Wall Street firms resort to desperate measures during staffing shortage

• Wall Street lacks junior bankers right now.
• The labor shortage comes as banks remain busy, forcing higher-ups to do lower-level work.
• It’s caused a hiring shift with banks desperate to fill positions.

The nationwide labor shortage has some Wall Street banking firms feeling the crunch, and everyone from junior bankers to top management is scrambling to handle the overload.

From passing on deals to even filling positions with less-qualified candidates, a new report outlines how banks are struggling to adjust in the wake of the coronavirus pandemic.

Junior banker staff shortage problem trickles up

As Insider reported earlier this year, a leaked powerpoint showed the exhausting hours put in by junior bankers working from home. Some have worked as many as 120 hours per week during the pandemic. That caused Goldman Sachs to shake things up to cultivate a better work-life balance from home.

The burnout warning was very real — some firms had to ramp up hiring to squash it – but the rise of burnout combined with an anticipated smaller headcount in a post-pandemic world has left Wall Street unprepared.

More deals are being made right now than anyone imagined, which requires more workers — something banks did not anticipate:

“If you were having this discussion in July of last year and you were putting your college recruitment and lateral hiring plans [together], would you say, ‘Geez, we need to hire 20% more people’?” said Alan Johnson, the managing director at Johnson Associates, a compensation consulting advisor to financial-services firms.

“People would say, ‘What are you talking about? That’s crazy. We don’t know where the business is going. We’re going to be laying people off, we’re going to be trying to push some people out,'” he added.

Senior bankers pick up the slack

Mid-level and senior bankers are now picking up work that they normally wouldn’t do, according to the report.

One senior banker recently noted that deal execution now consumes 60% of his time. Normally it was around 20%, but the lack of junior bankers forced a shifting of the workload.

The staffing shortage has been exacerbated by the business boom in late 2020 when IPOs were being announced left and right; there were 208 of them in the third quarter alone last year.

One unnamed firm even admitted to hiring junior workers who aren’t fully qualified:

“Given how stretched thin everyone is, I have a deal right now where my VP offered to get into PowerPoint and work through changes on the deck, because we just didn’t have enough people to work on the deck,” this person said.

This analyst’s firm, which has heavily shed juniors throughout the pandemic, has recently been laterally hiring juniors with minimal experience who “have a pretty steep learning curve,” they said.

The result is “a negative feedback loop,” this person added, in which the majority of the deal work is falling on more experienced second- and third-year analysts, who are increasingly feeling the weight of the burden.

While names of firms are limited in the report, it does list how several bigger firms are hiring to fill holes. JP Morgan Chase recently sent an email out to graduates to encourage them to apply to open analyst and associate roles in cities like New York, San Francisco, Houston, and others. Goldman Sachs, meantime, is amping up its hiring efforts, according to the report.