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Technology and Talent: Does a Lack of Automation Raise the Risk of Losing People and Negatively Impact Your ROI?

By Backstop Author

The institutional investment industry is facing fierce competition to attract and retain fresh talent. The challenge is especially acute in recruiting new and recent graduates who historically filled entry-level, “bottom of the ladder” jobs, where new recruits learned the basics of the business so they could gradually work their way up in a firm.  

Generation Z: A New Set of Expectations for the Workforce 

The problem is that the old-school model of advancement doesn’t cut it anymore. Generation Z workers and job candidates (those born roughly between the mid-1990s and early 2000s) bring profoundly different expectations to the workforce than their predecessors, even those just 10 years their senior. And as you might expect of “the first generation that has never known a world without the worldwide web,” technology is a huge influence in shaping those expectations. i 

Financial rewards still matter, but today.s workers want more: 

  • They want to make a meaningful contribution to their employers’ success and see tangible results for their efforts. “Though making money is of course still important to this cohort, they are just as driven by a desire to ‘make a positive contribution’ to their employer’s business and to ‘work with great people,’ according to findings from Manpower Group.” ii 
  • Today’s tech-savvy digital natives believe that much of the “boring but necessary work” assigned to entry-level workers is beneath their abilities – they know that “technology and automation have eliminated many of the more manual and repetitive tasks.” i  

These high-value workers are likely to be frustrated in an environment with outmoded processes and workflows. Conversely, they will be attracted to companies where processes that can be automated have been automated, freeing workers to leapfrog the dues-paying stage and start flexing their critical thinking skills more quickly.  

Competing for Talent in the Institutional Investment Industry 

So how can institutional allocators and investment managers use this insight to their advantage in the competition for talent? It starts with identifying opportunities for obvious wins in automation. Backstop has conducted research into everyday productivity among both institutional asset allocators and alternative investment managers. Our studies found that both allocators and managers are spending an inordinate amount of time on “non-value add tasks,” many of which are ripe for automation. Similarly, firms are missing opportunities for integration among disparate systems, resulting in a lot of manual downloading, uploading, and transfer of information – work that is typically delegated to less experienced employees.  

The Benefits of Automation for Developing Talent 

Increased data management automation and integration, both internally and externally, would not only free up younger employees for higher-value work but also free managers to invest more time in mentoring, coaching, and developing promising talent.  

A few opportunities that organizations may be overlooking include: 

  • Automated feeds of quantitative data from custodians, administrators, and third-party performance systems  
  • Integrated productivity tools such as chat applications, document repositories, and the many tools workers leverage to organize their work  
  • Industry-specific tools such as due diligence form and questionnaire solutions, eSub-doc processing, and data lakes or warehouses 

Automation in data management will go a long way toward eliminating the drudgery that turns off digital native workers – while simultaneously accelerating the learning curve on the analytical skills they need to advance. Investments in advanced technology are a sign that management is not only modern and forward-thinking but also that it cares about employees.  

The Cost of Losing Talent in the Institutional Investment Industry  

On the other hand, the cost of not automating is potentially enormous, raising the risk of losing not only good employees but also their knowledge. In firms where processes are largely manual and ad hoc, workers carry a lot of data and process knowledge in their heads. When they leave, that knowledge leaves with them, and the processes that depended on them are likely to break down. Automation is critical to enabling firms to “do more with less” and can actually help alleviate some of the pressure on recruiting and retention when not as many hands are required to perform routine tasks. 

The Employer/Employee Dynamic in Today’s Job Market 

Notwithstanding recent high-profile layoffs in the tech industry, the employer/employee dynamic has been fundamentally transformed. And it still appears to favor those in the job market. US Department of Labor data published earlier this year shows the number of new job openings continuing to outpace available workers, and employers continue to cite attracting and retaining talent among their biggest challenges. Moreover, the World Economic Forum projects that Gen Z will comprise 27% of the workforce by 2025. For institutional investment organizations that increasingly rely on this critical talent pool, advanced data management technology delivers dual benefits: not only does it improve processes and reduce risks, but it also helps attract high-quality people and keep them engaged.



i Gomez, Karianne et al, “Welcome to Generation Z,” Deloitte/Network of Executive Women, 2019

ii “What Can Financial Institutions Do to Attract and Retain Top Talent in the Digital Era?”, World Business Research/HR Financial Services 2022 https://hrfinance.wbresearch.com/blog/financial-institutions-top-talent-retention-strategy-in-digital-era/     

By Backstop Author