Wall Street Is Undergoing A Hiring Sea Change That Could Take It Back 30 Years?
Wall Street veterans like to tell stories about the bad old days when traders sweat on each other in the pit andnumber-crunchers could fight their way to becoming front-office analysts.
In the past few decades, though, that has mostly faded away.
As a result, employees in the back and mid-office were told they were staying put.
Now the tide is reversing. Once again, banks are taking a look at what their back and mid-office employees can do.
According to Krawcheck, there are three ways Wall Street banks can reduce compensation costs — layoffs, pay cuts for existing workers, and/or hiring a work force that costs less.
Cutting pay for existing workers by 10-20 percent is a painful process, so why not find people within the firm who want to advance, and have lower expectations about compensation?
"If you're in operations, why wouldn't you want to be an assistant trader or a research analyst," said Jesse Marrus, President of Wall Street career matching firm StreetID. "And they (the banks) already know who the people in theare and what their work ethic is."
Bottom line: Wall Street can't afford to hire expensive bankers right now. Banks are already hiring teams of people in compliance to deal with Dodd-Frank. At the same time, new regulation is also forcing them to look for new sources of revenue — fast. During this difficult time, banks don't just want smart employees, they want smart, loyal employees.
"It's recession economics, " said an employee at one Wall Street. "Efficiency comes first. To the banks, it's the Goldman dilemma: Amidst flat revenue are you really getting a return on an analyst who is likely to defect, to say nothing of being near-term greedy about bonuses, or do you engender loyalty and save cash in the process?"
The "Goldman dilemma" is the major change the bank just made to its 2 year analyst program. Those who complete it will no longer get a hefty bonus, and Goldman hopes that also means means they'll no longer leave for buy-side firms after they're done.
"I think every company is looking for loyalty," said F. Skiddy von Stade, the CEO of Wall Street job matching site OneWire.com. "It's very expensive for any company to train someone and have them go away."
On the other hand, von Stade points out, given thatbanks are downsizing and dealing with increased government regulation, young people might be happier, better paid, and under less scrutiny at a smaller, or mid-tier firm.
"All the major firms are great firms," he added, "but talent has moved around the Street and it's not as condensed as it once was."
Anyone prepping their resume?