There is no hotter topic in business than the Great Resignation — a term coined by economists for the mass exodus of employees from their jobs that began in 2021. The disruption caused by the global pandemic enabled many employees to rethink their careers, work/life balance, long-term goals and working conditions. The result? A large percentage of workers quit in search of a better gig.
Right now, with record low employment, people are no longer competing for jobs and companies are desperately trying to find talent to fill open positions. The immediate outlook is not great.
According to the Microsoft 2021 Work Trend Index, 41% of the workforce is considering leaving their current employer. Managers are understandably frantic. In the meantime, the Bureau of Labor Statistics has reported that there are 10 million jobs that are open. So, what does this trend mean for the financial services industry?
In mortgage banking, most managers believe that the key to retaining originators is all about money, i.e. the more a company pays, the greater likelihood a salesperson will stay at a firm. The rise in up-front bonuses and guarantees reflect how widespread this strategy is in our industry.
While back-office efficiency comes into play as a factor to close the deal, most recruiting efforts in mortgage sales come down to income and compensation.
The pandemic and demographic shifts have accelerated the issue of finding good sales talent, but the reality is that the very nature of work is changing dramatically. These external forces have only compounded the challenges lenders face when managing their workforce. The dominant structure today is still characterized by top-down management and a controlling, bureaucratic approach. Most managers view remote working in a negative light because they cannot manage employees as easily.
What Younger Employees Want
Traditionally, work has been seen as something that a person does and not what they are about. In the past, your personal life was separate from your occupation. Companies endorsed this separation by providing employees with job security. My father’s career reflected this promise where he worked at RCA for 40 years until he retired. This degree of job security simply does not exist anymore in the business world and mortgage banking is no exception. Jobs have become two- to three-year commitments.
Companies come and go and employees are left to move on when businesses inevitably collapse. Managers might have stock options or equity in a firm and a company’s demise isn’t as impactful to them (although it might mean a lifestyle change). For employees, it is a different matter. If their employer goes under, workers are often significantly impacted and can even lose their homes. No wonder workers are rebelling and saying the equation doesn’t work for them anymore. Employees want more.
The proof of a new work equation is that the U.S. Bureau of Labor Statistics states the average job tenure for 55- to 64-year-olds is 9.9 years, but only 2.8 years for workers 24- to 34-years-old. Younger employees understand that the trade-off of their time at a job must have a greater benefit than just wages. They want growth opportunities and career development. They want to learn and grow — life is more than a 12-hour-a-day job.
On the other hand, management is faced with how to win in a competitive marketplace. When budget cuts come up, the first thing on the chopping block is often career development and training initiatives because managers argue that they can’t afford it. Many managers also feel that if they train employees, their investment will be wasted because workers will leave to go to a higher-paying position at another company. In my opinion, if you don’t put career development and training in place, your employees will leave regardless for greener pastures.
A Winning Retention Strategy
For lenders that want to succeed in 2022 and beyond, it is time to rethink employee training and development. Instead of viewing it as a line-item cost, training and career development is really an investment in attracting and retaining your best employees. This is a significant mindset change but moving forward, it is the only way companies are going to hire and keep younger employees.