Morgan Stanley, BofA have the same problem: no one's leaving
2023 has been a funny year in investment banks. After a poor bonus round for 2022, it might have expected that people would move in search of more lucrative seats. Instead, 2023 has been characterized by fear of moving into a new role.
"Really high performers are in demand across the Street, but we have actually had the opposite issue: very low attrition," said James Gorman, CEO of Morgan Stanley today. Morgan Stanley should probably be "flattered" by people's unwillingness to move on, Gorman added. In fact, it's problematic: so few people moved on voluntarily that Morgan Stanley had to "take the initiative" and cut 3,000 people earlier this year.
Morgan Stanley isn't the only bank with this problem. Bank of America has also been struggling against people's unwillingness to go somewhere else. CEO Brian Moynihan said yesterday that BofA still has "record low attrition" and that this is why it too has been removing thousands of jobs after last year's hiring.
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People's unwillingness to look for new jobs hasn't gone unnoticed by recruiters. Respondents to our recent hiring sentiment survey said the supply of candidates is at "rock bottom", that people seem "more choosy" and that "quality applicants" have become harder to come by. Goldman Sachs declared yesterday that it received 1 million applications to its jobs last year; presumably that's down in 2023.
Consulting firms have been struggling with a similar dynamic. A KPMG insider told the Financial Times last month that there's been a decline the consultant “attrition rate” because consultants don't have any other jobs to go to. They added that this is problematic because KPMG's 2023 hiring plans had been designed around a higher expected level of staff departures.
When no one leaves voluntarily, people must be made to leave involuntarily. If everyone clings to their seats, things stagnate. Gorman said today that new talent must be brought in to "keep growing the place."
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