by Ryan Hoopes
The banking and financial service industry is a vital part of our economy and society as a whole. It contributes an estimated $3 trillion to our annual GDP, and it employs more than 6 million people. The industry also enables the U.S. to remain competitive on a global stage.
But, like many industries, the banking and financial services market is rapidly evolving. A variety of forces—from technology and regulations to mounting cost pressures—are driving change throughout the industry.
In this five-part blog series, we’ll explore each of the key drivers that are pushing the banking and financial services industry to evolve. Today, we look at one of the industry’s most significant challenges: talent.
The War for Talent
Across the country, the war for talent is growing increasingly competitive, particularly as unemployment hits historical lows. Today, like many other competitive industries, banking and financial services companies often struggle to attract and retain skilled young professionals. As a result, the industry is grappling with a growing skills gap, and the average age of its workers is trending higher.
This wasn’t always the case: Banking and finance were prestigious, well-paying fields that readily attracted young graduates, in part because they resulted in stable, long-term careers. With incredible bonus structures, these positions were known to be extremely lucrative. So why would banking and finance companies be struggling to attract and retain talented workers?
Several factors are at play, compounding the difficulty of a historically tight labor market:
Today, banking and financial services firms are directly competing for talent with some of the world’s largest, most recognizable tech companies, including Google, Microsoft and Apple. Why? As banking and finance grows increasingly digital, firms need to hire more tech talent than ever before. Some figures indicate that three out of every four new hires at some of the larger institutional financial firms are technology-related. And attracting and retaining tech-savvy workers means going up against some of the biggest names in tech.
Increased employee power
The tight labor market has gradually shifted the power dynamic from employer to employee. Workers understand that they have more leverage and leeway when it comes to finding a suitable job. That’s why they’re gravitating toward companies that can give them what they want, such as greater flexibility, a shorter commute and the sense that their work has meaning—values that are particularly important to the younger members of the workforce.
A shorter employment cycle
As more millennials and Gen Zers enter the workforce, and employees gain more power, workers are less likely than ever to stay at a job for their entire careers—or for an entire decade, for that matter. Many employees now expect to change companies (or, at the very least, move to a different role within the company) every three or so years. This behavior has become so engrained in younger employee groups that attracting and retaining talent is fast becoming a bit of a cycle. Banking and financial services companies not only need to differentiate themselves to future and current employees; they also work to stay attractive to former employees, who can go on to serve as good ambassadors for the company, helping improve retention, and who may even decide to return to the company once they’re ready for another job move in two to three years.
A New Approach to Work—and the Workplace
As talent attraction and retention become increasingly challenging, winning the war for talent requires a different approach to work and the workplace.
How do banking and financial services firms become an employer of choice for talented workers, particularly those younger professionals with degrees in finance? They need to realize that the traditional means of attracting and retaining talented employees—namely, with a high-pay, high bonus structure—don’t work for many of today’s younger professionals. They are much more interested in companies that offer the type of work they will enjoy, in a setting that is convenient, dynamic and flexible. That’s why two key real estate decisions—site selection and workplace strategy—are proving increasingly important for the banking industry.
The majority of young professionals want to work in vibrant city districts that combine office space with retail, residential, culture and arts, and provide easy access to public transportation and micro-mobility options. Companies that are located in these urban districts are more likely to stand out to young employees who crave the live-work-play lifestyle.
We’re seeing Goldman Sachs follow this approach as they gradually move more employees to Trammell Crow Center in Dallas’ Arts District. The company has consolidated several suburban market offices into one of their largest global centers of excellence, selecting a site in one of Dallas’ liveliest and fastest-growing Downtown micro-markets—an area that has grown increasingly attractive to young and tech-savvy employees.
To attract the very best talent, financial services firms must invest significantly in their workplaces and workplace technology, offering better work environments and more flexibility. Young professionals also are drawn to employers that offer flexibility, a value that companies can promote through workplace design and technology. Employers might choose to offer agile working environments and policies, which allow employees to work outside of the office when needed. Inside the office, attractive and flexible design can let workers feel more comfortable. Providing a variety of workplace options, such as cubicles, shared space and private “focus rooms,” has been shown to maximize employee happiness (and productivity).
Today’s 20- and 30-something employees have much different priorities than generations before. They’re looking for jobs that are flexible and interesting, and offer many of the attractive perks that are a trademark of big tech companies. By carefully considering their real estate strategy, banking and financial services companies can stand out to potential employees. Partnering with an experienced broker who specializes in site selection and workplace strategy for the financial industry is the first step toward attracting and retaining the very best talent.
In July, look for Part 2 in my blog series, which explores the role of technology in the evolution of banking and financial services.
Ryan Hoopes is a Director within Cushman & Wakefield’s Tenant Advisory Group. He is a principal leader with the firm’s Banking and Financial Services practice in Dallas, which focuses on real estate strategy and advisory in the rapidly-changing environments of both traditional financial institutions and fast-growing financial technology (fintech) companies.