Banks are now not only looking to retain talent but they are discovering that helping employees develop their careers and skills is essential.
All too often, institutions do not learn until the exit interview that staff believe they are stuck in the wrong job or burnt out. Banks are now listening to these concerns as way of harnessing their own talent pools.
Burnout can be caused by the failure to provide individuals with opportunities to fulfil their potential or from an overload of responsibilities when staff numbers are cut.
Kris Sasitharan, recruitment consultant in the human resources division at Joslin Rowe, says: 'Some of the leading investment banks are now restructuring their human resource process and have adopted a 'consultancy model' as a part of witnessing both the effects of burnout and good candidates leaving due to lack of career progression. The objective is to manage the situation when they first hear about it, rather than at the employee's exit interview - the prevention rather than the cure approach.'
Sasitharan explains under this model that each business unit has a dedicated team of HR professionals whose remit is to look at issues such as attracting candidates, motivation and, primarily, retention. Their strategies would include job enrichment and job rotation.
Linda Jackson, business director at Meridian Consulting, says: 'Institutions are increasingly worried about the legal ramifications surrounding burnout and are becoming more creative in their approach to the problem.'
One such creative solution may be sabbaticals, which are gaining popularity in investment banks. Institutions are realising that sabbaticals can be both beneficial as a break from the daily grind but also as a way to spark the entrepreneurial spirits of employees, which could generate a new source of revenue.
Policies differ towards sabbaticals among investment banks but they may be offered either on a case-by-case basis, at the request of an employee or as policy. In some European investment banks, for example, French employees with six years' experience in a professional role are eligible for a year's sabbatical after three years' continuous service with the firm.
Last year, PricewaterhouseCoopers, in an attempt to lessen the flow of consultants to tech start-ups, decided to give three-month sabbaticals to staff wanting to work on promising e-business proposals. PwC then planned to invest $500m (€570m) through equity stakes in those internet start-ups.
Another aspect of career development can be international postings. Most investment banks offer generous expatriate packages to incentivise employees to transfer on a temporary basis to a role in another location that is likely to enhance or vary their careers.
Philip Marks at Jonathan Wren, recruitment consultants, says: 'Banks are far more open in recent years to consider internal moves between departments nationally and internationally.
'This, however, is far truer at the more specialist or more senior end of the market, geographic locations permitting. There is sound commercial sense for this, both in terms of keeping a top producing employee motivated and performing at their peak and avoiding the costly exercise of recruiting, training and bringing up to speed a new employee should the current employee leave.'
Most investment banks are flexible not only about promotion but lateral moves, provided the individual has the skills and experience. Banks will do what they can to keep that person on board and to prevent them from going to a competitor.
Colin Campbell-Dunlop, managing director at search consultants Paradigm Search, says: 'It is quite common for good analysts to become even better marketers and relationship managers and for sell-side analysts to find a new career path in corporate finance.
'Banks appreciate that individuals may like to vary their career direction and will work with employees to reach mutual objectives. The situation seems less flexible for those who are not perceived to be so professionally capable.'
While banks recognise the need to promote individuals, they do not always do their best to ensure they acquire the necessary managerial skills as they move up the corporate ladder.
However, coaching and mentoring are rapidly gaining more acceptance in the financial services sector.
Stephen Schneider, managing director at the executive mentoring and boardroom development firm CPS, believes that investment banks were slow to see the need for coaching programmes, but increasingly firms are recognising the usefulness of the service. Schneider says: 'When people are over-promoted they find themselves moving up through the ranks quickly because they are talented in executing the deal. However once they arrive on the managerial side they find that the skills and attributes that made them a successful salesman or trader are not the same skill sets required for an effective leader. Often people in this situation lack the essential interpersonal skills required.'
Schneider contends that coaching and mentoring can help managers' individual and collective performance through deepening their insight into their own behaviour and interaction with others.
The jump from a transactional role to an operational one can be huge, says Susan Bloch, head of coaching at Hay Management Consultants, but unfortunately financial institutions are sometimes reluctant to invest in career development because of the transitionary nature of employment in investment banking.
Bloch says: 'Institutions often spend a great deal on development at the junior level but as someone moves up the career chain very little support is offered.
'Banks are stuck in the sink-or-swim mind-set. The perception is that if someone is talented and worthy then they will succeed, if not they will fail. City of London institutions are characterised by very talented people, but they don't always work well with others. Coaching can help to alter their management style.'
Bloch is currently working with one City of London institution in developing a unique grooming programme for the firm's high-flyers. Its aim is to target early on those moving up through the ranks, allowing for the best to get better by modifying unproductive behaviour.
Hard-line attitudes have started to shift in finance and flexible solutions implemented more. The competitive market for human capital has forced institutions to consider the costs of human wastage and consider a more receptive approach to the needs of employees.