As we enter spring – the time for graduations and summer internships – HR and TA teams start gearing up for early talent attraction and engagement activities. Through recent discussions with clients, especially those within corporate and investment banking, a common theme emerged: it is getting harder to attract and retain specialized talent in the earliest of stages in their careers.
Traditionally, internships have served as vital pipelines for attracting high-performing individuals who commit to joining companies for permanent roles post-graduation. However, historical norms are shifting, and increased competition among industries for high-skilled talent has empowered these young workers to shop around and explore other competitors or industries.
Competition has driven starting compensation upward, prompting a reassessment of value propositions and employer brands. Median advertised salaries from job postings for entry level talent, specifying 0 to 2 years of experience, increased across the US, Canada, and United Kingdom between 2022 and 2023. This phenomenon, combined with increasing turnover in the early years of employment, poses significant challenges and risks for businesses reliant on a steady influx of young talent. In the video and written blog below we explore some of the conditions and research around Gen Z talent landscape.
A Shrinking Talent Supply
The composition of the workforce is changing as populations in key markets exit, with younger generations not replacing them at the same levels. Between 2021 and 2035, the population aged 65 and older is expected to surge more then 30% in key markets for Corporate and Investment Banking, and as much as a startling 60% in Hong Kong. However, the growth within the 15 to 64-year-old segment will only grow in single digits or decline (Hong Kong at –12%), and the youngest segment contracts or remains flat (Canada at 2%).
The implications of this trend for college enrollments are already being felt. While research indicates that Gen Z is the most well-educated generation in history, total student enrollment and the number of talents completing internships have been on a downward trajectory in the US for years. Estimates from the National Center for Education Statistics show student enrollments and internships each declined just under ten percent between 2013 and 2023. And while the most prestigious schools may not face the same enrollment challenges as average institutions, the theme of fewer students to go around is amplified by the increased competition for lucrative roles in sectors that are enticing to talent motivated by earning potential, including tech, biotech, and fintech.
High Turnover Rates
Analyzing talent profiles in London, a pivotal market in the global CIB landscape, provides valuable insights into job-changing trends among early-career professionals. Our data reveals that while job-changing rates are initially high across various industries, they decline rapidly in the first few years. Notably, corporate and investment banking experience a similar trajectory, with turnover rates dropping below those of tech and general banking by the third year.
Understanding What Drives Gen Z
Understanding the unique characteristics and preferences of Gen Z is essential for crafting effective talent management strategies. Gen Z, the generation born roughly between the mid-1990s and early 2010s, is often characterized by its digital nativism, entrepreneurial spirit, and desire for authenticity and purpose in the workplace.
Entrepreneurial Spirit: Along with being digital natives, they are also gig economy natives, having grown up with digital access to gig platforms and ways to have a side hustle, unlike the service industry jobs their parents worked during their formative work years. This likely influences their value of autonomy and flexibility in their careers, preferring agile work arrangements that allow them to pursue their passions and interests outside of traditional nine-to-five roles.
Stress and Burnout: In recent years, research has uncovered high levels of stress and burnout, and concerningly low levels of engagement among Gen Z. Research has also illuminated the root causes of this stress and burnout, including rising living costs, maintaining employment in an uncertain job market, and global issues such as climate change and geopolitical uncertainty.
Seeking Purpose: Research indicates that Gen Z prioritizes career development and meaningful work over compensation. This preference underscores the importance of aligning organizational purpose with the values of young professionals.
Strategies for Talent Attraction and Retention Success
To thrive in this competitive landscape, employers in highly competitive markets can adopt three key strategies:
Connecting Purpose with Values: Embedding your organization's purpose into every aspect of its operations demonstrates a commitment to addressing societal challenges and creating opportunities for employees to contribute meaningfully.
Prioritizing Wellness and Self-Care: Going beyond superficial wellness initiatives, provide comprehensive support for employee well-being. Equip talent with the resources and support they need to prioritize self-care and maintain a healthy work-life balance.
Fostering a Culture of Learning and Growth: Embracing the natural curiosity and eagerness to learn exhibited by early-career professionals. Create pathways for talent to explore different roles within the organization and facilitate continuous learning and skill development.
Navigating the Gen Z workforce landscape requires a proactive and holistic approach. By understanding shifting dynamics, aligning with generational preferences, and implementing targeted strategies, employers can position themselves as employers of choice for the next generation of talent.
