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High Turnover Fueled by Search for More Pay, Flexibility: PwC

September 10, 2021  

Some 83% of financial services executives said in August that their companies are experiencing higher-than-normal turnover among employees, according to a PwC survey.

Nearly half of the executives who reported higher turnover said employees were leaving for better salaries at other firms, and 41% said it was due to “better flexibility elsewhere.”

Some 65% of employees across industries were looking for other work last month, PwC found, nearly double the 35% who said so in May. And more than 80% of executives in financial services said retention issues have gotten worse during the pandemic.

PwC surveyed 752 executives across industries from Aug. 2 to Aug. 6. About a fifth of them worked in financial services. The consulting firm also polled more than 1,000 full-time and part-time workers in early August.

PwC had not previously asked survey participants about turnover, a spokesperson said.

The “quit rate” — the rate at which employees voluntarily depart — is higher than pre-pandemic levels, according toU.S. Bureau of Labor Statistics data. In professional and business services, the rate was 4.1% as of June, up from about 3% in February 2020, according to a PwC analysis of the data.

Employees across industries ranked pay as the top reason to look for a new job, followed by benefits. Career advancement and flexibility ranked third and fourth, respectively, as reasons for seeking other work opportunities.

To step up recruitment and retention efforts, 49% of financial services firms said last month that they plan “to emphasize schedule and location flexibility,” according to PwC. Nearly a third said they will expand career development opportunities, and 27% will make pay changes.

BlackRockJanus Henderson and Schwab have recently announced across-the-board salary increases for most non-executive employees, in a nod to the tight job market. At Janus Henderson and Schwab, employees get a 5% increase, and at BlackRock, 8%.

Median pay at publicly traded pure-play asset managers were up 5% in 2020, compared to the prior year, an Ignitesanalysis showed.

Many major investment banks, including Goldman SachsMorgan Stanley and Citigroup, have recently hiked junior bankers’ pay, after staffers complained about burnout from this year’s increased dealmaking.

Some asset managers also have widely publicized their plans to hire hundreds — or in Fidelity’s case, thousands — of new employees. Schwab and Vanguard are also staffing up.

Fidelity in March extended voluntary buyout offers to at least 6,500 employees. About 2,000 accepted those offers and will leave the firm by the end of 2021.

In response to heightened turnover, 48% of the executives who participated in PwC’s August survey said that they plan to change processes to become less dependent on employee institutional knowledge.

Turnover appears to have hit marketing teams especially hard: Each of the 84 chief marketing officers interviewed by PwC last month said that employee turnover had increased. Some 45% of them said that the most effective way to lessen turnover would be to permit “location flexibility” among employees. 

Employee departures are leading marketing departments to reshape their ranks, said Mike McLaughlin, partner at marketing and product strategy consultancy Naissance Partners. A typical move has been to replace a channel or product marketer with a data analytics professional, he added. In addition, firms are producing more content to increase engagement with potential and existing clients and advisors.

PwC also took stock of companies’ return-to-office plans for the fall. A fifth of executives said their companies will require all employees to be in the office. The highest proportion of executives, 33%, said their firms would allow for a mix of in-person, remote and hybrid work arrangements. Some 18% said employees would have a mix of remote and in-person work, with no fully remote staffers.

With Covid-19 cases once again surging due to the highly transmissible delta variant, numerous firms have pushed back their timelines for requiring employees to be in the office. BlackRock, Prudential and Wells Fargo said they would postpone their mandated September returns by at least a month. American Century pushed its return from September to November. And others — including John HancockMFS and TIAA — won’t require workers to be in the office until at least January.

Employee preferences regarding where they work, meanwhile, are “all over the map,” PwC reported. Nearly 20% said they would prefer to work entirely remotely, while 22% said they would prefer to be in the office most days, with one day or fewer working from home.

Article written by Beagan Wilcox Volz.
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