Employee Poaching Returns to Wall Street

Wall Street is back.

First came profits. Then bonuses. Now, the time-honored tradition of poaching.

Nearly three-quarters of Wall Street employees say they have been approached at least once by headhunters since the beginning of the year, according to a survey from eFinancialCareers, a recruitment Web site. Also, 44% of respondents said the number of calls they have received is up from last year.

Rival firms aren’t just targeting the big name rainmakers, either. Back office and midlevel employees also are seeing increased interest from headhunters as well.

“Wall Street may have cut back too aggressively and firms are scrambling to make sure their benches are full,” said Constance Melrose, Managing Director, eFinancialCareers North America.

More concerning to employers, the survey found that employees are more willing to jump to another firm.

The uptick in recruitment follows more than a year of public furor over banker pay and government efforts to restrict Wall Street pay. It highlights the question about whether Wall Street can rein in compensation on its own. Last year, one after another, Wall Street CEOs pointed to the competitive market for their employees. To retain top talent, they argued, their firms had to pay up. But where would these employees go if investment banks didn’t pay up, critics of Wall Street pay replied.

A year after the stress tests, employees increasingly have options, according to the survey.

“The message to firms is that they need to be doing a talent-risk assessment,” Melrose said. “They need to think about who the key people are and make sure that those folks are getting the kind of incentives that will make them stay.”

What business lines are the hottest? While every department has seen a notable uptick, foreign exchange, derivatives, and regulatory affairs groups are seeing the highest turnovers levels, according to the survey.

And guess what the main carrot being dangled in front of prospective employees is? Higher salaries, of course. “The basic salary increase ranks far higher than superior bonus structures or guaranteed bonuses in 2010 as an incentive to move,” according to the survey.

“The survey does not say that Wall Street professionals will jump willy-nilly for an incremental dollar increase,” Melrose said. “It has to be something more substantial. But I think we will see more of this as business improves on the Street.”

(By Stephen Grocer) http://blogs.wsj.com/deals/2010/05/13/employee-po…