The investment bank Morgan Stanley recently announced a set of new policies for its junior associates, offering higher base pay and a faster track to promotion, while also underscoring its work-life balance policies, Preeti Varathan reported at Quartz last week:
According to its memo, Morgan Stanley is raising base pay for associates in investment banking and capital markets by 20% to 25%. It is also speeding up its promotion timeline for high-performing analysts—the entry-level position below associate—from three years to two. The memo also reiterated the bank’s current vacation and hours policies: two mandatory one-week vacations every year and limited staffing on Fridays and weekends.
Wall Street has long had a reputation for debilitating hours, consecutive all-nighters, and frequent weekend work. But even the most competitive firms are now grappling with a new generation’s insistence on rapid promotions and better work-life balance. “The ability to recruit, develop, and retain top talent by offering attractive career opportunities is a key priority,” the memo noted.
Indeed, at a time when the labor market is tight and employers in all industries are having to compete harder for talent, it’s unsurprising to see another large employer make investments in its most junior employees. The financial sector, however, has also been grappling for several years now with a particularly difficult employer brand problem. More than ever before, prospective employees now question whether the lucrative rewards of investment banking’s traditional high-stress, high-pay model are worth the costs to their quality of life.
Google is widely recognized as a good company to work for, offering competitive compensation, world-class benefits, and ample opportunities for learning and career development. Among large employers, Google ranked fifth in the US and took the #1 spot in the UK on Glassdoor’s Best Places to Work list for 2018, based on thousands of employee reviews.
In the age of HR as PR, a reputation like Google’s is more valuable than ever. On the other hand, the tech giant has also been at the center of several controversies in the past year concerning diversity, inclusion, and discrimination in the tech sector, including allegations from the US Department of Labor that it engaged in gender pay discrimination and a lawsuit by several former employees also claiming that the company systematically discriminated against women in pay and career development. (Google is not alone among tech employers in this regard; Microsoft is also facing a number of gender discrimination claims.)
In this instance, Google’s prestige could turn into a liability, business professors Mary-Hunter McDonnell and Brayden King explain at Quartz. That’s because of a phenomenon McDonnell and King found in their research that they call the “halo tax,” in which companies with good reputations are punished more severely when they are found liable for employment discrimination:
Using a unique database of more than 500 employment discrimination lawsuits between 1998 and 2008, we concluded that the greater the company’s prestige, the less likely it would be found liable because of the halo effect. However, once a prestigious company was found liable, punishments were more severe, which shows that prestige can be both a benefit and a liability, depending on whether a company is defending itself or its blameworthiness has been firmly established.
In 2014, when CEB, now Gartner, last took a deep look at employer branding, we concluded that companies needed to shift their strategies from branding that attracts candidates to branding that influences their career decisions, encouraging the right candidates to apply as opposed to the most candidates, and directing others elsewhere. At the time, most companies were receiving a high volume of applications and needed to to use their branding strategy to separate the best from the rest.
Today, the circumstances have changed: Applicant volume has declined, but the candidates companies need are becoming harder to find. In 2016, 39 percent of all job postings by S&P 100 companies were for just 29 critical roles, including technical occupations like software developers and information security analysts. Competition for critical talent is only projected to get tougher in the coming years, as the growth of aggregate demand continues to outpace supply.
At the same time, we’ve seen an explosion of investment in recruiting technologies and an expanding number of candidate-focused platforms. These include employer rating platforms like Glassdoor and Comparably, as well as skill-based communities like Github and Stack Overflow. With the proliferation of these resources, candidates are exposed to a much larger amount of information about their prospective employers, most of which is out of those organizations’ hands. Today, 80 percent of the information that influences a candidate’s decision to apply comes from external sources such as these platforms and social media, and only 20 percent comes from employers themselves.
At our ReimagineHR conference in Washington, DC, on Thursday, CEB advisor Dion Love led a panel discussion with Michael Cox, SVP of Talent Solutions at Comcast, Susan LaMotte, founder and CEO of the employer brand and talent consultancy Exaqueo, and Jim McGrath, talent acquisition executive at Danaher, on how organizations need to re-strategize their employer branding for this new recruiting environment.
We’ve heard of McDonald’s using Snapchat to target its recruiting efforts at young people, but other employers are turning to the youth-focused platform to recruit millennials and members of generation Z as well, including some major investment banks. Ellen Chang at The Street recently highlighted Morgan Stanley’s new Snapchat-based campus recruiting initiative:
Morgan Stanley launched its campaign with Snapchat earlier in 2016 in an effort to attract college students, and geofilters were created this summer for its analysts and associates. “We have to be where the students are,” said Lisa Manganello, head of integrated brand marketing at Morgan Stanley. “We want to build on the momentum and leverage and it fits naturally with student behaviors.” …
The bank could expand the geofilters to include other colleges across the U.S. if this initial program is successful to help them garner a broader and more diverse group of future investment bankers, Manganello said.
Other banks like JPMorgan Chase and Goldman Sachs have experimented with advertising jobs on Snapchat as well. ERE‘s recruiting tech blogger Joel Cheesman thinks it’s a great idea:
Highbrow companies who dismiss Snapchat as a medium for greasy burgers and salty fries should now take notice. Snapchat is making strides to becoming a legitimate advertising platform. Need more proof? In addition to Morgan Stanley, JPMorgan actually started testing Snapchat as a recruiting tool last year.
The argument for using Snapchat as a platform for recruiting appears to hinge on the concept of meeting that their target audience in the digital space where they already are. I’m skeptical of the hype about these efforts to raise brand awareness, however, mainly because if big investment banks like Morgan Stanley are no longer competing just with each other for top talent, but with tech companies and startups as well, there is little evidence that simply being in the same digital space as their target audience has much impact on attracting talent or raising the quality of their applicant pool.
Although the candy company Mars owns some of the world’s most famous brands (who hasn’t heard of M&Ms?), its employer brand is much less well known, Quartz’s Oliver Staley observes. Staley takes a close look at the company’s ongoing efforts to become more attractive to talent as it plans to expand its workforce by 70,000 employees over the next decade. Like other big players in the confectionery industry, Mars has historically been very serious about guarding its trade secrets, but its notoriously secretive culture had the downside effect of limiting the number of people outside the organization who knew what it was like to work there.
The company now faces the challenge of attracting talent from a generation of young people who grew up enjoying Mars products, but may never have thought of it as a place to pursue a career:
To get its message out, Mars is doubling the staff dedicated to luring college students, deploying social media, and honing its sales pitch to woo potential candidates. That often means showering them with M&Ms, and handing out gift boxes stuffed with candy bars and snacks. In making its pitch to MBAs and recent college graduates, Mars also stresses the variety of opportunities it can offer new hires because of its many business lines, and recruiters talk a lot about the company’s corporate culture, which historically combines egalitarianism with eccentricity—sometimes with surprisingly forward-thinking results.
That culture has in some ways been ahead of its time—Staley notes that Mars was ahead of most American corporations in adopting ideas like open offices, flat management, and bonuses based on company performance. The company scores high on lists of great places to work and people who work there tend to stick around. Indeed, that’s one possible reason behind the company’s current recruiting challenge:
Nicolas McComber /iStock
On Sunday, ex-Uber engineer Susan J. Fowler published a troubling account of what it was like to work for the company, alleging a pattern of sexual harassment, a toxic work environment, deceptive HR enforcement, and both management inaction and also retaliation against her for reporting incidents. The account has quickly gone viral and sent shockwaves across the tech sector, and it has even led at least some of the company’s customers to quit using the service. CEO Travis Kalanick responded very quickly to the scandal, immediately releasing a statement declaring that the work experiences Fowler detailed were “abhorrent and against everything Uber stands for and believes in,” and that he had instructed the company’s chief HR officer “to conduct an urgent investigation into these allegations.” The company then went even further and hired former US Attorney General Eric Holder to run that investigation, and Uber board member Arianna Huffington is participating as well.
In the wake of Fowler’s letter, some of the ridesharing company’s investors have begun to voice concerns about the company having a culture problem. Venture capitalists Mitch Kapor and Freada Kapor Klein, some of Uber’s earliest backers, published an open letter to the board and other investors on Thursday, saying they were “disappointed and frustrated” at Uber’s pattern of “responding to public exposure of bad behavior by holding an all-hands meeting, apologizing and vowing to change, only to quickly return to aggressive business as usual”:
At ERE, Phenom People CEO Mahe Bayireddi discusses the results of an audit his organization conducted of 600 Fortune 1000 companies in 2016 to “evaluate each company’s talent experience from the perspective of the candidate,” which “identified several consistent gaps in the overall talent experience”:
95 percent of the career sites are failing to provide relevant and personalized content: Today’s candidates expect a personalized touch when they visit a company’s career site, yet a lot of companies are either failing to provide any content or they are providing static, one-size-fits-all content.
97 percent of companies are hiding their employee reviews on Glassdoor: I’m a firm believer in radical transparency; companies should get in front of what people are saying about their company before candidates find it themselves.
86 percent of companies are inconsistently tracking visitor source information: In a lot of cases, companies aren’t tracking source information at all.
Changes in labor market supply and a more open exchange of information have increased the importance of a candidate’s perception of the recruiting process. With broad and diverse candidate pools, organizations could previously afford to ignore Glassdoor and social media comments such as “What a waste of time, I went through several rounds of interviews to be told there wasn’t a role available at this time” or “The recruiting process is broken. I was contacted by two different recruiters from the same organization and decided to progress with another company instead.” However, competition for attracting the best from limited talent supplies has placed the candidate’s experience center-stage in recruiting process design.
At CEB, we’ve been looking into this problem in some of our latest research. In a survey of over 5,000 job candidates, we found that over 60 percent still found the application process frustrating and stressful.