DISSERTATION: Banking finance industry recruiting young graduates after recession – HR IN BANKING

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TABLE OF CONTENTS

EXECUTIVE SUMMARY / ABSTRACT. 3

AIMS & OBJECTIVES.. 4

  1. INTRODUCTION TO BANKING & FINANCE SECTOR.. 6
  2. LITERATURE REVIEW… 10

2.1 Introduction: 10

2.2. Sub-Prime Crisis. 11

2.3 Development of HR Function: 12

2.4 HR in Banking & Financial Industry: 14

2.5 Tragetjobs Survey: 16

2.6 Prophet’s Research: 30

2.7 Fresh Minds’ Research: 32

2.8 Outcome of Literature Review: 33

  1. RESEARCH METHODOLOGY. 34
  2. PRIMARY RESEARCH.. 36

4.1 Analysis of young mentality: 36

4.2 Evaluation of HR Policy & Strategy: 44

  1. DISCUSSIONS & ANALYSIS.. 50

5.1 Need of Young talent: 50

5.2 HR Activities to attract young talent: 51

5.3 Strategies for recruitment of young talent: 54

6.CONCLUSION.. 56

7.RECOMMENDATION.. 59

8REFERENCES.. 62

  1. ANNEXTURE.. 65

EXECUTIVE SUMMARY / ABSTRACT

The dissertation is an examination of the banking and finance sector companies ability to attract young talent in the coming years with the back ground of recession and its associated fallouts. With this back ground this study is highly relevant in the present context as the banking and services industry still needs young talent even after axing and hence presumably with a surplus of experienced talent already in the market. Inevitably the crisis shall pass and the sector needs to grow and for this they need to have their most important resource namely the people who have sufficient talents. These, in the long term at least, could only come from the younger generation who are coming out of college with better skills as the teaching and learning methods, and styles are getting more relevant and industry specific.

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Assignment writers UK prices

Economic crises are not new and have come and gone with a cyclical efficiency taking along with it many major companies but the recent crisis has tarnished the image of finance and banking sector. The study intends to research into the attitudes of graduate’s mentality towards the financial sector companies and how these companies can attract young talent with their human resources policies.

This dissertation will be conducted into two parts. The first part of the research will concentrate on the need for young talent in the industry and the present human resources policies and practices adopted by means of graduate recruitment schemes and their effectiveness. This will be done through a critical review of the literature, its analysis and discussion.

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Assignment Writers UK

In the second stage of the research a two part survey will be conducted on a sample of present MBA students from the University of Sunderland on their attitudes towards a career in banking and financial services companies. The first part will be quantitative in nature and will be administered through online questionnaires to be sent to a sample population. The second part will be qualitative questionnaire soliciting the responses from the current students on how the banking and financial sector can attract more talent in the present climate. Both data will be analysed using statistical methods.

From the literature review and the survey results recommendations will be made to specific areas of human resources practices on how the banking and financial services sector can improve their graduate recruitment schemes.

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AIMS & OBJECTIVES

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Assignment writers uk

 Aims: How can the banking and the finance industry attract young graduates, after a year of recession linked negative press coverage and public animosity towards banking and finance sector?

The economic crisis of 2008, which is more or less accurately blamed on the risk taking of the finance industry, has given it very bad press coverage in the last one year. In wake of the crisis, the dissertation is an examination of the banking and finance sector companies ability to attract young talent in the coming years with the back ground of recession and its associated fallouts.

Objectives: Based on aims of the dissertation, following objectives has been framed for the dissertation:

  1. Study and understand the need for young talent in the banking and financial sector in the UK.

Now global economy is under recovery and stabilization phase from the impact of the crisis of 2008. Demand of the banking and financial sector has increased as the result of increase in the business activities. In view of the above, this part of dissertation will focus on the need of the young talent in the banking and financial sectors in the UK in the post crisis era.

  1. Critically evaluate the human resources activities in attracting and recruiting talented graduates.

As global economy is under recovery and stabilization phase, business opportunity for the banks & FIs has increased significantly. In order to tap the opportunity, there is need of young talents. To attract young talent is the major challenge for the HR functions of the firm. In light of the above, this part of the dissertations will evaluate the human resources activities in attracting and recruiting talented graduates in post crisis era.

  1. Conduct an analysis of the mentality of the graduates towards the banking and financial service companies in the pre and post recession periods.

The crisis of the 2008 has significant impact on the banking and financial sector. It has witnessed fall of the many investment banks and as counter action many banks & FIs has decreased the number of employee and also pay cut. To know the impact of the crisis on the mindset of the graduates, transactional analysis has become necessary. In view of the above, this part of the dissertation will conduct an analysis of the mentality of the graduates towards the banking and financial service companies in the pre and post recession periods.

  1. Study and evaluate the human resources policy and strategy changes required to attract young talent into the industry.

HR policy of the Banks & FIs is based on the competitive package in the industry. Looking into shortage of the employee in the banking and perceived shift in the career choice among the students, the present HR policy and strategy is not sufficient. In view of the above, this part of the dissertation will evaluate the human resources policy and strategy changes required to attract young talent into the industry.

  1. Recommend strategies in specific areas of human resources policies to recruit young talent in the post recession period.

Out of the many functions of the HR, recruitment of the young talent has become major challenge for the HR. This part of the dissertation will look in to strategy in specific areas of human resources policies to recruit young talent in the post recession period. Same will be done in light of the literature review and findings of the project.

The scope of the project study is limited to the major banking and financial services sector in the United Kingdom. The study will analyse whether there is any change of mentality of graduates towards the sector and how this can be changed over time.

1.    INTRODUCTION TO BANKING & FINANCE SECTOR

Banking and Financial Sector includes commercial banks, investment banks, commercial banks and building societies, broking firms, independent financial advisers, insurance and reinsurance companies. UK’s banking sector is world’s third largest after US and Japan in term of efficiency, dynamisms and return on capital. It is catering the need of 95% of the UK population and employs 3.5% of UK’s total workforce (Kali, 2007). During the decades ended 2005, it has witnessed three folds increase in assets to €5526 billion whereas lending and deposits has increased two fold to €3284 billion and €4984 respectively. Financial sector’s productivity has grown three times in compare to growth in the economy. During 2004, banking and financial sector has contributed £70 billion to the economy which is equivalent to 7% of country’s GDP. It is considered as major international centres for investment, private banking, cross border banking and accounts for a fifth of global international lending.

Deregulation, Competition and Consolidation

UK’s banking industry has seen a radical transformation with market liberalization by deregulation and the resultant competition. From the very beginning, building societies plays significant role in offering banking and financial services. Building societies was permitted to offer financial and insurance services and allowed to convert into banks by the Building Societies Act of 1986. Many life insurance firms moved into banking and banks diversified into mortgages and insurance. Mergers and acquisitions has been the other transformational force in the UK banking industry.

Till the late 1960s, retail banking in UK was dominated by the ‘big five’; Barclays, Lloyds, Midland, National Provincial and the Westminster Bank. In due course of time, Midland Bank was acquired by Hong Kong and Shanghai Banking Corporation which resulted in current HSBC. National Provincial merged with National Westminster and was later acquired by Royal Bank of Scotland. During same period, Halifax and the Bank of Scotland merged to form HBOS. As the result of the diversification into new areas, cross sector merger activities has started. As the result of this, the bank entered in allied activities like life insurance also. As the result of this, number of the banks declined but the average size and financial strengths of banks increased. The numbers of building societies, which account for around a fifth of personal deposits and mortgages in the country, have decreased.

Technological Developments

Last two decades has witnessed changed the way the banking and financial sector was working as the result of development in technology. Development in the field of computer technology, communication technology has lead to emergence of a new type of the information technology. Information technology has enabled the banking and financial sector to leverage products and services.

UK’s banking & financial industry has also leveraged the benefits of the technology taking cue from the global industry. Research firm ‘Datamonitor’ has reported following facts which reflect the depth and breadth of the technology adoption in UK banking and financial industry.

  • UK’s banks currently lead Europe in IT spending with 2006 figures of USD 23 billion.
  • For 2004 – 2008, the compound annual growth rate (CAGR) of IT spending by UK banks is 8.1 %.
  • The emergence of e-banking technology is the biggest single factor driving the growth in European banks’.
  • It spending and the online channel is the foremost channel in them of IT investment growth in 2006.
  • Most of the banks are offering products and services through multi-delivery channel like Internet, ATMS, call centre etc.
  • During 1994 to 2004, the ATM network doubled to 50,000.

Continuous innovation and R&D is required in the field of technology in order to leverage the power of the technology. Mobile Banking is new development in the field of the technology implementation.

There has been overall decrease in number of branches of UK banks over the past decades. Many banks like Abbey are planning to add new branches whereas several banks are upgrading their existing branch networks by implementing new technology. Core banking is an area where focus on the implementation of the technology was lacking. Few years ago, banks were reluctant to upgrade their age old solutions due to the inherent complexity of a core banking replacement exercise. As the result of this, turnaround time (TAT) to design and launch new products was over nine months.

Over the past year, there has been an urgency to evaluate potential solutions to resolve the issue of legacy systems in UK banking. This was due to global awareness of risks posed by legacy solutions and increased competition. Post acquisition of Abbey, Spain’s Banco Santander replaced Abbey’s legacy system with its more Partenon core-banking platform. It was followed by the rollout of Partenon with the launch of new corporate Intranet and Internet services. The Partenon platform is being introduced at Abbey in phases through 2006 and 2007. Further, Abbey introduced a single customer database.

Modern core banking solution has many advantages over the old legacy system. It provides flexibility as well as reduces turnaround time (TAT) to launch new products in days. Francisco Gomez-Roldan, CEO, Banco Santander, says: “We’re introducing better analysis and information on product profitability, sales capacity and productivity by channel, region and branch. This approach is enabling us to focus our efforts on reducing under-performance, targeting incentives and managing performance across the business more rigorously.”

UK’s banking industry having recorded rapid growth in the past decade is poised to grow further. There is cut throat competition and merger-acquisition activities in this sector. AT Kearney has done study on banking sectors in 2005 which forecast a drastic reduction in number of operating banks in Europe by over two-thirds within the next 10 years. To compete successfully, meet regulatory requirements and satisfy customer needs, banks need to invest in technology not only in deploying peripheral applications, but also in modernizing obsolete core solutions.

Few facts about UK Banking & Financial sector are as under (Kali (2007) :

  • Banks and financial services provide employment to over 1 million people.
  • Banks and financial services had contributed £70bn to the UK’s national output (6.8% of GDP) during 2004. This provides significance of the banking and financial sector in UK economy.
  • Banks and financial services provide 25% of total corporation tax to the UK Government which is another evidence of the importance of the banking & financial sector in UK economy.
  • Few years ago, the UK retail banks was having more than 125m accounts, was clearing 7bn transactions a year and was facilitating 2.3bn cash withdrawals per year from its network of over 30,000 free ATMs. It provides cost-effective banking services to 95% of the UK’s population. This provides depth and breadth of the UK banking sector.
  • In 2005, 24m personal customers registered to access their bank accounts online, while 42 million are registered to access their accounts by telephone. This provides implementation level of the technology in the banking sector.
  • UK banks have opened more than 1.8 million post office accessible basic bank accounts during April 2003 to March 2007.
  • UK banks contribute over £100m per year to charities and local community initiatives. It reflects the social commitments level (CSR) of the UK banks.
  • Five UK banks got place in the top 15 firms listed n the DTI’s recent 2006 Value Added Scoreboard of Wealth Creating Companies which is symbol of international recognition.
  • The value of foreign exchange business passed through London every day is more than £560bn ($1 trillion).

The industry was badly hit by the recession of 2008 and has witnessed the fall of many institutions like Northern Rock. During the crisis, most of the firms have decreased the number of the headcount followed by pay cut. Now, the global economy is under recovery and stabilization. Business activities level has increased significantly leading to increase in demand of the banking and financial sectors. In view of the increase in the market potential, the UK banking & financial is poised to grow.

2. LITERATURE REVIEW

2.1 Introduction:

Young talent is required in every industrial segment especially the services industry where human resources have the greatest importance. According to Yatoo (2001) the service industry is the only one segment which considers or should make their human resources most important resource as for other industries the employees working for them are pretty much an addition to their other resources such as machinery, equipments, buildings, suppliers, finances etc. This is especially the case in banking and finance sectors as they are in need for a huge talent pool of capable, energetic, ambitious, risk taking and young employees who can manage other resources properly (Sreenivas, 2006). One of the ways in which the industries attracted young talent is through their graduate recruitment schemes where they try to attract the just graduated, talented but inexperienced job seekers.

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As seen during the growth years of the finance and banking industry there was an attraction from the talented young graduates with back grounds ranging from IT to MBA’s to the growing banking and finance sector as their chosen career path. The main attraction during the heady days of the financial services sector growth was the perceived glamour and the amount of money the City bankers were making through bonuses. During the better days there were no finger pointing towards the sector, or companies for their enormous salaries and bonuses, because these were just subhead lines to their growth curves and every segment enjoyed growth even if in lesser figures.

The economic crisis of 2008 which is more or less accurately blamed on the risk taking of the finance industry has given it very bad press coverage in the last one year. The crisis may or may not be due to the bankers but it is definitely true that there is public anger against this particular sector and the people who manage those (Woods, 2008). Many banks and financial institutions have had to take the blame for the crisis either rightfully or other wise and some of the industry’s major brand names have been tarnished in the process of taking tax payers money to survive. To top it all up the players in the financial sector has in the eyes of the press and public gone back into the same sort of management styles of big bonuses (Woods, 2010), again just when the world seems to be getting normal and when the other segments of the industry such as housing, automobile etc are still trying to survive for no fault of theirs. There are already news headlines of decreasing appeal among the young graduates towards the financial sector companies (Inman, 9th Feb 2010, financial news).

2.2. Sub-Prime Crisis

Subprime crisis started with subprime lending (Fabozzi & Mola, 1999) in US and spread to world through instruments like MBS and CDO, other derivatives products etc. Housing market in US was booming and it has shown price appreciation of 124% during 1997-2006. It was also supported by US government and Federal Reserves by reduction in rate of interest from 6.5% to 1%. As return on investment in housing sector was more than rate of interest charged by banks, investor found it easy way to make money. In due course of time, they started getting refinance of their home or spending backed by price appreciation in value of security. These banks also ventured into sub-prime lending i.e. lending to people with poor credit worthiness. Investment banks issued mortgage based security (MBS) and collateralized debt obligations (CDO) by securitization of these loan portfolios. Rating agency awarded investment grade for these instruments. They took credit default swap (CDS) from the insurance company like AIG to mitigate default risk. As the result of it, banks/FIs found it as attractive option for investment and started investing in it. In due course of time, banks/ FIs from other countries like United Kingdom, France, Japan, Germany etc. got involved into it. By this way money from world economy was flowing into US economy. As on March 2007, subprime mortgage was having total exposure of $1.3 trillion.

From 2006-07 onwards, rate of interest started increasing and housing price started decreasing. Most of the mortgage loan was given on adjustable-rate mortgages (Jansen & Nick, 2009). So, borrower found it difficult to discharge their liabilities and started defaulting on the loan commitment. As the result of this, everyone in the chain got affected. AIG and other insurance company too failed to meet their obligation as claim was more than their capital base. It was a worldwide phenomenon and resulted into significant slowdown in economic activities. Banks/FIs like Goldman Sachs, Morgan Stanley, Northern Rock, Bear sterns, Lehman Brothers, Merrill lynch, Fannie Mae, Freddie Mac, etc. either cease to continue business or converted into commercial banks or was nationalized.

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The subprime crisis is a classical example of failure of risk management systems. Banks got involved into subprime lending which means lending to customer with poor credit history which was having higher credit risk. Investment banks created high leverage in the system. When borrower started defaulting from the repayment, banks ceased to continue the business. Before subprime crisis, Banks/FIs were having more exposure to housing sector i.e. lack of diversification. By March 2007, subprime mortgage was having total exposure of $1.3 trillion but neither Banks/FIs nor regulator took any strict measure i.e. lack of control and monitoring.

There are many reasons behind subprime crisis. First of all, it started with lending to the subprime borrower having poor credit history. Secondly, Investment banks securitized these assets and issued MBS and CDO which was assigned investment grade by credit rating agency. Thirdly, Protection buyer of credit default swap like AIG gave protection more than their capital base. Fourthly, Investment banks created SPEs for issue of MBS & CDO and these were shown as off balance sheet item. As the result of this leverage in the system increased manifold and same went unnoticed by regulator. Regulator also failed to notice such a risk exposure. Above mentioned reasons are considered as cause of subprime crisis and its effect is well known. It lead to collapse of once mighty banking institutions such as Lehman Brothers and the government led bailouts of American International Group in United States, buyout of Royal Bank of Scotland by Lloyds TSB in UK. These investment banks were considered highest paying organizations. Negative press coverage, mass level lay off and pay cut has also tarnished the image of the banking and financial sector. Overall, the subprime crisis of 2008 has diluted employer’s brand of the banked and financial industry.

2.3 Development of HR Function:

The management theory has evolved through several distinctive stages including the classical, the behavioural, and the contemporary management perspectives (Schermerhorn, 2008). In similar pattern HR has evolved over the period through several distinctive stages. These stages include the personal management, the human resource management and the strategic human resource management (Tesone, 2008).

Personal management is 1st stage in the development and it was effective until the 1960s. According to it, labour was considered as production cost. The work was divided into different groups based on job profile. Step-by-step guidelines were given so that even unskilled workers could perform the job properly. According to the personal management, an organization should use most economical ways to do a job. The main functions of personal management was recruitment, job analysis, performance reviews, wages, benefits, training, record keeping, and labour relations (Harrell-Cook, 2002)

The HRM is 2nd stage in the development and it emerged in 1960s when it started realizing that employees are useful assets for the organizations. According to Miller (1989), a HRM approach provides balance between employees of an organization and strategic direction of the firm. Now employees were considered important not only in reducing cost but also in improving quality of products and developing new ideas. Organization started giving focus on training, motivation and development of employees. It considered employees as resource instead of cost centre (Michael, 2006). Employees were considered as an important resource of the organization called human resource. The major functions of the HRM are- strategic business partner, change management, employee champion and administrations.

Strategic human resource management is 3rd stage which has emerged in 1990s. The factors which lead to development of strategic human resource management are intense competition, technological developments and demographic changes which made the business environement more complex. This lead to loss erosion in traditional source of competitive advantage like cost leadership and differentiation in markets (Porter, 1980). As the result of this, the organization started concentrating on alternative ways to maintain their competitive advantage. Strategic resource management is one of such area which can provide competitive advantage to the organizations. In this employees are considered as strategic partner to business and HR policies and practices are linked to the objectives of the organization. The major functions of the strategic human resource managements are: change management, knowledge management, leadership development, managing innovation, human capital and talent management etc.

According to Brockbank (1999), there are two types of HRM perspective: operational and strategic. Operational HRM activities routine work like day-to day delivery of HR practices. Strategic HRM activities are complex and involve long term, comprehensive and planned decision. Strategic HRM is provides competitive advantage to the firm either reactively or proactively. In former mode, HR practices are aligned with the company’s business objective and facilitate change. In proactive form, HR participates in strategic development of the organization by creating culture of innovations and linking of organizational value with the external environment. Looking into importance of the HRM, it becomes necessary to analyse the HR functions in the banking and finance industry. Further, the research topic is also related to HR functions of the banking and financial sectors.

2.4 HR in Banking & Financial Industry:

HR policy in banking and financial industry is in tandem with other industry will little variation. It is characterised by harmonious industrial relations and was unaffected from the “British diseases” of industrial action and demarcation issues associated with parts of manufacturing industry (e.g. Batstone, 1984). From its beginning, banks have promoted unitarism with focus on teamwork, shared interest and loyalty, high commitment level beyond the cash nexus (Fox, 1966). Its approach to the employee relation is passive in nature. Many banks are having well defined career path for its employee with promotion scheme in the place. It is further supported by an underwritten agreement with major UK banks on no poaching.

Retail banking is labour intensive industry and it contributes to 70% of the total operating costs. They are mainly involved into offering day to day requirement of the existing customers like fund transaction. As they are not involved into marketing of the products and services to tap new customer base, they are considered overhead rather than a resource (Morris, 1986, p.22).

Until the 1980s, competition level in banking industry was limited and banks were operating as an oligopoly. Government was concern about economic stability with the help of cap on lending and interest rate. The oligopoly fed through to the management of staff as national wage bargaining minimised competition for labour. However, deregulation of the industry during eighties led to fall of national system and a questioning of old employment practices.

In current scenario, banks and financial sector has been experiencing deregulation, increasing competition, technological innovation and an increasingly discriminating public. As the result of change in the industry scenario, the HR policy of the banks has also changed in tandem with other industry. The employee relations strategies like industrial relations, communications, training, remuneration policy, etc has witnessed a turnaround change. Banks has moved to market driven organizations and employee is considered as resource rather than overheads (Wilkinson, 1990).

Historically, employee relation in Banks is considered as a ‘second order’ strategy, purely facilitative and not fully integrated into overall business strategy (Purcell, 1983). Employee relations was not at the priorities level of the top management of the banking and financial sector unless there is unrest at mass level. However, in due course of the time, there is gradual increase in the level of the personnel professionals at Board but still it is in minority. Lack of serious consideration of employee relations has also been said to owe something to the dominance of financial control at this level and lack of union influence (Batstone, 1984). Many people including Walton (1985), has emphasized on active co-operation of employees in industry as they has visualized shift away from emphasising control to one of commitment.

Retail banking is offering limited products; hence quality of service offered by front office employee is vital factors which influence customer decisions for banks selection. Traditionally, front office staff has not been equipped with customer contact skills but for technical and administrative ability. In view of the latest change in the banking and financial sectors, banks need greater commitment and co-operation than mere compliance from staff. To meet the challenge, new approach of HRM has developed in banking sector also. New HRM approach is employee centric which considers employee as resource. Each and every process of the recruitment, induction, training, appraisal rewarding of individuals to an overall set of articulated beliefs of organisation’ (Hunt, 1984, p.16)

From the above discussion, it can be concluded that in banking and financial sector also, HR policy has witnessed sea change. Now employee is considered as resource rather than overhead. HR policy in the banking & sector is also at par of the other industry.

Banking and finance industry recruiting young graduates after recession

2.5 Tragetjobs Survey:

The Targetjobs has conducted employer of choice graduate survey 2009 over 1,470 students and graduates who stated that the insurance, retail banking and financial services sector was one of the areas that they were interested in working in. The survey report looks at the demographics of those wishing to work in the insurance, retail banking and financial services sector, their job-seeking behaviour, and their attitudes towards employers operating in this sector. It also shows the ranking of the top organizations for the Targetjobs National Graduate Recruitment Awards for the sector. Overall, the survey has reflected in the mindset and thinking process of the graduates in choosing careers in banking and finance sector in wake of the crisis of 2008.

Outcome of the Survey: The result of the survey is presented below by using statistical tools like Pie-chart, bar-graph etc.

Demographics: 43% of the survey participants were male whereas 57% of the survey participants were female. Pie-chart for the gender of the survey participants are given below:

Graph: Showing Pie-chart of the gender distribution of the participants

The gender split of those interested working in insurance, retail banking and financial services is broadly similar to the overall sample. Pie-chart for the gender of the participants interested in insurance, retail banking and financial services are given below:

Graph: Showing Pie-chart of the gender of the participants interested in insurance, retail banking and financial services.

Those wishing to work in insurance, retail banking and financial services are significantly more likely to come from a non-white ethnic group, especially Chinese or Indian, than the overall sample. Bar graph of the ethnic group of the participants of survey is given under:

Graph: Showing ethnic Group of the participants of the survey

Those wishing to work in insurance, retail banking and financial services are most likely to study business and administrative studies; mathematical sciences; or economics and politics. Bar graph of the subject studied by the participants of survey is given under:

Graph: Showing subject studied by the participants of the survey

Graduation year

Students in the final year of their degree are most likely to be interested in this sector. Worryingly for a sector where early experience and applications are important, students in the first stages of their degree (i.e. those graduating in 2009 or later) are less likely to be interested in insurance, retail banking and financial services than other sectors – perhaps pointing to a lack of early awareness of this sector.

Job seeking and attitudes:

Respondents’ views of the current market conditions: For the first time in the history of this survey, students were asked about their confidence in the market. Further, they were asked to rate their view of current market conditions as ‘healthy’, ‘reasonable’ or ‘tough’. 59 per cent of those surveyed responded to this question and the views of those interested in insurance, retail banking and financial services broadly mirrored the overall sample. Respondents have mixed views about current market conditions – 40 per cent feel that conditions are tough, while 46 per cent feel that conditions are reasonable. Only 14 per cent feel that current market conditions are healthy – and those interested in insurance, retail banking and financial services are more likely than average to think that market conditions are tough. Bar graph of the respondent’s view on the current markets is given below:

Graph: Showing respondent’s view on the current markets conditions

How much you have looked into a career after university?

Response of the participants interested in insurance, retail banking and financial services are slightly better in compare to overall sample in regard to seriousness towards job hunting. This is because so many of those wanting to work in insurance, retail banking and financial services are in their final year, they are proportionately more likely to be at a later stage of the job-hunting process than the overall sample. They are therefore more likely to have started applying for jobs or to have actually secured a job than those interested in other areas. Graph of the response is given below:

 

Graph: Showing response of the participants regarding hob hunting

Other Industry: Students wishing to work in insurance, retail banking and financial services are also, quite naturally, interested in a wide range of other career sectors like accounting, investment banking, consulting, advertising, public sector etc. 47% of the respondents says that they are interested in accountancy & professionals services, 46% in investment banking and investment, 20% in the consultancy, 17% in adverting, promotions & marketing, 15% public sectors etc. Table of the response in percentage term is given below:

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Table: Showing other industries those wanting to work in insurance, retail & financial services are interested.

Organization awareness: The organisation with the highest awareness rating among those wishing to work in this area is Abbey- 56 per cent of those wishing to work in insurance, retail banking and financial services (a total of 820 respondents) have heard of the organisation. Abbey is followed by Barclays (54%), Alliance & Leicester Plc (51%), HSBC (50%), Lloyds TSB (50%) and others. Table for the response is given below:

Table: Showing organization heard of by respondent in percentage term

Organization heard of & applied to: Although Abbey is the organisation with the highest levels of awareness, the highest percentage of respondents have heard of and applied to HSBC, Barclays and the Royal Bank of Scotland Group. This may be because while selecting company to apply, students is more concern about pay package and job profile than other factors. Table of the response is given below:

Table: Showing organization heard of and applied to

Respondents’ first choice: HSBC is also the organisation that students in this area most want to work for – more than one in ten said that it would be a first choice employer, closely followed by Barclays (10%). Lloyds TSB, RBS and Abbey are some of the organization which is ranked after HSBC and Barclays. Table of the list of respondents’ first choice is given below:

Table: Showing organization of respondents’ first choice

One of several considered organizational:   The ranking of organisations that would be ‘one of several’ that respondents would consider working for broadly reflects the list of organisations that respondents have heard of. Barclays is at top of the list followed by HSBC, Lloyds TSB, RBS, Abbey & others respectively. List of the organization in preferential order is given below:

Table: Showing list of one of several considered organizational

Organization not considered for working: 11 per cent of respondents would not consider working for Capital One, followed by Alliance & Leicester and Norwich Union. Reasons for this may be many like low pay package, poor brand image, bad experience etc. Detail table with the list of organization which is not considered for working is given below:

Table: Showing list of the organization which is not considered for working

Excellent organization for working:

HSBC and Barclays are seen by a fifth of respondents as having an excellent reputation for providing quality work experience and internships. It is followed by RBD, Lloyds TSB, Abbey etc. This may be due to good pay-package, good brand image and career opportunity. List of the organizations that respondents have heard of and rate excellent for work experience and internships are given below:

Table: List of the organization considered excellent for working and internships

Organisations with the highest profile on campus: Regardless of which organisations students most wanted to work for, they were also asked about employers in the insurance, retail banking and financial services sector which have the highest profile on campus. This provides a simple measure of the visibility of employer brands on campus. List of such organization are given below:

 

Table: Showing list of organisations with the highest profile on campus

Factors for selection of the organization: Respondents were asked to rate the importance of different factors in terms of how the factors would affect their decision of whether or not they would like to work for a particular organisation. Respondents were asked to rank each factor on a scale of ‘very important’ to ‘very unimportant’. The table above shows the percentage of respondents who named factors as ‘very important’ when deciding which organization to work for. Response is presented with the help of below given bar-graph:

Graph: Showing important factors in deciding employer

Salary and training opportunities are the most important considerations for those wishing to start careers in insurance, retail banking and financial services. They also place more importance on the reputation of an organization than respondents interested in other sectors.

Survey conducted by the targetjobs has revealed the mindset of the young graduates towards the banking and finance sectors. Those wish to work in the insurance, retail banking and financial services are more likely to come from a non-white ethnic group and are most likely to study business and administrative studies; mathematical sciences; or economics and politics. Respondents have mixed views about current market conditions – 40 per cent feel that conditions are tough, 46 per cent feel that conditions are reasonable, only 14 per cent feel that current market conditions are healthy. HSBC and Barclays are the organization which is most preferred by the students in term of the careers. Pay package and training & development opportunities are the major factors considered by the students while selecting organizations.

2.6 Prophet’s Research:

Prophet’s carried out research to find out the customer experience in UK retail banks during 1st quarter of 2009. A group of the mystery shoppers were asked to rank the major UK banks i.e. HSBC, Citibank, Barclays, Natwest, Northern Rock, Halifax, Abbey, Alliance & Leicester, Lloyds TSB and Post Office based on four criteria namely branch experience, website experience, service speed, and service quality. They were asked to rank the banks on three scales namely ‘above expectations’, at expectation’ and ‘below expectation’ based upon their experience in dealings. The response was given in view of the experience in dealings with the bank, and covered products, staff responsiveness, branch environement, website experience, and consistency of service. The research has thrown lights on the various aspects of the banking. Service quality of HSBC and Citi Bank is above expectation, Barclays is ‘at expectation’ and others is ‘below expectation’ with HSBC coming out just on the top. The reasons for this are personal, attentive, and knowledgeable service as well as its pleasant branch environment and online banking service at HSBC. Citi won the second rank due to its branch environement, prompt service, and competitive pricing. Barclays was criticized for long queues in the branch and out of dated branch environement. Mistake in the transaction executed and poor advice given by the staff is the major reasons for the poor ranking of Natwest and Northern Rock.

From the above results, it is evident that the major factor which has affected the result is banks employee. The employee knowledge and expertise plays crucial role for delivery of the service. Many respondents have claimed that the employees were not having enough knowledge of products and services. The respondent has criticized banks for long queues, staff indifference and customer advice.

Prophets’ League Table:

Further, the shoppers were asked to grade each bank based on the four criteria namely branch experience, website experience, service speed, and service quality on the scale of 1 to 5, with 1 meaning the experience or service was extremely below expectations and 5 being extremely above expectations. The field research was followed up by random visits and analysis from Prophet’s team of financial service sector experts. The Result of the survey is given as under:

Graph: Prophet’s UK banking customer experience league

From the above chart, it is evident that HSBC got highest score followed by Citibank. Barclays got 3rd ranks as it got 3 out of 5 whereas others got less than 3. The major factor which is responsible for the above result is the quality of the service. Front office employee need to behave according to the brand identity of the banks. The employee should be motivated enough to deliver the brand loyalty. Knowledge of the employee, expertise of the employee and attitude towards work is the major factors which affects the service quality

Conclusion from the Research: From the prophet’s research it can be concluded that knowledge, expertise and attitude of the employee plays critical role for the service delivery. In current situation, trust in banking sector is fragile at the moment that care needs to be taken to assure customers that banks are being nothing less than completely open and honest about their products. Nowadays, customers are more knowledgeable and do homework and cross check products and pricing before approaching banks, hence transparency in the business is also paramount. Attentive customer service, an appropriately reassuring branch environment, an easy-to-navigate and feature-rich online presence, and differentiated products and services are some of the strategy which a bank should follows. Front office staff should be trained and should have adequate knowledge of the products and services. They should be motivated enough to deliver the service at their best. Overall, UK retail banking sector has a way to go before it delivers a great customer experience.

2.7 Fresh Minds’ Research:

Fresh Minds is UK based research firms which started operating in 2000. It has conducted two identical survey pre and post the credit crunch. In 2008, it has asked graduates to give the list of the firm they wanted to work for. It has repeated similar exercise in 2009. The list of the most preferred firms are as under:

SN 2008 Research Percentage 2009 Research Percentage
1. Goldman Sachs 72 McKinsey 76
2. McKinsey 61 Goldman Sachs 54
3. Morgan Stanley 32 Morgan Stanley 28
4. BCG 23 BCG 20
5. BP 22 Foreign Office 18
6. JP Morgan 18 Barclays Office 16
7. Lehman Brothers 15 PWC 16
8 Accenture 12 Bain 14
9 Bain 11 Unilever 14
10 Citigroup 11 Innocent 10

Table: Showing list of top ten firms as per graduates survey

From the above table, it is evident that despite 12 months of damaging headlines about the UK financial sector, most graduates still want to work for it. Top four firms in the list are the same. Goldman Sachs and Morgan Stanley, the two of the mostly negatively reported investment banks are in top three. The research finds specific firms’ reputations seem to be bomb-proof – or at least credit crunch-proof. According to Alex Waters, despite all the negative press, the financial sector has maintained a largely untarnished reputation because of the career benefits it can provide (Crush, 2009). Compare to other sector, banking sector is known for high salaries, bonuses and a good life.

Other side of the survey is that there are fewer banks in the list of 2009 compare to 2008. It means that graduates are more concern about the pay package and career opportunity rather than industry outlook. Higher ranking of Goldman Sachs and Morgan Stanley is due to their ability to manage brand image. They are paying higher package in spite of the downturn.

2.8 Outcome of Literature Review:

Literature review on the related article, survey and research has provided a lot of input. Sub-prime crisis of 2008 was setback to economy and lead to fall of many giants like Lehman Brothers, Merril Lynch, Morgan Stanley etc. These investment banks were highest paying organizations and were considered as Dream Company by many. Crisis of 2008 has also damaged the employee brand of the banking and financial sector.

HR function has passed through many distinct phases from the personnel management to human resource management and strategic human resource management (SHRM).SHRM in banking and financial sector is under implementation and as of now most of the firm has adopted HRM approach.

Survey conducted by Targetjobs, Fresh Minds and Prophet’s research has highlighted many issue related to banking and financial sector. Respondents have mixed views about current market conditions-40 per cent feel that conditions are tough, 46 per cent feel that conditions are reasonable, only 14 per cent feel that current market conditions are healthy. Pay-package and training and development programme are the main factor for selection of the organization. Graduates are more concern about the pay package and career opportunity in compare to industry outlook. HSBC and Barclays are considered good place to work with. Experience of dealing with HSBC and Citi Bank is above expectation, Barclays is at expectation whereas for others is below expectation. Expertise, knowledge and attitude of the staffs are the factors which has lead to above results. It means in banking and finance sectors, there are needs of huge talent pool of capable, energetic, ambitious, risk taking and young employees who can manage other resources properly.

3.RESEARCH METHODOLOGY

Research methodologies are of various types and selection of right methodology plays a significant role on the result. Based on uses of statistical tools, there are two types of research methodology- qualitative and quantitative methodology (Cooper & Schindler, 2006). Qualitative methods are mainly descriptive in nature and employ analytical technique. Based on the source of data, there are two types of the research-primary and secondary (Saunders et al., 2007). .

The research into the graduate recruitment policies and the changes of mentality of young graduates towards the banking and financial sector will be conducted in two different methods. The first part of the research will concentrate on the need for young talent in the industry and the present human resources policies and practices adopted by means of graduate recruitment schemes and their effectiveness. This will be done through a critical review of the literature, its analysis and discussion.

In the second stage of the research a two part survey will be conducted on a sample of present MBA students from the University of Sunderland on their attitudes towards a career in banking and financial services companies. The first part will be quantitative in nature and will be administered through online questionnaires to be sent to a sample population. The questions are ‘yes’ or ‘No’ answer type with close option. The question for the above survey is given as annexure 1.

The second part will be qualitative questionnaire soliciting the responses from the current students on how the banking and financial sector can attract more talent in the present climate. The questions for the second part of the primary research are open answer type. The questions for the above survey are given as Annexure 2.

Data Collection: Primary data will be collected from the present MBA students from the University of Sunderland. The response for the first part of the primary research will be collected through close answer type online questionnaire which will be sent through e-mail. Target response for the first part of the primary research is between 40 to 45. Response for the second part of the primary research will be collected online with the help of the open type questionnaire.

Data Analysis: Primary data for first part of the primary research so collected will be analyzed by using simple statistical technique like descriptive analysis, pie chart, bar graph etc. Primary data for the second part of the primary research will be analysed by using descriptive analysis methods of the qualitative data.

From the literature review and the survey results recommendations will be made to specific areas of human resources practices on how the banking and financial services sector can improve their graduate recruitment schemes.

Rational for Topic Selection:

The reasons for the selection of the topic for this dissertation are as under:

  • It is general perception that banking and financial industry is looking for the young talents. Crisis of the 2008 has impacted the career decision of the young graduates. Survey conducted by targetjobs has again attracted the attentions of the media as well industry experts. In view of the above, it becomes necessary to analyse the whole issue in light of crisis of 2008.
  • Literature review of the topic reflected that there is shortage of the skilled manpower in the banking and financial industry. Prophets’ research highlights that front office employees are not having enough knowledge of the products and services. Further, investment banking needs young talents for the innovative products which will maximize the return with limited downside potentials. In view of the above, it becomes essentials to analyse the issue in light of the recent development.
  • As I intend to enter into the human resources field and personally hoping to gain employment in the financial sector, this study will help me to identify the human resources policies and practices which will give me a better understanding of the requirements and shape my future career.

In view of the above, the dissertation topic, “How can the banking and the finance industry attract young graduates, after a year of recession linked negative press coverage and public animosity towards banking and finance sector?” has been selected.

4. PRIMARY RESEARCH

Primary research is conducted in two parts. First part of the research is done in order to know the mentality of the MBA students of university of the Sunderland towards career in banking and finance sector. Second part of the survey will study and evaluate the human resources policy and strategy changes required to attract young talent into the industry. Survey result is being presented below:

4.1 Analysis of young mentality:

This section of the report will conduct an analysis of the mentality of the graduates towards the banking and financial service companies in the pre and post recession periods. A brief account of the analysis is being presented below:

To know the mentality of the graduates towards the banking and financial sector, survey methods has been used. A survey is conducted on the sample of present MBA students from the University of Sunderland with the help of the structured questionnaire. All the questions were closed answer type with single choice option. The response is collected through online questionnaire which was sent through e-mail.

Data Collection & Analysis: Total 42 responses of the above questionnaire were collected. The response sheet was cross checked for data validation. Out of 42 responses, 2 responses were incomplete and hence rejected. Remaining 40 questions were considered for the data analysis. Data analysis is done with the help of the descriptive statistics, charting techniques and other statistical tools. For the data analysis, the response has been considered in coded form as given below:

Code Response
Yes 1
No 2

Table: Showing response in coded form

Response of the 40 respondent is presented as annexure 3 in coded form. 1st horizontal row defines represent questions in as per the serial number. Respondent ID is allocated as per the chronological order of receipt of the response.

Analysis of the Primary data: Primary data so collected is analysed with the help of statistical tools. Question wise analysis of the primary data is presented in given below:

  • Are you interested in making your career in banking and financial sector?

MBA students were asked whether they are interested in making their careers in banking and financial sector. The main objective of the questions was to know their opinion about career in banking and financial sector in light of the crisis of 2008. The response so collected is analysed by using descriptive statistics and pie charts. Same is given below:

 

SN  Particulars value
1 Mean 1.68
2 Standard Error 0.08
3 Median 2.00
4 Mode 2.00
5 Standard Deviation 0.47
6 Sample Variance 0.23
7 Kurtosis -1.47
8 Skewness -0.78
9 Range 1.00
10 Minimum 1.00
11 Maximum 2.00
12 Sum 67.00
13 Count 40.00
14 Confidence Level (95.0%) 0.15

Table: Showing descriptive statistics of the response of question no. 1

Chart: Pie-chart of the response of question no. 1

From the above table and chart, it can be observed that mean of the response if 1.68 which is more than 1.50. Only 13 students (32.50%), out of 40 are interested in making their careers in banking and financial sector. There is sharp contrast between the above response and data regarding share of university graduates in financial sector (27%) in compare to 18.9% in all industries in 2005 as given in EU KLEMS Project (2008).

The banking and financial industry has been strongly hit by the economic downturn. Although there is some optimism with regards to the future, the industry is still cautious about any long-term recovery. It means the crisis of 2008 has affected the mindset of young graduates. Measure taken by the financial sector like job cut, salary cut etc to withstand the financial crisis of the 2008, has diluted the brand image of the financial institution especially among campus students.

  • Recession led by subprime crisis of 2008 has affected your career decision?

The banking and financial sector has been strongly hit by the economic downturn of 2008, resulting in cuts in pay and a decrease in the number of jobs available. Many investment banks like Goldman Sachs, Morgan Stanley, Northern Rock, Bear sterns, Lehman Brothers, Merrill lynch, Fannie Mae, Freddie Mac etc. either ceased to carry business or converted into retail banking. These investment banks were considered as dreams jobs among many graduates. In order to know the effect of fall of these giants on the career choice among MBA students, the above question has been framed. The response so collected is analysed by using descriptive statistics and pie charts. Same is given below:

SN  Particulars value
1 Mean 1.35
2 Standard Error 0.08
3 Median 1.00
4 Mode 1.00
5 Standard Deviation 0.48
6 Sample Variance 0.23
7 Kurtosis -1.66
8 Skewness 0.65
9 Range 1.00
10 Minimum 1.00
11 Maximum 2.00
12 Sum 54.00
13 Count 40.00
14 Confidence Level (95.0%) 0.15

Table: Showing descriptive statistics of the response of question no. 2

Chart: Pie-chart of the response of question no. 2

From the above table and chart, it can be observed that mean of the response if 1.35 which is less than 1.50. Total 26 students (65%), out of 40 are in opinion that sub-prime crisis of 2008 has affected their career choice. It means a major chunk of the young graduates is looking for career option other than banking and finance.

Many financial activities like investment in stock markets is bound to face many types of risk like credit risk, market risk etc. Such risk exposure not only affects earning potential of the investors but may create threat to financial institution itself. This in turns affects the employment prospectus of people employed in such industry. Effect of the crisis of 2008 was significant and was nightmare for many employees. Although recent past has witnessed some sign of recovery still industry is cautious about any long-term recovery.

In nutshell, it can be concluded that the recession led by subprime crisis of 2008 has affected career decision of the many young graduates.

  • Recent economic crisis has damaged the employers brands in the banking and financial sector?

Before the crisis of 2008, investment banking industry was known as sunrise industry. Investment banks like Goldman Sachs, Morgan Stanley, Northern Rock, Bear sterns, Lehman Brothers, Merrill lynch, Fannie Mae, Freddie Mac etc. were considered good employer brands. It was considered lucrative than IT sectors. These banks were not only offering highest pay package but also good career opportunity. For many graduates, getting employment in the investment banks were their dream jobs. In wake of the crisis of 2008, it becomes necessary to know whether it has damaged employer’s brand or not. The response so collected is analysed by using descriptive statistics and pie charts. Same is given below:

SN  Particulars value
1 Mean 1.33
2 Standard Error 0.08
3 Median 1
4 Mode 1
5 Standard Deviation 0.47
6 Sample Variance 0.23
7 Kurtosis -1.47
8 Skewness 0.78
9 Range 1
10 Minimum 1
11 Maximum 2
12 Sum 53
13 Count 40
14 Confidence Level (95.0%) 0.15

Table: Showing descriptive statistics of the response of question no. 3

Chart: Pie-chart of the response of question no. 3

From the above table and chart, it can be observed that mean of the response if 1.33 which is less than 1.50. Total 27 students (67.5%), out of 40 are in opinion that the crisis of the 2008 has damaged the employers brands in the banking and financial sector. The reasons for this may be fall of the Wall Street giants like Lehman Brothers. Merrill lynch etc. 13 students out of 40 are in opinion that the crisis of the 2008 has not damaged the employers brands in the banking and financial sector. Reasons for this may be competitive starting salary for graduates offered by UK investment banks.

Form the above discussion, it can be concluded that the crisis of the 2008 has damaged the employers brands in the banking and financial sector.

  • If you were graduating before the crisis of 2008, you might have selected your careers in banking and financial sector?

It is common observation that the sub-prime crisis of the 2008 has affected the career choice in banking and financial sector. Before the crisis of 2008, the sector was considered dreams job by many graduates. The reason for this was high pay package better career opportunities and work culture. In order to know the mindset of the young graduates in pre-crisis period, this question has been framed out. The response so collected is analysed by using descriptive statistics and pie charts. Same is given below:

SN  Particulars value
1 Mean 1.43
2 Standard Error 0.08
3 Median 1.00
4 Mode 1.00
5 Standard Deviation 0.50
6 Sample Variance 0.25
7 Kurtosis -2.00
8 Skewness 0.32
9 Range 1.00
10 Minimum 1.00
11 Maximum 2.00
12 Sum 57.00
13 Count 40.00
14 Confidence Level (95.0%) 0.16

Table: Showing descriptive statistics of the response of question no. 4

Chart: Pie-chart of the response of question no. 4

From the above table and chart, it can be observed that mean of the response if 1.43 which is less than 1.50. Total 23 students (57.5%), out of 40 are in opinion that if they were graduating before the crisis of 2008, they might have selected careers in banking and financial sector. The result of this question is sharp contrast to question number 1 in which only 13 students out of 40 are interested in making their career in banking and finance.

High pay package, better career opportunity and good work culture are the major reasons which were attracting the young students in the financial and banking sector. Additional benefits like bonus scheme, pension scheme etc. also acted as motivational factor. There was a good level of mobility within firms to progress up the career ladder. In nutshell, it can be concluded that in the absence of the crisis of 2008, higher number of the university graduates might be interested in making their career in banking and financial sector.

  • Major factor which attracts young graduates in banking and financial sector is high pay package?

As discussed above, there are many factors which made the sector lucrative for young graduates. High pay package, good career opportunity and good work culture are some of the factors. According to equity theory of motivation, reward in lieu of work is the main motivational factors (Koontz & Weihrich, 2006). In view of this, the above question has been framed out in order to find out the major motivational factors which attract young graduates in banking and financial sector. The response so collected is analysed by using descriptive statistics and pie charts. Same is given below:

SN  Particulars Value
1 Mean 1.23
2 Standard Error 0.07
3 Median 1
4 Mode 1
5 Standard Deviation 0.42
6 Sample Variance 0.18
7 Kurtosis -0.14
8 Skewness 1.37
9 Range 1
10 Minimum 1
11 Maximum 2
12 Sum 49
13 Count 40
14 Confidence Level (95.0%) 0.14

Table: Showing descriptive statistics of the response of question no. 5

Chart: Pie-chart of the response of question no. 5

From the above table and chart, it can be observed that mean of the response if 1.23 which is less than 1.50. Total 31 students (77.5%), out of 40 are in opinion that the high pay package is the major factor which attracts young graduates in banking and financial sector. Investment banks are known for huge pay package and bonus scheme. Better career opportunity is other factor as there is good level of mobility within firms to progress up the career ladder.

In view of the above, it can be concluded that high pay package is the major factor which attracts young graduates in banking and financial sector.

4.2 Evaluation of HR Policy & Strategy:

This section of the report will study and evaluate the human resources policy and strategy changes required to attract young talent into the industry. A brief account of the evaluation of HR policy & strategy is given below:

In wake of the crisis of 2008, the main challenge for the HR of the banking and finance is to attract young talent in the industry. Being in the service industry, Human resource is the key assets for the banking and finance companies. Dealing in the derivative markets requirements requires in-depth knowledge of the finance and continuous innovations. Momentum of the growth can be resumed with the help of the talent management. Key point of the human resource policy under practice in banking and finance sectors are as under:

  • Competitive salary: Average salary to the graduates entering in the banking and finance industry is about £27,500 whereas students entering investment banks expected to earn an average salary of £38,000 (The Graduate Market in 2009, High Fliers Research Limited).
  • Additional Benefits: Employees are also offered some additional benefits other than pay package. Sign-on bonus (lump sum of money on joining the company), gym membership, pension scheme, private health insurance, a company bonus scheme etc are some of the additional benefits.
  • Diversity: Many employers in banking and financial industry have diversity initiatives in place. It promotes the women, minority ethnic graduates and graduates with disabilities in banking with the help of various programmes in place.
  • Career opportunity: There is a good level of mobility within firms to progress up the career ladder.
  • Many banks & FIs is also using campus recruitment in order to attract young talents.

At present banking and financial sector is struggling hard to retain talent due to high employee turnover. The global economy is under recovery and stabilization phase. Many stock markets like National Stock Exchange (India), Bombay Stock Exchange (India) is offering good returns. Global investment scenario has improved a lot and many firms are going for expansion plan. In such a scenario, banks & FIs have good business opportunity. To tap the market they need people with right set of skills. Attracting new talent in the industry is one of the solutions of present problems. But while doing this, they need to evaluate their human resource policy and incorporate strategic change if required.

In order to find out the strategic changes in HR to attract new talents, survey methods of research has been used. Again, this survey is conducted on sample of present MBA students from the University of Sunderland with the help of the open ended questions as given in the research methodology.

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Data Collection & Analysis: The above questions were circulated among the sample MBA students by e-mail in order to know their response. Response received from the respondent is being analyzed by used descriptive research techniques.

  • List out the factors which deter you for making career choice in the banking & finance sector?

There are many factors which deter young talent for making career choice in the banking & finance sector. Some of the factors which are key issue for the new talents are as under:

Job safety: In light of the sub-prime crisis, job safety has become major concern for most of the young talents. In wake of the crisis, it was banking and financial sector which was adversely affected. This sector has witnessed highest number of job cut and significant decrease in pay-package. Job cut was affected at every level but mainly on entry level. In view of above, it is job safety which deters young talent for making career choice in the banking & finance sector.

Work pressure: The work environment in banking and financial sector is very fast-paced and dynamic. Working hours can be long, particularly for new graduates in investment banking. The industry is having higher work pressure than other sector by nature of jobs. This is perceived work pressure especially for new graduates, which deter young talent for making career choice in the banking & finance sector.

Accountability & responsibility: This sector is having higher accountability and responsibility compare to other sectors. This should be reflected in pay-package which means young talents is looking for higher package. In the post crisis era, very few firm mainly investment banks are paying higher than competitive package. Jobs like retail banking to have higher accountability and responsibility which means higher pay package for every job.

From the above discussion, it can be concluded that concern about job safety, high work pressure and high level of accountability and responsibility is the major factors which deters young talents from making career in banking and finance industry. Issue of job safety may resolve in due course of time by fulfilling the promise given to the employee followed by growth momentum in the industry. Increase in manpower and well define job profile with scope of flexibility will certainly reduce the level of the work pressure. Pay-package should be in tandem of the work profile and accountability of the employee.

  • List out your suggestion which you would like to be part of HR policy in order to attract young talent?

In order to attract young talent, the HR policy of the banking and financial sector may incorporate following suggestions:

Higher pay-package: Compensation and benefits analysts should be carried out to ensure proposed compensation and reward packages are benchmarked and competitive. Accountability and responsibility level of the employee should be considered while deciding the pay package. Competitive pay package in tandem of job profile will attract the young talent. Further, based on the performance of the employee, bonus scheme should be formulated. In nutshell, the money should not be an issue for attracting the candidates with desired skill sets.

Training: All the new young talent should be given structured and planned training in order to provide practical aspects of the jobs. Existing employee should also be given training at continuous interval in order to update them with new development at corporate level or in industry. Many respondents in the prophet’s survey have complained that the front office employee was not having sufficient information about the products and services.

Campus recruitment: Campus recruitment is the best way to attract new talents. Many banks like Barcalys, Citi, HSBC etc. is giving focus recruitment in order to acquire young talents in the industry. But the practice of campus recruitment is not so common in small banks and FIs. There are over one million people currently working in the UK financial services industry in more than 35,000 companies (UK international financial services – the future, HM Treasury, 2009). In view of the above, campus recruitment should be made part of the HR policy to attract young talent. Participating in summer training placement and organizing some competition during the academic periods may assist in identifying right candidates.

Better career opportunity: While selecting any job offer, university graduates also evaluate career opportunity. Small firms which can’t afford high package can attract young talents by offering fast track career opportunity. Performance criteria can be formulated for fast track career opportunity which will be win-win situation for both- employee and employer.

Conductive work culture: Work environement should be conductive which will act as motivators for the employee. Long working hours should be avoided and work allocation should be done in planned way. Adequate manpower should be provided in order to avoid work load on some employee.

From the above discussion, it can be concluded that the higher pay package, training, campus recruitment, better career opportunity and conductive work culture are some of the indicative list of the suggestion which can be adopted in HR policy in order to attract young talents in banking and finance sector.

  • What all strategic change is required in HR department of banking and financial sector in order to attract young talents?

Strategic change in HR is required in order to attract young talents in banking and financial sector. Some of the strategies which can be adopted are as under:

Employee engagement: The employee should be engaged in all the decision making process in the organization. Employee feedback and suggestion should be considered for any decision. This will help to improve the performance at every level of the organization. Employee will be motivated leading to increase in performance level of the organization.

Talent management: Talent management is the process of developing and integrating new workers, developing and retaining current workers, and attracting highly skilled workers to work for a company. In view of the current scenario, talent management should be considered as an integrated part of the HR strategy.

Knowledge management: Knowledge management covers the key areas from identifying knowledge in an organisation to promoting and facilitating knowledge sharing and innovation (Awad & Ghaziri, 2004). In the pre-crisis era, investment banks were able to make easy money due to innovations. Knowledge management should be incorporated as part of the HR policy in order to nurture talents within the organization.

Benchmarking: HR department should use benchmarking in all the area of HR including from recruitment to performance appraisal. Salary structure and other staff benefits should be at par of other industries. At the time of the performance appraisal, low achiever should be sorted out and as per the individual requirement, training or counselling or any other measure should be used. Benchmarking should be at both level-within the organization as well as outside the organization.

Employee engagement, talent management, knowledge management and benchmarking are some of the strategic change which is required in HR department of banking and financial sector in order to attract young talents.

5.DISCUSSIONS & ANALYSIS

UK’s banking & finance industry has seen a radical transformation with market liberalization by deregulation and the resultant competition. It is considered third largest sector in the world in term of efficiency, dynamism and return on capital after US and Japan. It provides jobs to over 1 million people in UK. The global economy is under recovery and stabilization which has resulted into increase in demand of the banking and financial sectors. Literature review reflects that the present manpower in banking and financial sectors is not up to the mark. Young graduates are not so keen about the career in the banking and finance sector. In view of this, in-depth analysis of the issue is being done.

5.1 Need of Young talent:

This section of the report will study and understand the need for young talent in the banking and financial sector in the UK. Need of the young talent in banking and financial industry can be traced with the help of discussion given below:

Prophet’s Research:

As discussed in the in the literature review section, the major factor which has affected the result is banks employee. The employee knowledge and expertise plays crucial role for delivery of the service. Many respondents have claimed that the employees were not having enough knowledge of products and services. The respondent has criticized banks for long queues, staff indifference and customer advice. Barclays is criticized for long queues in the branch.

Front office employee need to behave according to the brand identity of the banks. The employee should be motivated enough to deliver the brand loyalty. Knowledge of the employee, expertise of the employee and attitude towards work is the major factors which affects the service quality. Hence, there is need of young talent in the banking and financial sector to bridge the gap.

Risk management: In view of the subprime crisis, risk management has become the crucial task in the banks and FIs. There are mainly three types of the risk-credit risk, market risk and operation risk (Chorafas, 2004). Operational risk is due to system failure and employee mistake. In process of the risk management, role of the employee has become critical. Basel II is under implementation in many countries including UK. In light of the Basel II implementation, there is need of young employee in banking & finance sector.

Customer Awareness: Nowadays, customer has become more conscious and aware about the banking & financials products. With the help of the power of internet technology, they cross check each and every products at home before approaching any banks. In such a scenario of information symmetry, the service delivery experience plays crucial role for attracting any employees. In view of the above, there is need of the young talent with good communication skills in the banking sectors.

Nature of Business: Banking & finance sector by the nature of its business need young talent. This field requires people with analytical mind and good communication skills. Knowledge about products, right aptitude and motivational level is necessary. The sector is complex in nature and employee should posses the knowledge about the products. Many respondents in the prophet’s research have complained that the employee was not having enough knowledge products and service.

Service Industry: Banking and financial sector is part of the service industry. Service being intangible in nature, delivery point of service plays crucial role. Hence, the customer satisfaction and marketability of the products depends upon the skill sets of the employee. Prophet’s research has revealed that the attitude of the present employee is not in line of the requirement. Recruitment of the young talent may motivate young employee to deliver their best.

From the above discussion, it can be concluded that there is need of young talent in the banking and financial sector in the UK.

5.2 HR Activities to attract young talent:

This section of the report will critically evaluate the human resources activities in attracting and recruiting talented graduates. A brief account of the HR activities in order to attract and recruit talented graduates is being discussed below:

During last 3 decades, financial industry has emerged in a big ways. Increase in banking activities and rise of investment banks were the major reasons for emergence of financial sector. In due course of time, financial sector become the major employer even for university graduates. Same can be understands from the table given below:

Source: EU KLEMS Project (2008)

Table: Showing Shares of university graduates in total employment in the financial industry and in all industries

Before the subprime crisis of 2008, banking and financial sector especially investment banks were considered highest paying sector. This was possible because it was also engaged in developing overly risky and fragile financial products that were highly profitable but proved ex post socially harmful (Philippon 2008b). As the result of financial innovations, financial sector was able to further increase relative wages and to continue to attract high skilled workers. Both the skill upgrading and the increase in wages and rents was still concentrated in the subsector “other finance” (Philippon & Reshef, 2009).

Graph: Average compensation per workers in financial industry

Source: OECD (2008)

From the above graph, it is evident that the before the sub-prime crisis the relative wages in the financial sector was much higher than other sector. Employee in the financial sector was paid about 85% higher than other industries.

As discussed above, the financial sector especially investment banks were considered as dreams job by many graduates. Investment banks like Merrill Lynch, Lehman Brothers, Goldman Sachs, Morgan Stanley, Barclays etc. were offering highest paying jobs. Due to lucrative pay package, many young talents chose it as careers. Before sub-prime crisis investment banking industry was known as sunrise industry (Hayre & Barney, 2000). Subprime crisis of 2008 was financial crisis as the result of which investments banks were badly affected. Many investment banks converted into commercial banks or filed for bankruptcy or were taken over by others. Northern Rock, a medium sized British bank, requested for security from the Bank of England and subsequently it was nationalized on 17th February 2008.

At the time of recession many banks & FIs e.g. Citi Bank has reduced their headcount in order to control cost. The recruitment process was either freezed or on hold. The Association of Graduates Recruiters (AGR) has conducted winter survey in 2009. According to the survey, first time in its history of last 22 years, the starting salary will stay the same. The average salary offered during last year was £25,000. Some sectors mainly banking and finance sector which provides 13.3% of the vacancy are cutting are cutting wages, in some cases by up to 8 per cent. Overall vacancies are expected to decrease by 5.4%, with employers blaming the recession for its drop. AGR surveyed 245 organizations, out of which 46% was in opinion that they were expecting to hire fewer graduates this year. This is sharp contrast from the summer survey of 2008, which has predicted 11.7 per cent growth in vacancies.

Now, the global economy is showing sign of recovery from the crisis and is under stabilization. This has changed human resources activities of banking & financial sector in attracting and recruiting talented graduates. Banks and other financial institutions, which between them shed thousands of jobs as a result of the financial crisis, resumed hiring last year in a bid to position their businesses and take advantage of the market upturn (Inman, 2010). Boutique investment banks, including US firms Jefferies and Evercore, were among the most aggressive hirers, while larger rivals such as JP Morgan, Barclays Capital and Nomura have also been adding to their ranks.

Barclays has earned net income of £4,585 million during 2009. To retain the talent as well as to attract talent from the competitors like RBS it is paying lucrative package and bonus to its employee. The bank is paying the 23,000 staff at its investment bank £191,000 per head on average for the year 2009 (barclays.com). HR team of the Barclays works with every unit in order to attract and retain the best people. HR teams hosts many training and value added programme in order to equip the employee with necessary skill sets to be ahead of the business. Pension scheme at Barclays is also management by the HR team. The Pensions Administration team of the Barclays supports its 240,000 members retirement funds and pension fund executives works with the fund’s trustee to ensure highest standards. Cost and benefits analysis is done in order to set the salaries of the staff. It is ensure that compensation and rewards package are best in the industry.

From the above analysis, it can be concluded that before the crisis of 2008, HR activities was oriented towards attracting new talents by offering best package in the industry. In the post crisis era also, HR activities is focussed towards attracting new talents may not be highest package but competitive package.

5.3 Strategies for recruitment of young talent:

This section of the report will recommend strategies in specific areas of human resources policies to recruit young talent in the post recession period. A brief account of the recommendation of given below:

Based on the literature review and outcomes of the primary research it is evident that there is need of young talent in banking and financial industry. Current strategy followed by banks and FIs is not sufficient enough to attract the young talents. The crisis of 2008 has decreased the motivation level among young graduates in among careers in banking and financial sector. At the time of the campus recruitment, students are more concern about job profile and pay package. Brand image of the organization also plays crucial role for selection of job offer. In view of the above, following strategies can be recommended in specific areas of human resources policies to recruit young talent in the post recession period:

  • Pre-recruitment strategy: Before visiting campus for the recruitment, HR should find out the number of the opening based on job profile. Based on the requirement of the skill sets, university and college can be priorities. Salary offered at the time of last recruitment by other companies in those campuses can be find out from the website and placement department of the concern college and university which can be used for the benchmarking.
  • Selection Process At the time of the campus recruitment, selection of right candidates for right jobs becomes crucial. Recruitment process should be such that the required skill sets can be identified.
  • Lucrative pay package: The pay package should be competitive enough to attract young talents. Pay package should not be an issue for the selection of the deserving candidates.
  • Additional benefits: Some additional benefits like performance linked bonus scheme, pension scheme, joining bonus etc can be offered to young graduates, which may act as differentiating factors.
  • Career opportunity: Young graduates are more worried about their future career opportunity. At the time of the campus recruitment, the career path in the organization can be briefed to employee. In lieu of handsome pay package, fast track career path can be offered which may act as differentiating factors.
  • Mid academic interaction: Organizing competition like business plan etc during mid-academic session will provide an opportunity to identify young talents. Further, summer training programme can be also offered to the students which may be followed by pre-placement offer for the deserving candidates.

The above strategy in totality or in combination can be used, in specific areas of human resources policies in banking and financial sector to recruit young talent in the post recession period. 

6.    CONCLUSION

Dissertation has started with aim to find out the strategy with the help of which banking and financial industry can attract young graduates in post recession era. Based on the aims of the dissertation, five objectives have been framed for the dissertations. Firstly, study the need for young talent in banking and financial sector in the UK, evaluation of HR activities in attracting and recruiting talented graduates. Analysis of mentality of the graduates towards the banking and financial service companies in the pre and post recession periods. Fourthly, Study and evaluate the human resources policy and strategy changes required to attract young talent into the industry. Fifthly, recommendation of strategies in specific areas of HR policies to recruit young talent in the post recession period.

The dissertation is conducted in tow different methods. The first part of the research concentrate on the need for young talent in the industry and the present human resources policies and practices adopted by means of graduate recruitment schemes and their effectiveness. This is done through a critical review of the literature, its analysis and discussion. In the second stage of the research a two part survey is conducted on a sample of present MBA students from the University of Sunderland on their attitudes towards a career in banking and financial services companies. Data so collected is analysed with the help of the simple statistical techniques and descriptive analysis.

UK banking and financial sector is third largest sector after US and Japan. Before the subprime crisis of 2008, investment banking sector was considered as sunrise sector. Investment banks were considered as lucrative career option as it was offering highest pay package. Crisis of 2008 has resulted in fall of many investment banks like Goldman Sachs, Morgan Stanley, Northern Rock, Bear sterns, Lehman Brothers, Merrill lynch, Fannie Mae, Freddie Mac, etc. In wake of the crisis, the banks and FIs responded by decreasing the number of the employee and pay cut. This has badly impacted the employers brand of the banking and financial sector.

Now, global economy is under recovery and in the process of stabilization. Demand of the financial and banking services has increased significantly. In order to tap the growing markets, there is need of young talents in the banking and financial sector. Prophets’ research has found that the present employee especially front office employee is not having in-depth knowledge of the products and services. Out of the nine major UK banks, HSBC and Citi bank got ‘above expectation’ rating, Barclays bank got ‘at expectation’ rating while others namely Natwest, Northern Rock, Halifax, Abbey, Alliance & Leicester, Lloyds TSB and Post Office got’ below expectation’ rating. It means banking and financial sector should focus on the recruitment of the young talent.

Targetjobs has conducted surveys in 2009 over 1470 students to find out their opinion regarding career option in banking and financial sector. They were asked to rate their view of current market conditions as ‘healthy’, ‘reasonable’ or ‘tough’. Respondents have mixed views about current market conditions – 40 per cent feel that conditions are tough, while 46 per cent feel that conditions are reasonable. Only 14 per cent feel that current market conditions are healthy – and those interested in insurance, retail banking and financial services are more likely than average to think that market conditions are tough. From the survey, it can be observed that only few students are interested in making careers in banking and financial sectors.

Before the crisis of 2008, HR activities were oriented towards attracting new talents by offering best package in the industry which was as high as 1.85 times in compare to other industry. In the post crisis era, HR activities is focussed towards attracting new talents may not be highest package but competitive package. Compensation and Benefits Analysts sets salaries for job roles to ensure proposed compensation and reward packages are benchmarked and competitive.

Primary research on mentality of the graduates towards the banking and financial sector reflects that in view of the crisis of 2008, less number of the students are interested in making their career in banking and financial sector. Recession of 2008 has definitely affected the career decisions among students and has also diluted the employers’ brand. Many students agreed that in absence of the crisis of 2008, they might be interested in making their career in banking and finance sector. There are many factors like pay package, work culture, career opportunity which attracts a students. Out of the above listed factors pay package in the major attraction for the young graduates.

Primary research in order to evaluate the human resources policy and strategy changes required to attract young talent into the industry has revealed many facts. Concern about job safety, high work pressure and high level of accountability and responsibility is the major factors which deters young talents from making career in banking and finance industry. The higher pay package, training, campus recruitment, better career opportunity and conductive work culture can be adopted as part of the HR policy in order to attract young talents in banking and finance sector. Employee engagement, talent management, knowledge management and benchmarking are some of the strategic change which is required in HR department. Some of the strategies which can be adopted in the specific areas of the HR for recruitment of the young talents are: campus recruitment, competitive package, additional benefits, offering good career opportunities and participating in summer placements.

In nutshell, Banking and financial industry need young talents in view of recovery and stabilization in the global markets. Crisis of the 2008 has affected career decision of the young talents in the banking and financial sectors. These young talents can be attracted by offering competitive compensation, better career opportunity and conductive environement which can done with the help of certain improvement in the HR policy and strategy mentioned in this dissertations.

7.    RECOMMENDATION

Based on the literature review and outcomes of the primary research it is evident that there is need of young talent in banking and financial industry. Current strategy followed by banks and FIs is not sufficient enough to attract the young talents. The crisis of 2008 has decreased the motivation level among young graduates in among careers in banking and financial sector. In view of the above, following recommendation can be made for HR policies in banking and financial sectors:

  • Lucrative pay package: As discussed above, the pay package should be competitive enough to attract young talents.
  • Performance based bonus: Bonus scheme based on the performance of the employee should be implemented as it will act as win-win situation for both-employer and employee.
  • Training: New as well as existing employee should be given proper training at regular interval in order to impart required skill sets.
  • Campus recruitment: Campus recruitment will good value proposition is the best way to attract young talent.
  • Control on employee turnover: The existing employee should be retained by looking into issue with the help of exit interview.
  • Work culture: the work culture should be such a way that every employee can contribute to their best.
  • Employee engagement: Involvement of the employee in decision making process will increase their accountability as well as motivation.
  • 360 degree feedback: Using 360 degree feedback mechanism can be used for the performance appraisal of the employee and accordingly pay package can be revised.
  • Benchmarking: Benchmarking of the employee performance with best performer and employee compensation with the industry is one of technique to attract the young talent.
  • Talent & knowledge management: Talent as well as knowledge management will help to get the benefits of knowledge economy.

The above suggestion can be implemented in combinations or in totality in the HR departments of the banks & FIs. Before implementing any change in the HR policy and strategy, cost and benefits analysis should be carried out in order to know the effect of the policy at organization level.

Shortcomings and recommendations for future works:

The dissertation has following shortcomings:

  1. Primary data collection is done by survey methods on the sample of MBA students of university of Sunderland. Data so collected is analysed by using simple statistics techniques like descriptive analysis. However, looking into nature of the topic, the primary data can be collected from different respondent group and same can be used for testing the statements by using hypothesis testing.
  2. Primary source of the data is collected from the MBA students of university of Sunderland. This has revealed one side story of the issue. HR executives working in the banking and financial sector can be included in the primary data collection which might have provided in-depth of the issue.

In spite of the above shortcomings, this dissertation is complete in itself as it is able to achieve all the aims and objectives of the dissertations. The dissertation has proceeds as decided in the beginning of the dissertations. The dissertation has completed in the given time table. Overall, it was a good learning experience where theoretical knowledge is applied to solve the practical issues.

Recommendations for future works:

In view of the recovery of the global economy, talent shortage has become major issues for banking and financial issues. Although there are some research and survey is conducted on this issue but none is in comprehensive in nature. This topic requires few more research which will act as guidelines for the HR executives working in banking and financial industry. In view of limited literature available in this field and discussion mentioned in this report, it can be suggested that some more empirical research in this field is required. An indicative list of the topic is as under:

  1. Study and evaluate the mindset of the young university graduates to know their favourite career option.
  2. To evaluate the major challenge for banking and financial industry in post crisis era.
  3. Study and evaluate HR policy of the banking and financial sector visa-vis other sectors.
  4. To study and evaluate the job satisfaction level of the employee working in banking and financial sectors.
  5. How the banking and financial sector is different from the other sectors?

Brief account of some of the above topic is already discussed in this report but carrying independent research will bring insight of the issue. As there are limited secondary source of data on the above topic, research should employ primary methods of data collection. Primary data collection should be done questionnaire method and data so collected should be interpreted by using hypothesis testing. Conclusion should be made based on the interpretation of data. In spite of the above odds, the dissertation is comprehensive in nature and was successful in achieving aims & objective of the dissertations. This will certainly act as reference materials for all future works on this subject.

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9.    ANNEXTURE

Annexure 1

  1. Are you interested in making your career in banking and financial sector?

Yes                     No

 

  1. Recession led by subprime crisis of 2008 has affected your career decision?

       Yes                         No

 

  1. Resent economic crisis has damaged the employers brands in the banking and financial sector?

Yes                    No

  1. If you were graduating before the crisis of 2008, you might have selected your careers in banking and financial sector?

Yes                       No

  1. Major factor which attracts young graduates in banking and financial sector is high pay package?

Yes                    No

Annexure 2

 

Question 1: List out the factors which deter you for making career choice in the banking & finance sector?

Question 2: List out your suggestion which you would like to be part of HR policy in order to attract young talent?

Questions 3: What all strategic change is required in HR department of banking and financial sector in order to attract young talents?

 

 

 

 

 

Annexure 3

ID Career in Banks & FIs Effect of crisis Damage employer brands Pre crisis careers Pay package
1 1 1 1 1 1
2 2 1 1 1 1
3 1 1 2 2 1
4 2 1 1 2 1
5 2 2 1 1 2
6 1 1 1 1 1
7 2 2 2 2 2
8 1 1 1 1 1
9 2 1 1 1 1
10 2 2 2 2 2
11 1 1 1 2 1
12 2 1 1 1 1
13 2 2 2 2 1
14 1 1 1 1 1
15 2 1 1 1 1
16 1 2 2 2 2
17 2 1 1 2 1
18 1 1 1 1 1
19 2 1 1 2 1
20 2 2 2 2 1
21 2 1 1 1 1
22 1 1 1 1 2
23 2 2 1 1 1
24 2 1 1 2 1
25 1 1 1 1 1
26 2 2 2 1 1
27 2 2 2 2 2
28 1 1 1 1 1
29 2 2 2 2 1
30 2 1 1 1 1
31 2 2 2 1 2
32 1 1 1 1 1
33 2 1 1 2 1
34 1 1 1 1 1
35 2 2 2 2 2
36 2 2 1 1 1
37 2 1 1 1 1
38 2 1 2 2 1
39 2 1 1 1 1
40 2 2 2 2 2