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“It was once a coincidence. It was twice a coincidence. Three times it was the enemy’s actions,” Auric Goldfinger told James Bond.
Jefferies, Man Group, and Citadel have intensified the use of non-competitive or extended gardening leave provisions in employee contracts in a variety of ways. Why are you suddenly interested in employment safety?
Historically, loyalty is a virtue, but the investment banking industry has always accepted that its most valuable assets leave the building every night and not always return. Bankers are having a good time, not long, and the industry uses redundancy to manage its business cycle, so it cannot make many claims about anyone’s long-term future.
But as I began to look, the examples of companies that have historically created virtues from the flexibility of the financial labor market suddenly became a bit more protective.
For example, the entire private equity industry has had to give up its recruitment efforts this year when bulge bracket investment banks decided they would not tolerate systematically poaching by junior bankers. This isn’t exactly “enemy action,” but there’s a reason why it’s happening and probably has something to do with this.
As all recruiting stocks reported this year tell us, staff turnover in the banking industry has always been declining and has continued to decline since.
Loyalty appears to have suddenly emerged in the traditional, fex-free world of investment banks, not just from employees, but from employees. Elsewhere, banks like UBS (who wanted to use “natural exhaustion” to promote planned staffing cuts) found themselves significantly parallel and had to create forced redundancy.
Hedge Fund Managers with the most jobs have the odd consequences that hedge fund managers with big losses are big losses.
Of course, both sides feed each other. The driver underlying the unusually low turnover rate from the perspective of employees is that despite the market rise, investment bankers feel less optimistic. According to efinancialcareers, employment trend report:
. . . Candidates are far more risk-averse than employers. There appears to be a material discrepancy between the expectations and demand of candidates and the market rates that companies are ready to pay. Many candidates simply refuse to consider alternative career moves at this point in the cycle.
And this also feeds the employer’s attitude. After all, who is likely to be risk-averse about career changes?
So in an environment where almost no one wants to work, only those who have made a truly impressive offer will move. And these tend to be exactly what you don’t want to lose – people like Jeffries’ private equity secondary team, or research queators for Man Group and Citadel. That’s why employees in most demand are finding their golden handcuffs tightened.
*sorry.
