What does turnover currently look like in the financial services industry?
A Compdata survey found the Banking & Finance sector has an 18.6 percent turnover rate, which is one of the highest employee turnover rates among all sectors.
No matter what age bracket you examine, retention isn’t looking good.
A Harvard Business Review survey found that resignation rates are at the highest among mid-career employees between the ages of 30 and 45. Stating that "Many of these workers may have simply reached a breaking-point after months and months of high workloads, hiring freezes, and other pressures."
Gen Z’s recent entry into the workforce is also playing a role. Gen Z grew up with the global recession of 2008, and some entered the workforce during the pandemic, which many view as the catalyst for the collective movement we have named ‘The Great Resignation’.
While this upheaval and reassessment of norms in the workplace has affected pretty much every sector, financial services is taking one of the greatest hits – but why?
Why is the financial service sector taking such a great hit when it comes to employee turnover?
work-life balance struggles
One in three financial analysts can work between 50 to 70 hours per week. This can be a turnoff for professionals that have re-considered how much they value a good work-life balance. People are now wanting to work to live, not live to work, and many employers are seeing what their high intensity cultures have now cost them.
This doesn't mean people have stopped caring about their job or organisation, but rather than to continue providing high quality contributions to their organisation they need to avoid high levels of stress to prevent burnout. This can only be achieved by making sure they have time for family, hobbies, and rest, but until the culture within the financial industry allows for that, they will have to face losing valuable talent to more flexible, forward thinking sectors.
You might be interested to read about the 4 day work week's effects on productivity.
reputation and values
The harsh truth is that the 2008 financial crisis has had a major impact on the public image of the financial industry, and it's never really recovered in this respect. Nowadays, more and more employees are preferring to work for companies that they feel share their core values and ethics - particularly among the younger generations - which obviously is not exactly compatible with what people think of when it comes the driving goals and values behind the actions of many global banks back in 2008.
The idea of environmental, social, and governance (ESG) awareness is more important than ever for employers in the financial services sector looking to appeal to the younger members of their organisation and not bear the cost of a high turnover rate. However, 67% of those surveyed within the financial industry said their firm has not yet taken action on ESG initiatives.
This kind of inaction at your own institution could cost you the most promising talent and increase turnover rate in the younger generations.
As high stress work seems to go hand in hand with the finance industry, many who enter it expect to be receiving fair compensation for their efforts. However, with a cost of living crisis many people across multiple industries are feeling the strain of salaries which used to stretch further - particularly at a junior level. This pushes the employee turnover rate higher, as individuals seek higher salaries by consistently job hopping to companies which offer better salaries or benefits packages, or turning to a new industry altogether.
Since The Great Resignation, employees are even more attuned to the kind of compensation that is available to them, and are advocating for what they feel they deserve. When you don't compensate employees in your organisation fairly, you risk not only a high turnover rate, but also developing a not so positive employer brand for your organisation, particularly if you are recording and publicly declaring financial success in areas of your business, but your workforce is not seeing that increase in compensation in their salary, benefits, or day to day work life.
Learn how to calculate employee turnover at your institution here.
How can a HR software help you improve retention in the financial services industry?
Provide valuable insight and comparison against competition
HR software can provide employee turnover analytics which allows you look at turnover rate on a granular level and compare this against industry average as well as that of your competitors. This can help with informing how you position yourself as an institution when recruiting or retaining talent with the competition from your industry in mind.
This data can also help you learn from the best in your sector. If the data from your HR system shows one competitor is particularly good keeping their turnover rate low, it could be worth examining what their employee retention strategy is.
Helps spot patterns and trends in your turnover, as well as what preludes it
These employee turnover analytics can also give you perspective on the details of your internal employee retention.
For example, you may have a low employee turnover rate compared to competitors, but if all the trouble seems to be in one division of your firm - whether it be interns, senior leadership, employees reporting into a particular manager - then this can steer you towards an issue that will likely need to be addressed.
You may also find that employee retention analytics show people are reporting as happy and engaged, but then quickly fall off from the two year point, which may indicate you need to reconsider the opportunities offered for career growth, or raises in your organisation.
Understand workforce demographic so you can adjust your proposition to retain them
As an employer, it's important to gain insight into the lifestyle of each employee at your firm to improve employee retention and decrease turnover. The analytics provided by the right HR system can achieve this for you. For example, working parents are going to be more attracted by a benefits package which includes covered childcare and life insurance.
Maybe your employee data will reveal that you have more employees than you thought making long commutes to get to your office. In this case, introducing a hybrid, flexi-time, or remote working model, and covering the cost of transport and food when employees are in office will improve their quality of life at work, and therefore their retention.
The right HR system can provide employee data which helps you as an employer be considerate of each individual employee, so you are able to nurture their potential in the best way possible, maximising productivity and decreasing employee turnover.
Overall, the turnover rate in the finance industry is a concern for many. The solution must be all encompassing and long term to make a difference, and HR software can provide some of the key insight to enable, inform, and deliver this strategy.