Junior Salaries Rise as Top Companies Struggle with Young Employee Retention

Even the most prestigious companies have struggled to retain junior employees in recent months as the mental toll of the pandemic and demanding expectations drive out young talent.

“There’s a shortage of experienced junior people,” said Alan Johnson, who is the managing director of Johnson Associates, a compensation consultancy that works with financial services firms. Landing a job at the most high-paying Wall Street companies is fiercely competitive among recent graduates. Retaining those employees, however, has caused headaches for executives…

Junior compensation plays a large role in giving employers an edge against competitors. Many professional services firms compete against one another to recruit talent from top universities. Offering higher salaries than industry rivals can help win over young talent, according to Johnson.

“I think they’re part of the same ecosystem,” Johnson said of major corporate jobs. “Many of those people recruit at the same schools, the same MBA programs, so coming out there’s similarity in pay and opportunity.”

Many companies participate in salary planning surveys to determine compensation levels within the industry and across different positions. That planning has taken on heightened importance this year as employers handle a surge in pandemic- and stress-driven departures by junior workers.

“We’ve told clients that the end-of-the-year pay process this year will be very important,” Johnson said. “It’s going to be a really important year, and make sure you pay people what you think you have to.”

SHRM / July 6, 2021

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Wall Street Bids Up Junior Banker Salaries in Battle for Talent

A full-scale bidding war has broken out on Wall Street, this time over young bankers, as firms struggle to attract and keep talent after the pandemic added to famously crushing workloads…

“There’s a lot of competition for the best people,” said Alan Johnson, managing director of the Wall Street compensation consultancy Johnson Associates. “I think everyone is going to be moving to $100,000 now.”

Bloomberg / July 2, 2021

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First-year Analysts at JPMorgan Will Now Make $100,000

JPMorgan Chase (JPM) is raising the salary of first-year analysts to $100,000, up from $85,000, a person familiar with the matter told CNN Business. The pay hike, which takes effect July 1, means some millennials and Gen Zers will be making six-figure salaries fresh out of college…

The hikes will make JPMorgan the most lucrative big bank for junior analysts — a shrewd move amid an ongoing war for talent between Wall Street and Silicon Valley, where many tech firms offer greater flexibility for remote work.

Alan Johnson, managing director at compensation consultant Johnson Associates, said the moves are a sign of “healthy business and a tight labor market.”

CNN Business / June 29, 2021

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Equities Traders, Underwriters on Track for Biggest Bonus Bumps

Incentive compensation for equities traders may climb as much as 30% while underwriters could see a 40% jump, Johnson said Thursday. Stock underwriters — who worked on a record number of special-purpose acquisition companies in the first three months of the year — are “significantly outperforming” their counterparts in debt capital markets, the consultancy said.

Mergers-and-acquisition bankers are poised to see a jump in bonuses of 15% to 20%, Johnson said. Fixed-income traders are also on track for a boost in pay. Bonuses are typically awarded after year-end and changing market conditions in coming months could alter the compensation picture.

“Combining the remarkable business recovery and with stock-market highs, financial services incentive compensation is expected to increase meaningfully for 2021,” said Alan Johnson, managing director at Johnson Associates, said in an emailed statement.

Bloomberg / May 6, 2021

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CEOs are Getting Paid Bonuses Like There Was No Pandemic

Compensation consultants have long argued that owning stock best aligns the interests of the CEO with those of the company’s shareholders, who are the ultimate owners of the company. Yet companies also note that that sticking to pre-set financial goals during economic downturns may not reward corporate leaders for any critical decisions they make that ultimately protect their companies from financial harm or position them to flourish when times improve.

“No matter how good your incentive plan is, in one year out of 10 you are going to have to make adjustments as to what’s fair,” said Alan Johnson, one of the nation’s top compensation consultants. “When goals become impossible to achieve based on something you could never have anticipated, I am pretty sympathetic to [a company board that says], with the opportunity a CEO had, they did pretty well.”

CBS News / April 22, 2021

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CHROs Flag Burnout, Excessive Stress in Board Reports

“I think generally people think 2021 will be a better year financially and hopefully the workforce will get back. As we tell clients, I think pay is really important, but I think at the moment, the fatigue and stress of the employee workforce is at least as important,” says Alan Johnson, managing partner at Johnson Associates, a compensation consulting firm focused on the financial services industry. “We need to pay people fairly and based on their contribution, but you need to be increasingly on the lookout for their mental health.”

According to Johnson, for example, some boards have deliberated over mandating vacation time in 2021 because they noticed employees were leaving it untouched last year through the pandemic. “You need to manage your employees’ mental health, and I think that’s something that’s been neglected in the pandemic here.”

Johnson says he has also cautioned his clients that the pandemic is going to be a two-year phenomenon, rather than just one.

“We all hoped that when Jan. 1 came along it would be normal, but it’s not going to be normal.”

Agenda / March 8, 2021

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