Promotions have long been used by banks as a tool for retaining their best talent, with all global banks having clearly defined ranks and a structured career path for their employees, typically from analyst through to managing director.
Each rank promotion has historically been accompanied by a sizeable uptick in base salary, together with a large increase in annual bonus. Given the generous financial rewards on offer, competition for promotions was and remains fierce.
However, it’s well known in the industry that investment banks consistently struggle to retain their best and brightest junior bankers.
After working 90 hours a week or more during a two- to three-year analyst programme, top-performing juniors are typically poached by other global banks, or they join a private equity firm or hedge fund, or they pursue an MBA at an elite business school.
In more recent years, the race to recruit the brightest young bankers has only intensified, with leading private equity houses wooing analysts just six months into the typical two-year analyst contract (i.e. 18 months before any new role at the bank would start).
Moreover, the many tech titans – such as Amazon, Facebook and Google – are now attractive alternatives to graduates who would once only consider a career in banking.
The investment banks have defended these approaches in two ways: firstly, by increasing analyst base salaries and, secondly, by introducing accelerated promotions for junior bankers. Analysts are now being promoted to associates as early as two years into their careers, 6 to 12 months ahead of traditional timelines.
While accelerated analyst promotions have partially stemmed the tide of junior departures, there is a growing bottleneck of mid-level bankers – associates, vice presidents and directors – with limited upward mobility prospects.
This is a result of strict quotas on senior promotion openings, an effort to rein in costs and rebalance ‘top-heavy’ employee pyramids. In 2013, for example, Goldman Sachs changed its MD selection process from once every year to once every two years. Even before this change was put in place, the bank only promoted about 2% of its global VPs each year to MD.
Similar situations exist at other global firms. An employee at one bulge bracket investment bank, who my consulting company recently interviewed for an industry report, said that of the 500 front-office employees in his regional business division, only two were promoted to MD (from a pool of 200 executive directors) for each of the past three years. And only six people were promoted to executive director (from a pool of 140 VPs) over the same period.
This growing bottleneck of mid-ranking employees is creating considerable discontent among a large proportion of the group’s workforce, with voluntary turnover rates for associates and vice presidents surging in recent years.
My firm’s research suggests that fast-tracking analyst promotions in a blanket fashion does little to differentiate between high and low performers. It may also create false expectations among junior bankers as to the pace of their long-term career trajectories, especially when they encounter prolonged promotion waiting times at VP level and above.
This problem is more acute for middle and back-office employees, where promotion quotas are even more limited.
While promotions indeed still exist, they are without a doubt harder to get. For industry newcomers and those already working in banking, there are a few important things to remember if you’re looking to climb the corporate ladder:
Understand your objectives: identify what is specifically required of you to achieve your next promotion. Discuss these KPIs openly with your line manager to pinpoint your development areas.
Find case studies: speak to senior colleagues who have been promoted to your desired corporate rank. Find out how they did it and why some of their peers may not have been successful.
Demonstrate leadership: proactively seek out opportunities to demonstrate your leadership potential, including your capacity to deliver high quality output for a senior audience.
Build your network: nurture relationships with senior colleagues outside of your immediate team. The support of senior bankers beyond your manager is invaluable promotion currency
Don’t make enemies: one senior voice of disapproval could ruin your chances of promotion and may stick throughout your entire career.
Find a senior sponsor: find someone senior at the bank (i.e. your team or department head) who you think will stand in your corner and fight for your promotion.
Don’t give up: sometimes missing out on a promotion does not reflect your performance; rather, it is simply a function of very limited quotas in the current climate. Don’t stop trying – your time will come!
Benjamin Quinlan is a former Deutsche and UBS banker who is now CEO of Hong Kong consultancy Quinlan & Associates.
Image credit: Wenjie Dong, Getty
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