would still attract top talent. The academic even said that talented people are not particularly motivated by money, but by the cut and thrust of deal-making. They want to be in the thick of big M&A activity. It’s a myth that the banks need to pay big bucks in order to stop top talent from joining other industries.
I asked why the banks didn’t bring their bonuses to a level that the rest of society would find reasonable. The answer was that none of the big players had the guts to try it. In other words, they were frightened of losing talent not to other sectors but to each other. If one bank blinks the talent will not be interested in joining and eventually what talent they have will disappear. If so, then there’s no question that the only way to deal with the matter is at the industry, if not, governmental level.
It has been proved many times that a strategy based around providing the best possible work experience is a more effective way to retain talent than paying the most. Indeed it was proved just last week by my friends at Goodman Masson, the finance industry recruiters. Their staff turnover level is well below 20% in an industry where average turnover exceeds 30%. A four point approach won Goodman Masson the coveted Great Place to Work award for Best Workplace in the medium size business category, and those four points are 1) Giving employees the tools and infrastructure to do their job well, 2) Giving them opportunities to develop professionally, 3) Paying them well and correctly, and 4) Giving them an environment they won’t want to leave. (Click here for the full report).
Note that the third point does not talk about excessively high pay, but it does suggest that Goodman Masson aim to be competitive with pay. They recognise that while remuneration is an important factor in staff retention, it’s not sustainable as the only tool in the box, because all it takes is for a competitor to offer more for the strategy to fall flat on its face. It’s the rest of the package that’s really important because that’s what creates the culture required that stops people wanting to leave. You will never build engagement by throwing money at your staff. In fact the more you throw at them the more they understand that you don’t care about them, but that you are simply buying them. People like to feel loved.
Retention comes from engagement and commitment to the company. It’s about creating an environment with shared values and where people appreciate that the company cares about them.
Now it may well be the case that bankers are somehow different to everyone else and are only interested in money, but that’s not my experience. In my experience some bankers are perfectly decent and lovely people, and some are something that rhymes with “bankers”. In other words, they’re pretty much like anyone else.
Can banks change? That’s not looking likely given that they are still a very long way from understanding that a business can stand for something more in the world than profit. Goodman Masson stands for caring about its people. Their priority is not about constantly demanding improved results from their staff. As a result of this employee engagement is high and guess what – performance is constantly on the up.