Tightening of non-competes despite a collapsed finance job turnover?
In a surprising turn of events, the investment banking industry has experienced a significant shift in its approach to employee retention and recruitment this year. Historically known for a high level of employee turnover, the sector is now becoming more protective of its workforce.
Bulge bracket investment banks have taken a firm stance against poaching of their junior bankers, forcing the private equity industry to reconsider its recruitment efforts. This change in policy has led to a material mismatch between candidate expectations and the going market rate, as many candidates are refusing to consider alternative career moves.
The banking industry has witnessed staff turnover falling to all-time lows this year. In an environment of low employee turnover, only those who receive impressive offers are moving jobs, leading to a sudden outbreak of loyalty among both employees and employers.
Employers in the financial sector have shown increased interest in strengthening non-compete clauses and extending gardening leave provisions in employment contracts. This move is aimed at better protecting business interests, preventing sensitive knowledge transfer to competitors, and securing a competitive advantage amid intensified market competition and employee mobility.
Notable names such as Jefferies, Man Group, and Citadel have tightened or extended non-compete clauses and gardening leave provisions in their employee contracts. The private equity secondaries team at Jefferies, research quants at Man Group, and similar high-performing employees are in high demand, but are finding that their job offers come with tighter "golden handcuffs" or non-compete clauses.
UBS, a bank, has undershot its planned headcount reduction and had to make compulsory redundancies. This unfortunate event underscores the current trend of increased job security for employees in the financial sector.
Interestingly, hedge fund managers with big losses are receiving the most job offers, suggesting that the industry values experience and performance over short-term financial success.
Recruitment stocks have reported on this trend, noting that staff turnover in the banking industry has been consistently low. This shift in the industry's dynamics, marked by increased loyalty and job security, is a departure from the past and a sign of a maturing investment banking sector.
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