For years, every spring has brought back a familiar two-step at Wall Street banks, in which first-year analysts, fresh out of college, are courted by private equity firms for higher-paying jobs that begin after their two-year banking stints are over, and those same first-year analysts invent plausible reasons to sneak out of the office in order to interview for those jobs without their bosses finding out.
The private equity recruiting season has been pushed earlier and earlier by jumpy buyout firms, who can't wait to get their grubby hands on Wall Street's most talented young'uns. That's good for the young'uns, but bad for the banks that employ them, since banking analysts who have their next jobs lined up a year and a half ahead of time tend to get substantially less motivated to do work. So Morgan Stanley, following Goldman Sachs's lead, recently tried to convince job-hunting overachievers to stay put by banning them from interviewing with other firms until October 1 of their second year.
But the job-hunting overachievers revolted, and now, they've prevailed.
Bloomberg reports on the bank's about-face:
Morgan Stanley, the sixth-biggest U.S. bank by assets, had sought to delay outside recruitment to prevent distractions and productivity loss, said one of the people with knowledge of the decision. Junior bankers were interviewing elsewhere after only six months at the firm and securing other jobs with more than a year left in the program, the person said.
Some analysts objected, particularly as other banks refrained from similar bans, the people said. Eventually, many Morgan Stanley analysts sought interviews secretly, ignoring the pledge they signed last year, one of the people said.
“That’s a difficult thing to monitor,” Lipstein said. “While you can scare the bejesus out of a 22-year-old, the smart ones will know that you can’t stop someone from managing their career.”
The bank held a meeting April 12 led by Grace Kim, an executive director in the investment-banking division, to say it was rescinding the rule, the people said.
A victory for all that is right and good! Now Morgan Stanley's young analysts can openly wage war with their colleagues for the few remaining spots in private equity firms, and be openly bitter about the spots they inevitably lose to Goldman Sachs's young analysts, instead of keeping it all bottled up inside.