How are millennials forcing change in banking?

There has been some degree of anxiety over the last few years in the world of banking in relation to how to attract millennials in the workplace. Millennial candidates value their life balance and sense of meaning at work much more than any previous generations and banks haven't traditionally been great at offering this.

There is no arguing that this generation will soon make up the majority of the workforce and they won't wait for banks to understand them. So how do we go about fixing this problem?

The bigger picture: assessing the landscape

According to a report by Compensation Advisors, only one third of bank directors feel they have a satisfactory plan for attracting millennials as employees. Another third said they were trying to recruit Millennial talent but were having great difficulty in doing so.

Millennials are today the very people who are bringing new ideas to the table. New financial technology is being built by and used by Millennials more than by any other generation. For example, Monzo co-founder Jonas Huckestein has basically led way to the future of banking and is under 30 himself.

It's crucial that banks design a strategy that successfully engages millennials so that they can - as a business - keep abreast of all these new ideas and stay innovative and appealing to their customers.

The key driver of change: purpose

Employees need a shared sense of purpose to work well. In today's competitive financial service environment, promising bonuses and high salaries isn't going to engage and retain highly principled and motivated workers anymore, not if they're Millennials.

Millennials believe culture and experiences are more important than revenue and one of the biggest mistakes organisations are making today is assuming that their brand purpose is the same as their ultimate business goal. As important as it is, it's not the same.

Purpose must originate from a place of passion, it's what pushes you to do what you do. If you don't define and communicate it right, employees will not be in it with you. They will become unhappy, unmotivated and start focusing just on making money or getting through the day - that is, if you manage to attract them to work for you at all in the first place.

Connecting with Millennials requires an honest attempt to listen and incorporate their values and we're starting to see some banks trying to take this on-board. Citigroup for example is now offering employees the ability to take a year off work to volunteer.

Yet, there's more to it than just some fun perks. You have to get the workplace culture right.

The key driver of failure: carrot and stick approach

The 'carrot and stick' approach, known as the combination of reward to persuade people to do something and punishment if they refuse to do it, is a mistake. Drawing on four decades of scientific research on human motivation, Pink exposes this mismatch in his book 'Drive'.

He demonstrates that while carrots and sticks worked successfully in the twentieth century, it's the wrong way to motivate people for today's challenges. This applies to the finance industry too. Regardless of whether processes require an element of lateral thinking where rewards can provide a small motivational boost, jobs in finance in the 21st Century have become more complex and self-directed. This is primarily where the carrot and stick approach is becoming least effective.

The issue of rewards can cause resentment and a decline in the morale of other workers. For example, if only the sales team gets rewarded for hitting their targets but the marketing department played a vital role in that success too, it causes resentment and can lead to a decline in performance. It can also create disunity, poor teamwork and lack of communication between teams. It's these sort of things that can easily build up into a toxic workplace culture.

And there's evidence that a failure to consider this is hurting banks' innovation projects already. Just 17% of the industry majority have managed to launch five or more digitally driven products since the start of their innovation efforts and only 16% have implemented five or more digital mid- or back-office solutions.

Solving the dilemma

How do you go about incentivising teamwork and cooperation to create a positive and appealing workplace environment, whilst making sure people perform and hit the targets?

The answer is - yes, again - by creating the right culture. I'll give you an example. JP Morgan made a structural change to its working culture in 2016 through an initiative called 'pencils down'. This aimed to return "life" back to the work-life balance of bankers by banning them to come into the office at weekends. Whilst the true effects of such policies are harder to asses than bonuses or other financial rewards it's obvious that they bring about what was once an almost non-existent sense of caring, loyalty and good management that truly shows staff that you care.

Everything else will slowly fall into place when you get this right. You just have to remember that creating the right culture for your business is not a one off task nor is it a black or white one or the same for every business. It's something you need to keep cultivating and growing, it needs to be tailored - depending on the people you bring in, the people that you see leave and the business hurdles you have to overcome.

Ultimately, it's a way of showing your employees that you're both in it for more than just the profit. And if you're looking to hire Millennials, well, what can I say? you've got no time to waste - it's the way to their hearts!

Saurav Chopra is CEO and Co-founder of Perkbox