Friday, July 15, 2016

Who Attracts the Best Talent?

Financial institutions are scarce on LinkedIn's new talent-attraction list, but Goldman Sachs slips in at no. 27 on its U.S. list
Which companies around the globe attract the best and the brightest?  Where do the most talented want to work?  What are the coveted places for those who are select their employers, before employers select them?

LinkedIn used its stockpile of data from over 400 million users and took a stab at creating a list. It used data analytics and data science. It tapped intuition and made assumptions (many of them). Here's one:  Companies that attract the best talent are companies that get the most job requests in LinkedIn or garner the most attention in LinkedIn updates or communications. 

In early July, it presented the results of the project, its first such effort. Its data and models produced a ranking of top companies or financial institutions it contends are successful in attracting the best talent. Some of the familiar names (Apple, Google, Amazon, Facebook, e.g.) led the top of the list.  Financial institutions were few in number, and there might be reasons.

Be mindful that a broad survey or analysis of the kind LinkedIn led could lead to possible false impressions or misrepresentations. (What is the real definition of "talent"? Aren't many talented people recruited without their making inquiries in LinkedIn?)

Yet the final list included names we would expect in 2016, names of companies that pay well, that have ambitious plans to grow and make a societal difference, that offer pleasing perks, and that present interesting problems for smart people to find solutions in their first few days on the new job.

Up front, LinkedIn needed to define top talent and best talent.  It then assembled a set of assumptions to define what it means to attract talent.   Are the companies at the top of its list attracting employees who sported the highest GPA's, who performed beyond expectations during internships, who have in-depth levels of skills in technical areas, and who have demonstrated qualitative skills (drive, energy, work ethic, leadership, etc.) in previous work assignments? Are they MBA's from top business schools, those who lead class discussions in investment analysis or chair the finance club?  Are they mostly computer science whizzes from elite engineering schools?

There's a global list and a U.S. list. Apple, Salesforce, Facebook, Google, Amazon, Microsoft, Uber, Unilever, and Coca-Cola and Oracle appear on both lists.  In the U.S. compilation, you see Uber, Stryker, Netflix, Under Armour and Tesla. Are we not surprised? Don't talented people want to work at companies making a mark or sitting on the cusp of extraordinary growth? (Many of the companies on the global list are Consortium sponsors.)  Few financial institutions appear on the list, and we might be able to rationalize why.

LinkedIn explains the criteria clearly, even if many will argue about the flaws (as there are in just about all lists published and promoted widely).  LinkedIn has access to voluminous data--from companies, recruiters, employees, industry leaders, potential hires, students, etc.  It culled the data, deciphered trends, clicks and activity from its users, put together a set of rules and used results to present a list.

Its premise for talent-attraction is based on (a) reach and clicks (how well known the company and its brand are) (b) engagement and interaction (how often LinkedIn users connect with the company in some form), (c) job interest (how often LinkedIn users explore or seek employment at the company), and (d) staying power (how long do employees remain at the company).

Some filtering of data must have been necessary, because those who lack required skills or talent are also clicking and exploring and pursuing job opportunities at many of the same companies.  And often the best are discovered and tapped in other ways or through other channels.  They need not spend much time completing job applications discovered from an exploratory moment in LinkedIn. But LinkedIn asserts, if thousands are exploring employment opportunities at Google, then Google's chances of hiring the best increase.

Now what about financial institutions?  Why don't they crowd or dominate the list in the way they might have in the 1990's or mid-2000's, when art-history and music majors expressed interest in gaining a spot in an investment-banking class at, say, Credit Suisse or Lehman Brothers?

Why are Goldman Sachs (no. 27 on the U.S. list ) and Morgan Stanley (no. 40 on the U.S. list ) the only two large financial institutions on the list?  Do financial-service companies (banks, funds, institutions, insurance companies, and asset managers) not attract top talent annually from undergraduate and business schools or from other industries?  Are this generation's brightest choosing careers mostly in technology, new ventures or less-bureaucratic and less-hierarchal organizations?  And are work-life-balance issues factors?

What implications can we make from LinkedIn's efforts to highlight the paths that talented people take in pursuing opportunities or employment?

1) Investment banking might still be a lure.

Goldman and Morgan appear on the list, partly because of the continuing attraction of investment banking.  They are no longer "pure investment banks." (They are officially bank holding companies.) But in some circles, they are considered major investment banks before they are labeled commercial banks.

Wells Fargo, Citi, or JPMorgan Chase with similar brands and, in some cases, strong financial results might easily have supplanted Goldman and Morgan.  With Goldman and Morgan Stanley, there is the apparent direct tie (and heritage) to investment banking, where compensation packages are still lucrative and deals, transactions and trading still cause surges of adrenaline.

2)  The steady transformation of financial services (including the impact of regulation) can be daunting.

With new regulation keeping banks strapped in many ways, talented people might be restricted from being creative, expanding on bold ideas, and coming up with new products.  Regulated financial institutions have restrained balance sheets and thousands of pages of new rules to adhere to. 

3)  The survey, with some flaws, could still have omitted some institutions or miscalculated "talent attraction."

Let's consider that banks such as Wells Fargo, hedge funds such as Bridgewater and Citadel and private equity firms such as KKR, Carlyle and Blackstone indeed attract the financially talented.  How do they not appear on the lists? In some cases, they aren't household brands (one of the criteria). In other ways, they identify talent in stealth ways and hire in limited numbers.  And they may have a limited presence in LinkedIn.

4) The fintech revolution might, in fact, even its early unproven stages, be enticing talent that might otherwise have gone to work at Charles Schwab or Bank of America.

New companies that fit the mold of "fintech" didn't ease onto the lists. A few notable ones (Square) did. Others might show up on lists in the years to come. SoFi is a prominent example. But the wave has come and is far from peaking. They have affected talent retention at banks, which are suffering anxiety trying to determine a counter-strategy:  Beat them or join them or invest in them?

An MBA graduate (of a Consortium school?) with a concentration in finance and an extensive background in computer science is just as likely to want to explore working for a transformative, business-model-breaking fintech company as she would want to start out as an associate in project finance at Deustche Bank.

So the list is out, slowly slipping onto the digital screens of young professionals (and those more experienced).  It will likely be an annual LinkedIn roll-out, and no doubt it'll polish and update the criteria next year.

One special note:  Microsoft, which just announced its planned acquisition of LinkedIn, appears on the list.  LinkedIn list organizers unabashedly said they will keep the new parent on the list this year. For now, at least.

Tracy Williams

CFN:  The Fintech Revolution, 2016
CFN:  Financial Technology and Opportunities, 2014
CFN:  Bitcoins:  Embrace or Beware, 2014
CFN:  High-Frequency Trading:  What's Next? 2014
CFN:  Fortune's Best Places to Work, 2016

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