A burning question for mutual fund and ETF providers centers around how they should recruit and retain top talent.
Financial services, once the dream job for so many, now competes with iconic, transformative companies for the attention of younger employees.
Armies of young people are needed in Silicon Valley and the voracious appetite of financial services for these talented younger employees has waned in the last five to 10 years. Why is Silicon Valley, or other options like NGO's, attractive? They offer the promise to change the world. How do we compete with that? Our industry has to invest in the future as it is perceived by this next generation simply, because the competition does.
In order for providers to be more successful in cultivating and retaining young talent, they must:
* Build an attractive culture to young employees.
* Leverage social media and technology - speak their language.
* Formal training with obvious career path opportunities. Bring back the sort of training that people got from venerable firms like Manufacturers Hanover or Chemical Bank.
* Reward loyalty with opportunity. Commit to growing a certain percentage of positions from grooming internal talent.
* Head off unhappiness similar to the unhappiness algorithms that Google uses to predict employee discontent.
* Inspirational products and services.
* Provide detailed training in various departments.
COMPANIES DOING IT RIGHT
Several firms are established magnets for attracting, training and grooming their C-Suite, rarely seeking outside talent to join their ranks because they have carefully planned over a long period of time. Vanguard, Capital Group and Franklin Templeton Funds are great examples.
Vanguard has a real strategy for developing and grooming young talent. The entire firm has created a system to motivate everyone to keep an eye out for new talent, the sort of corporate setting that exists in high technology and long term career perspectives. Young employees are able to observe that hard work and loyalty pay off because Vanguard often promotes from within.
CREATE A PROCESS
So when should you take notice of this next generation of talent? Is it a sifting process or do you need to make smart bets and intentionally groom people? That would be more expensive and they might not continuously be an employee. They may add value to your firm in other ways - more significantly over time.
For example, that great analyst on your team might get recruited to a top private equity firm after one year - but your firm's relationship only improves. The financial services summer internship experience that transforms to a job offer has become unattractive to the students. Internships ending just as the senior year begins yields offers in early September with perhaps a week to accept.
It gives the soon to be graduate little time to explore other options at a time when they should. This practice further characterizes this industry as impenetrable.
It also locks out some candidates who would have been incredible who sought other, more valuable summer experiences. Nuveen, recently purchased by TIAA-Cref, has a long standing summer intern program. It offers students a robust and formal curriculum designed to familiarize them with asset management. It builds candidates' pipelines in the future, especially for roles within internal sales & services, product, investment oversight and operations.
They hire about 22 students and give them an opportunity to try Nuveen out, especially at the MBA level. On campus recruiting is critical and should be revived. Fewer firms and industries are doing it and if you want to get to the best, most talented young people then make it easy for them.
But be creative about your selection process. Google did some interesting longitudinal studies and found zero correlation between grades, test scores and job performance.
Figure out how to assess for the key attributes that will make for really successful employees in your organization and design a two-year training program to teach them lifelong skills that will keep them in the asset management business - and make it fun! Or you will lose them.
Today, naturally curious, ambitious young people have vast choices. Competing for their attention requires our industry to provide clearer opportunities and balance values that matter to them.
Carol Hartman is EVP and North American financial services practice leader at DHR International, a global executive search firm.