In the wake of Lehman Brothers’ collapse, campus recruiting is probably the last thing on the minds of executives at financial services companies.
But shelving such recruiting activities might put these firms at a severe disadvantage when markets pick up again, consultants warn.
The announcement on Monday, September 15, that Lehman, which has 25,000 employees, was filing for bankruptcy is the latest in what seems to be an ongoing unraveling of several financial services firms, which now include Bear Stearns, Fannie Mae and Freddie Mac. At press time, insurance giant American International Group was also discussing a restructuring.
This string of events has executives at financial services companies hunkered down figuring out how they can survive. Recruiting is probably the last thing on their minds, said Rick Smith, senior vice president of Sibson Consulting.
“This is the Katrina of Wall Street,” he said. “There isn’t going to be a lot of hiring for a while.”
But just because companies might be freezing their hiring efforts doesn’t mean they shouldn’t continue attending campus recruiting events, Smith said.
“Financial services companies should still get out there and say, ‘We may not be hiring right now, but maybe in a few months,’ ” Smith said. “They want prospects to remember that when things were tough, they were still nice to them. ”
If these firms completely scale back their campus recruiting, they risk losing the top MBA prospects to other industries, experts say. “The consulting industry might do well tapping this talent,” he said.
Given the uncertainty and the lack of job openings, many MBA graduates may turn to the Big Four consulting firms, including PricewaterhouseCoopers and Deloitte, for jobs, said Alan Johnson, a compensation consultant in New York.
Companies that do consulting for financial services may also look to recruit these MBA graduates, Smith said.
“We may even want to look at some of these kids,” he said.
Companies such as Goldman Sachs and Morgan Stanley, which have so far remained unscathed by the crisis on Wall Street, are likely using this time to recruit more experienced employees from the likes of Lehman and Merrill Lynch, consultants say.
“They are definitely picking the cherries out of the pie,” said William J. Morin, chairman and CEO of WJM Associates, a New York organizational consulting firm.
“If these firms are smart, they will spend a similar amount of time reaching out to the top MBA students with their recruiting activities,” he said.
Financial services firms need to remember that for many young MBA students and recent graduates, this is the first major crisis on Wall Street that they have seen, Smith said. It’s up to recruiters to reassure them, he said.
“I have been in this business for 25 years and have lived through two recessions and a number of market crashes,” Smith said.
Although there might not be work in the industry the next six months, Smith and others believe that it will pick up again next year.
“This will pass,” Smith said. “It always does, and Wall Street will come back as strong as ever.”