The Army’s personnel problems are not unlike those of Wall Street: The youth are not interested in waiting for decades
An industry with a rigidly hierarchal organizational structure faces a retention crisis among its youngest, brightest employees.
By Major Hank Waggy, US Army
Best Defense guest contributor
An industry with a rigidly hierarchal organizational structure faces a retention crisis among its youngest, brightest employees. Despite the social prestige of the occupation and its well-known path to financial security, the industry faces declining retention among the very employees that it recruited and trained just years, or even months, earlier. Management must adapt to a generational cohort of employees who require greater flexibility and greater influence in their young careers, though legacy employees doubt that major reforms are necessary.
Such is the case for Wall Street banks today, but the situation could just as easily describe the U.S. Army and its officer population. Some will immediately bristle at the comparison; there are certainly differences between young bankers and young military officers. While select officers have moved between the military and Wall Street, and both industries require macro-traits such as intelligence, determination, and ambition, each industry desires other traits unique to itself. But whatever the differences, both industries strive to retain young talent, while options outside of the industries continue to siphon off the next generation.
In a series of articles over the last year, the Wall Street Journal investigated the retention crisis facing the major Wall Street banks. Most tellingly, LinkedIn analyzed former investment bank employees who left for other jobs. Those employees spent only 17 months at investment banks, down from 26 months a decade earlier or 30 months in 1995. Employees are deciding to leave earlier in their career, reducing the return for banks on the sunk costs required to recruit and train their employees.
Banks pursue several different options to address declining retention. Citibank offered a paid sabbatical a year early in the career, providing 60 percent of the salary to work for a non-profit for a year. Other banks adjusted work hours, attempting to fence off weekend hours from routine work. JP Morgan allows young bankers to spend up to 15 percent of their time assisting non-profit organizations. All of these changes attempt to address the desire to perform meaningful work while providing for a work-life balance.
Perhaps the biggest challenge facing Wall Street is the delayed gratification model that worked for previous generations. Under that model, young bankers toil under 100-hour work weeks on rote drudgery until several years into their career. After paying their dues, opportunities open to negotiate major deals and hold great responsibility — followed by the huge paydays for which Wall Street is known. Some surveys point to a breakdown in the model because of millennial employee expectation, or as the Wall Street Journal put it: the “desire to take on more substantial work sooner”.
More nimble competitors for talent, whether from private equity firms or Silicon Valley, can offer young employees more responsibility sooner than the traditional Wall Street banks. The major banks are tied to their own legacy, where management all arose through the same system. Some banks are attempting small changes at the margins, but none of the changes will place a banker with four years of experience in charge of far older peers. The requirement to wait your turn remains.
All of this brings us back to the U.S. Army. Many have written on the talent crisis facing the Army, whether in feature-length magazine articles or even in full-fledged books. Smart and capable young officers have many options for employment after the initial service obligation, often in organizations far nimbler than the military. Many are leaving the service, in aggregate at an alarming rate.
The same cultural factors buffeting the retention rate on Wall Street affects the military. As Charles Murray ably described, the market places a premium on intelligence, more so now than in previous decades. Intelligence probably always helps you in a job, but relatively few jobs absolutely required it forty years ago. Today, the traditional smart jobs (law, medicine, military, finance, and engineering) must compete with a greatly expanded financial sector, Silicon Valley, and technology-enabled firms for talent. For a young person looking to use their intelligence, many more options exist than for their parents. The problems in recruiting and retaining talent is not necessarily a millennial generation problem, as one study points to a decades-long intelligence drain on at least one of the services.
No easy solution can address the problem, whether on Wall Street or in the Army. The Army’s model — occasional command opportunities combined with a 20-year full pension — might not provide the incentives necessary in the robust talent market. A great advocate for reform, Brad Carson, recently resigned, leaving no clear heir to personnel reform.
We are left with a hierarchal and bureaucratic system ill-designed for a cohort of employees who expect work-life balance, intellectually engaging work, and meaningful responsibility — all early in their career. Hopefully, the Army will retain enough of its brightest stars to provide the leaders of the future. Hope should not be a course of action.
MAJ Hank Waggy is a military intelligence officer currently stationed in Colorado. He’s a veteran of several tours to Iraq and Afghanistan, and once served at Army Human Resources Command. The opinions expressed are his own and do not reflect those of the U.S. Army or the Department of Defense.
Photo credit: Wikimedia Commons