The War for Talent Will Not Go Away
By Alan J. Kaplan for BankDirector
The “war for talent,” however it manifests itself within your institution, shows no signs of letting up. First coined by the consulting firm McKinsey in a groundbreaking human capital study over 25 years ago, the phrase still holds true today. A quarter-century later, the challenges of attracting, developing and retaining top talent remain as formidable as ever.
This issue is particularly pressing in the banking industry, where the scarcity of formal training programs has been well documented. But the talent conundrum extends far beyond banking, affecting many of today’s high-priority sectors like pharmaceuticals and semiconductors. Companies in these industries may want to boost domestic manufacturing for national security reasons, but the real question is: If they build new plants, will the workforce follow? And at what cost? Offering wages well above market rates to entice workers may prove unsustainable. Is banking really so different in this regard?
Macroeconomic Forces Fueling the Talent Challenge
Several broad economic factors reinforce the talent shortage and will continue driving demand for staffing, recruiting and executive search firms in the years ahead. Investors in the human capital sector frequently note two major trends:
● An aging workforce. As older generations retire, younger generations entering the workforce are significantly smaller. This trend is accelerating across the U.S.
● Shifting demographics. Millennials — born 1981–1996 — now make up the largest segment of both the population and workforce at around 22%, followed closely by Gen Z (those born between 1997 and 2012) at 21%. However, Gen Alpha (those born 2013 and after) represents a steep decline at just 14%. This means that by the time Gen Alpha enters the workforce — whether after high school (circa 2031) or college (circa 2035) — employers will face a significantly smaller talent pool.
Long-term talent planning is no longer optional — it’s essential.
External Factors Exacerbating the Talent Shortage Beyond generational shifts, immigration changes and education trends are also reshaping workforce dynamics. The reduction in skilled immigration affects the availability of technical and professionals with advanced degrees, who remain in high demand. Additionally, college enrollment has declined due to demographic shifts, rising tuition costs and increased interest in trade careers — jobs offering ready employment and solid financial opportunities.
Meanwhile, even amid fluctuations, unemployment remains historically low. This labor market reality continues to tip the scales in favor of workers rather than employers.
The Reality of Leadership Succession In my role advising financial services CEOs and board leaders, I’m often asked: “How’s the market?”Barring those rare black swan events, my answer remains the same: “Pretty tight.”
The demographic profile of today’s sitting bank CEO skews toward individuals nearing retirement. Leadership succession is critical, yet many boards hesitate to address it. Avoiding tough conversations with the CEO allows uncertainty to linger and may frustrate prospective contenders who are wondering when they will get their chance to lead the institution. Failing to plan for CEO succession means failing to plan for the institution’s long-term success and autonomy.
For banks in smaller markets, the talent challenge is even more pronounced. Recruiting outside executives can be costly and relocation is often complicated by limited housing availability. Growth-oriented banks usually seek next-level talent, but is that talent accessible when and where they need it?
A Strategic Approach to Talent Management
Solving the talent conundrum requires a forward-thinking approach to human capital management, starting with a strong and strategic human resources leader at the helm. Banks must systematically:
● Map existing talent across the organization.
● Identify future talent gaps based on projected needs.
● Develop a timeline to address those gaps proactively.
● View talent management as a strategic imperative.
Organizations that acknowledge their own talent deficiencies and take decisive action will be best positioned to survive and thrive in the years ahead.
Alan J. Kaplan, Founder & CEO
Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and board advisory firm based in Philadelphia. Kaplan Partners is a longstanding partner with Bank Director. You can reach Alan at 610-642-5644 or alan@kaplanpartners.com
Alan J. Kaplan, Founder & CEO
Alan J. Kaplan is Founder & CEO of Kaplan Partners, a retained executive search and board advisory firm based in Philadelphia. Kaplan Partners is a longstanding partner with Bank Director. You can reach Alan at 610-642-5644 or alan@kaplanpartners.com.
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