Asset-management firms make investments on behalf of other people and institutions. Since the success of these firms depends to a critical extent on the quality of the talent that they employ to make investment decisions, they must excel at recruiting, developing, rewarding, and retaining talent, right? Wrong, according to their own people.
The message on talent from asset-management employees to their bosses is an overwhelming "could do better," as a McKinsey survey shows.1 The bosses might be forgiven for being surprised. After all, in the United States the average earnings for investment managers are almost double those for lawyers. How could employees feel that they are badly treated? And what if they do?
These feelings do matter, for the survey shows that companies perceived by their employees to be good at managing talent are also the ones doing well in the market (Exhibit 1): the three firms with the best results in each area were almost always the same. Whether or not these firms really are the best talent managers hardly matters. After all, labor in this industry is highly mobile, but if good employees believe that they are working for the best, they will stay put.
Asset-management...