“Frontline talent attrition levels are at an all-time high since the pandemic, it’s taking us much longer than usual to find the right fit”
“We’ll have to likely use higher compensation packages to retain and attract talent in this market”
The above are some of the concerns that financial services leaders have shared with me during our conversation over the past few months. Hiring and retaining talent in this competitive job market is an ongoing challenge for leaders today. Some of the concerning statistics we’ve seen so far show that twenty-five percent of FS frontline talent reported a high intent to leave and nearly two-thirds would leave their current firm for a growth opportunity. Furthermore, about two-thirds of senior FS executives surveyed in Gartner’s Financial Services Business Priority Tracker in March 2022 are expecting workforce shortages across lines of business and functions (e.g. business operations, contact centres, frontline staff) over the next 12 months
But before you walk or dial into your next executive meeting to discuss your hiring and retention strategy, it’s important to understand “why” your people leave in order to determine where your bets are best placed.
One way to illustrate this is to think of your employee as an individual who is selling their house, and their reasons for selling can fall into 1 out of 4 scenarios.
1st Scenario: “There are cracks in the ceiling, the house needs repairing.”
This implies poor managers, lack of employee recognition, or lack of professional growth opportunities. In short, your firm’s work experience is broken and in need of repairs. Frontline employees in FS are highly ambitious individuals who rank career growth and personal development as the two most important motivators. In this scenario, you will need to evaluate the way managers lead in the organisation as well as improve the visibility and opportunities for career development.
2nd Scenario: “There’s nothing wrong with this house, but I need an extra room so this house no longer meets my needs.”
In the last few years, new employee needs have emerged such as a greater demand for work flexibility or a greater interest in Environmental, Social, and Governance related issues. Employees now overwhelmingly favour a hybrid work model – with 56% of operations employees stating that the ability to work flexibly would impact their decision to stay at their organisation. If employees sense a misalignment between these new personal needs and the overall employee value proposition of the organisation, your leadership will need to take a greater role in the things that matter to them.
3rd Scenario: “The current house is fine, but the other houses are looking better.”
In this scenario, other financial services or non-financial services companies are offering a better employer brand or more competitive compensation for critical talent. Firms with deeper pockets are willing to spend more to acquire the talent needed to drive growth. Some of the most sought-after roles within the FS industry include software developers, customer service representatives, sales agents, and financial analysts.
You will feel the most pain in this scenario. It is incredibly easy for employees to peruse the offerings of other firms with little effort, while leaders are typically faced with only one main strategy: that is to match the perceived better offerings of other companies.
However, with limited resources and budgets, leaders will need to determine the critical talent segments and decide where to selectively outcompete.
4th Scenario: “I don’t want to live in a house anymore, I want to live on a boat”
In this scenario, employees may have completely new lifestyle aspirations. The pandemic has caused many to question the purpose of work. Some may want to take the time off to reconsider their career path. Some are keen to pursue academic interests. And others are leaving the workforce entirely.
This scenario is mostly outside of your control and ability to influence as an employer. In this situation, your efforts are better spent on recruiting and backfilling these positions instead of trying to convince your employees to stay. FS leaders should invest in creating a pipeline of talent to backfill these roles quickly.
There’s no silver bullet to solving the attrition challenge and this will likely endure for the medium to long term in the industry. In order to adopt a more effective approach to address this issue, leaders will need to ask “why” employees leave. This will dictate the next steps critical to retaining talent.
To learn how other best-in-class organisations retain critical talent, here are a few recommended resources.
- A Framework for Assessing Attrition Risk: who wants to Pack up, and Why?
- 4 Bold Strategies to Disrupt Compensation Competition in the New Talent Landscape
- How Financial Services Leaders are Winning on ESG Goals
- 5 Critical competencies for the Future of Financial Services
- How to Build an Engaging Virtual Onboarding Program for Today’s Talent Market
- Creating a Diverse Workforce in FS starts with Entry Level Hiring
- Why the “Struggle for Talent” is a Red Herring
- How to Make Hybrid Work Successful in Financial Services.
The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.
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