Tanya Jansen, Co-founder, beqom
The banking industry is focused on improving employee retention, and firms have already started making strides. In fact, recent data shows that financial services firms have an average attrition rate of about 19 percent, which is only slightly higher than other comparable industries. However, the pandemic has put a wrench in their efforts, making retention even more difficult, especially with younger demographics.
A recent survey from Wall Street Oasis found that a quarter of junior bankers say they will likely leave their current positions within the next six months. This poses a serious retention problem for financial firms that would undoubtedly impact their businesses in the short and long term. With Generation Z already making up about a quarter of the global workforce, companies must create workplaces that align with their younger employees’ needs in order to retain talent and avoid hefty costs associated with churn. In fact, Gallup estimates that it costs anywhere between one-half to two times an employee's annual salary to replace them.
With their bottom lines at stake, financial services companies are already working to adjust and reevaluate retention strategies. To be successful, organizations should start with improving workplace benefits and compensation practices to align with our new world and evolving demands from younger generations.
Implement equitable pay practices
When it comes to compensation, many workers across industries are skeptical of employers’ practices. In fact, one in three (34 percent) U.S. workers don’t believe their pay is based on their performance, experience or skill set, and that their salary is simply determined by what their manager feels they deserve to make.
One important issue that all industries, and especially financial services, are proactively addressing is pay equity and the gender pay gap. For financial firms, workers are ready to hold employers accountable for addressing this issue with one in three (33 percent) finance workers saying they would leave their company for an employer with more equitable pay practices.
It’s clear that pay equitability -- regardless of gender, race, religion, or sexual orientation -- is a major obstacle; but it’s an important issue to many workers, especially younger generations. Financial firms are making strides toward improving fairness in pay by leveraging tools that provide visibility into compensation and offer opportunities to improve equity. This is a critical step for firms to both retain and build trust with workers.
Drive transparency across the company
Financial firms must also take steps to hold themselves accountable for equitable pay, as many employees are calling for increased visibility of pay rates across the organization. In fact, Generation Z is the group most likely to report sharing their salary with other colleagues (61 percent), and they expect this to become a standard in the workplace. If not, more than half of U.S. workers (58 percent) across age groups say they would consider switching jobs for more pay transparency.
It’s on managers to provide greater visibility into how team objectives impact employee compensation. Not only does this drive a sense of fairness and unity within the workforce, but it also proves to workers that the employee experience is important and that management is committed to keeping them happy at work.
Prioritize benefits beyond compensation
Younger workers crave work-life balance, but the majority in Wall Street Oasis' survey (84 percent) say that their long work hours have hurt personal relationships with family and friends. This is likely a big contributor to the churn issue with junior employees.
Younger generations of workers put a big emphasis on the value of flexibility, with more than two in five (42 percent) Gen Z workers saying that flexible options such as remote and hybrid work are the top benefit when evaluating an employer. In addition, Gen Z thinks that small perks can go a long way. They’re the generation most likely to consider small cultural bonuses -- such as snacks, free lunches and happy hours -- as an important workplace benefit. Successfully retaining these workers will require a bigger focus on total rewards packages and comprehensive cultural benefits, beyond just compensation.
Many financial firms are just regaining their footing as we enter the post-pandemic world, limiting their ability to adjust salaries or offer bonuses at this time to keep their workers happy. However, the truth is that these types of incentives are not necessarily the only path to engaging young employees. By continuing to prioritize equitable, transparent total compensation, the financial services industry will better retain and attract Gen Z talent, while also paving the way for the future of workplace demands.