Maurice Evlyn-Bufton, chief executive officer of The Trafalgar Partnership, on why three-month notice periods are only encouraging banks to hire sooner rather than later.
In a bull market like today's, employers need to work hard to protect their talent, to remove the temptation of their key staff to look externally or to consider opportunities that are inevitably passed to them by ever-eager search consultants.
The importance of this protection is traditionally at its peak in the first quarter of the year, following bonus payments. This year, however, with the market as buoyant as it has ever been, employers have begun focusing on retention earlier than ever before. Longer employee notice periods are seen as one possible solution to driving down attrition at the middle to senior levels.
In the past, an employee who wanted to move was invariably tied to a one-month notice period. 2006 has seen a migration by many banks to three months, and in some cases even six months. This commitment is aimed at protecting their leadership platform and the talent within the bank. The idea is that employees will be less attractive, harder to 'dislodge' and less likely to consider moving in the first place.
In effect, however, the fact that longer notice periods have been adopted almost universally across the market has proven to be counter-productive. Banks that want to hire at this time of the year are faced with the prospect of first waiting until the bonus payment, which could be as late as March, and then being forced to wait again for a further three months, perhaps to the beginning of July and beyond, until the extended notice periods have been worked out and candidates become available.
As a result, we've seen a significant increase in search activity in the final few months of this year - traditionally a quiet period for all areas, front to back. This is particularly the case in areas of significant demand, such as derivatives or prime brokerage, where the message being given to search firms by infrastructure heads in technology, operations and finance, is clear: "We will buy out bonuses, the business cannot wait; we cannot expose ourselves to potentially losing our preferred candidates only to be left back at the starting point four or five months down the line."
The result is that extended notice periods, which were set to reduce volatility, are having the opposite effect. Buyouts and guaranteed bonuses are now becoming commonplace as employers seek to secure talent midwinter, as opposed to waiting until a very distant spring.