The phrase “churn and burn” is commonly used to describe an industry’s high turnover rate. Based on recent data, it’s appropriate to use that phrase when describing the financial services industry.
According to a Compdata survey, the Banking & Finance industry has an 18.6 percent turnover rate, which is one of the highest among all industries. While many factors that play a role into this large turnover rate, looking deeper into the data isolates one glaring disruptor – millennials.
In a PwC survey of millennials working in the financial services sector, it was found that only 10% of all millennials plan to stay in their current role for the long term. In addition, 42% of respondents said they would be open to new opportunities and 48% were actively looking for new opportunities.
Also read: Should We Stop Making a Big Deal about Millennials?
Recently, LinkedIn uncovered another staggering statistic, finding that analysts and associates who left their positions in 2015 on average held their positions for only 17 months. When you compare that number to a 26 month average in 2005, and a 30 month average in 1995, it is clear that the new-age workforce is a major cause of turnover in the financial services industry.
Low Engagement
One reason that millennials tend to have higher turnover rates is that they typically have lower engagement levels than previous generations. Gallup found that an astoundingly low 29% of millennials are engaged at work. This low level of engagement means that millennials are less likely to feel connected to their job, and therefore more likely to change jobs. As millennials exhibit the lowest engagement levels of any generation, turnover rates are poised to keep rising, especially for bigger, more established industries such as financial services.
Flexibility & Work-Life Balance
For someone looking to enter a profession with a healthy work-life balance, the financial services industry is likely not a good fit. One in three financial analysts can work between 50 and 70 hours per week. This exceeds the typically 8 hours per day, 5 days per week work schedule, which can be a turnoff for young professionals that value a good work-life balance. Nearly 60% of millennials say that work-life balance is very important to them.
Also read: How Well Do All-Remote Teams Work?
Millennials also look for more workplace flexibility, choosing workplaces that provide options for work environments, work hours, and benefits.
Embracing Digital Transformation
In an era where digital savviness is not just preferred but expected, the financial services industry must accelerate its digital transformation efforts. This not only involves integrating advanced technologies into everyday operations but also ensuring that digital platforms are leveraged to enhance employee engagement and satisfaction. Millennials, having grown up in a digital world, expect their workplaces to reflect the technological advancements of the age. By adopting cutting-edge solutions, financial institutions can create a more engaging and efficient workplace that resonates with the millennial ethos.
Reputation
It’s no secret that the 2008 financial crisis has had a huge effect on the financial services industry. The collapse of some of the biggest financial institutions in the world has given the industry a poor reputation. Millennials value image and reputation of the companies that they work for, more so compared to past generations.
PwC found that 21% of millennials working in the financial services industry said that they would rather not work in that industry due to the perceived reputation. Many millennials in the financial industry are moving away from the large financial institutions and are gravitating towards tech companies such as Google, Facebook, and Amazon, which resonate more with the younger workforce and have a cleaner reputation.
Knowing the reasons behind a high employee turnover rate can help understand the needs of this new workforce and what they perceive as being most valuable in a profession. Based on the research above, companies need to start identifying valuable benefits they can offer to retain this new wave of talent.
Increase Engagement
With engagement levels reaching an all-time low, firms need to examine ways to increase employee engagement. A common method of increasing millennial engagement is to have a good corporate social responsibility policy. PwC found that 61 percent of millennials in financial services actively seek employers whose CSR values align with their own.
Also read: Millennials want to see your company values, not hear about them
Promoting educational development is another way to retain talent. Offering professional development opportunities such as footing part or all of the bill for an online management degree program can help millennials advance their career and build loyalty to their company.
The Power of Corporate Social Responsibility
Millennials are not just looking for a paycheck; they are seeking employers whose values align with their own, particularly in terms of social and environmental responsibility. A strong Corporate Social Responsibility (CSR) policy can be a significant draw for millennial talent. Financial services firms that actively contribute to social causes, practice sustainability, and engage in ethical business practices will find themselves at an advantage in attracting and retaining this generation. Highlighting CSR efforts in recruitment materials and job descriptions can make a financial institution stand out to socially conscious millennials.
More Flexible Atmosphere
Offering a flexible work environment is another way to keep millennial talent. This can be done in a number of ways:
- Offering ample vacation time can be a good way to let your employees blow off some much needed steam.
- Providing workspace flexibility, like unconventional work spaces in the office coupled with working from home opportunities can go a long way in retaining talent.
Acknowledging the needs of employees outside of the office and trusting them to maintain a good work-life balance will undoubtedly decrease your turnover rate.
Innovative Benefits: Sabbaticals and Beyond
To stand out in the competitive financial services industry, firms must think beyond traditional benefits. Sabbatical programs, as implemented by leading companies like Bank of America and digital bank Monzo, offer employees a chance to recharge, pursue personal interests, or volunteer, thereby enhancing their work-life balance and overall satisfaction. Additionally, benefits such as comprehensive mental health support, financial wellness programs, and flexible parental leave policies can address the specific needs and values of the millennial workforce, making the financial sector more appealing despite its demanding nature.
Allow Millennials to Make an Impact
One of the biggest things millennials look for in job is to have their voices heard. An open door policy that allows millennials to voice their opinions and make suggestions will make for a more interactive work environment. Give employees some autonomy to explore projects on their own, that they think will benefit the company. If millennials feel that their work is making an impact, they will be less likely to pursue other opportunities.
With turnover in the financial services industry on the rise, it has become important for players in the industry to evolve. Financial businesses need to realign their retention practices with the growing labor force of millennials. If they don’t, they run the risk of losing millions of dollars in millennial turnover costs.
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