This article describes strategies on how to attract, develop and retain data scientists and other individuals with strong quantitative and data skills. Regions Model Risk Management and Validation has benefited from under 10% external turnover for the past five years and the article discusses how we at Regions has reached that success. Written by Jacob Kosoff and Irina Pritchett.

1. The RMA Journal May 2018
46
OPERATIONALRISK

2. May 2018 The RMA Journal 47
MODERATING
THE CHURN
RETAINING EMPLOYEES
IN THE QUANTITATIVE BANKING SPACE
BY JACOB KOSOFF
AND IRINA PRITCHETT
In 2016, the employee turnover rate in
banking reached its highest point in 10
years,1
exceeding the all-industries aver-
age by 3.5%.2
High turnover is a costly
problem, and one that our team in the
model risk management and validation
(MRMV) group at Regions has worked
hard to minimize.
By enacting strategies to attract and
retain the right employees, MRMV
achieved a turnover rate of 8% over the
past year. That’s notably below the 2016
all-industries average and more than 5%
below the voluntary turnover rate for
banking and finance. That is to say, we
are bucking the trend. Fortunately, our
success is largely a result of deliberation
and action. In this article, we share the
strategies employed to moderate the
churn.
Costs
Picture a scale. On one side are stacked
blocks labeled with the tangible and in-
tangible costs of external turnover. This
side includes costs that
1. Accumulate before an employee leaves
the institution, including lost employee
and supervisor productivity and separa-
tion processing.
2. Continue through the time of the job
vacancy, including the myriad costs
that come with recruiting and inter-
viewing candidates.
3. Don’t end until the new hire is contrib-
uting to the team without detracting
from others’ productivity.
For those worried about paying a
premium for retention, research shows
that hiring internally comes at a lower
cost than hiring externally.
Now for the other side of the scale.
Retention certainly incurs time costs, as
every individual on the team must spend
time thinking, communicating, and act-
ing on strategies that encourage the de-
velopment and retention of others. Time
is money, to use the cliché, and the finan-
cial costs of having team members spend
time actively contributing to a culture of
retention certainly add up. Nevertheless,
our experience shows that the costs of
turnover easily tip the scale.
Recruitment and Retention
Recruitment in and of itself is relatively
easy. Attracting new graduates in need of
experience or associates with quantitative
backgrounds willing to switch jobs for a

3. The RMA Journal May 2018
48
experience and institutional knowledge
in the meantime.
External Recruitment
The MRMV group is open to applications
from all candidates. However, the larg-
est single source of external candidates
has been the networks of team members.
Most candidates in our pipeline have
either worked or studied with existing
associates on our team.
Aside from the obvious benefit of rely-
ing on personal knowledge of candidates
to attract quality talent that fits into the ex-
isting culture, engaging the team’s network
in this manner allows our associates to feel
valued and invested. Every individual in
our department is tasked with impacting
the culture, and this is one way they are
able to do so. Furthermore, each associate
knows that he or she is able to significantly
influence the makeup of the team.
External recruitment provides the op-
portunity to diversify the team with can-
didates whose skills add to the group’s col-
laborativestrength.Thisisincontrasttothe
mistake of building a homogenized team
orsearchingsolelyfortheperfectassociate.
Diversitybringschallengeandengagement,
while demonstrating an appreciation for
individuals’ unique skill sets.
Internal Recruitment
The benefits of internal recruitment come
pay bump are common strategies. We find
that such strategies work on the front end
of getting people in the door, but do little
to ensure long-term retention.
For Regions’ MRMV group, retention
starts at recruitment. Besides striving for a
culture that attracts individuals interested
in growing with the team and the com-
pany, we assess indicators of a candidate’s
long-term prospects. Particularly when
hiring external candidates, we look at
key indicators of their potential for lon-
gevity at the company: their geographi-
cal preference, their motivation behind
previous career moves, and their career
aspirations. Maintaining an internal
culture that keeps team members chal-
lenged, engaged, and appreciated attracts
quality individuals to the team.
Recruitment is an ongoing process.
There are always people on our radar
and in our pipeline, so we never have
to scramble for candidates in the event
of a job opening. Transparency and trust
are vital when developing and maintain-
ing a pipeline, given that we often have
conversations with candidates regarding
jobs that may not come open until many
months later.
Maintaining a pipeline also allows us
to share candidates with other teams. We
have recommended many individuals
throughout the bank, and some in time
may join our group, having accumulated
from hiring someone who has been vetted
within the company and who in turn has
institutional knowledge, experience, and
an internal network. Compared to an ex-
ternal candidate, an internal hire may be
more productive from day one and may
very well come at a lower direct cost. We
have divided internal recruitment into
two categories: active and passive.
Active Internal Recruitment
Active internal recruitment starts with
the managers of model risk management
building healthy and trusting relation-
ships with the human resources depart-
ment and people managers in other
areas of the bank. These relationships
give MRMV managers the opportunity
to have discussions with other groups
about talent management strategies and
succession planning. They let the other
groups know about the strengths of the
associates in MRMV and how they could
contribute to other teams. Indeed, MRMV
managers have built a brand of “brag-
ging” about their associates, which serves
to develop interest in MRMV associates
in other parts of the bank. Furthermore,
it facilitates and supports having other
areas of the bank hire MRMV associates
and proves that MRMV is a true incuba-
tor of talent.
During those conversations, MRMV
managers also engage in a dialogue with
a HR representative and people manag-
ers to let them know we are looking for
internal talent. People managers in other
areas, knowing it is a two-way street,
usually suggest that MRMV reach out to
specific associates on their team and start
a conversation. Over the past few years,
roughly four out of five people managers
will be positive about the idea and will
suggest we reach out to certain associates
on their teams. We move forward with
around 80% of the associates whom the
people managers have explicitly encour-
aged us to meet.
After asking the people managers if
they have anyone in mind, we compile a
list and assign an associate on our team
to invite the candidate to coffee for the
purpose of gauging interest. That the
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THERE ARE ALWAYS
people on our radar and in our
pipeline, so we never have to
scramble for candidates in
the event of a job opening.

4. May 2018 The RMA Journal 49
MRMV associate and the other associate
know that the managers have talked first
and are truly on board is key at this point.
Recruiting of internal candidates is
strengthened through the friendships
and networking done by members of the
team, so the conversations with associates
on others teams are often as natural as
two friends talking. Furthermore, when
the internal associates on the other team
know their manager believes their cur-
rent skills make them attractive to other
areas within the bank, they become even
further engaged.
Quants who have been in their current
positions for two to three years are the
ones most often recommended by their
current managers, who may be concerned
that the associate has reached a point of
restlessness and desires a move. We in
MRMV want to ensure that the move is
internal and not external.
When we have interest from an inter-
nal candidate, we place priority on com-
munication and transparency with that
individual and his or her management
well before the official interview process
begins, since there is no true benefit if it
comes at another group’s expense. Also,
it is important to note that in these con-
versations no offer of employment is
ever made and no titles, positions, or
compensation are ever discussed. That
will all occur through HR after the formal
interview process is over. The conversa-
tions are designed to assess interest. The
formal interviews are where skills and
ability are assessed.
Passive Internal Recruitment
Passive recruitment is more externality
than strategy. It is a by-product of engag-
ing with other teams, building our team’s
reputation, and increasing its visibility
throughout the institution. One way in
which we engage with other groups is by
lending and borrowing individuals. This
allows quants to develop their skills and
institutional knowledge, while encour-
aging internal career development for
members of all teams.
Wealsohostlearningandservice-based
initiatives for individuals throughout the
institution. These include regular Lunch
and Learns, an annual Quant Summit,
weekly math colloquiums and coding
workshops, and a monthly volunteer
activity where we lead financial literacy
workshops. Each of these items came out
of team members’ personal initiatives.
The result of the passive internal recruit-
ment is that it leads to other associates
discussing with their current managers
the benefits of joining MRMV.
MRMV as Talent Incubator
Currently, 32 areas in our bank employ
quants, many of whom are alumni of the
validation group. As a talent incubator,
MRMV encourages internal career de-
velopment. We reasonably expect that
somewhere between 65% and 75% of
our team will explore internal career op-
tions outside of validation after two years
of service with MRMV
, and we prepare
them to do so by discussing strategies
well ahead of time.
We start the conversation on internal
development during the recruiting and
interview process, since we want to at-
tract individuals who are actively inter-
ested in the trajectory of their careers
and want that trajectory to be within
our organization. Once on the team, as-
sociates are encouraged to develop their
skills according to their interests as well
as the team’s needs.
If an associate expresses interest in
moving into liquidity risk, for example,
we encourage him or her to work on rel-
evant validations and build experience in
that space in order to be competitive job
candidates when an opportunity comes
up. Further, we regularly train our team
on building their brand, both as indi-
viduals and as a department. Having a
positive reputation makes internal move-
ment much smoother. Once associates are
ready to actively pursue a new position,
their managers discuss with them ideas
for how to approach the hiring manager

5. The RMA Journal May 2018
50
develop. This allows managers to allocate
projects based on their team members’
strengths and interests. The skills assess-
ment and open communication between
individuals and their managers work in
conjunction with having a flat organiza-
tional structure to allow individuals the
opportunity to optimize on their skills
and interests.
Another vital area of communication,
transparency, and trust is that of career
growth within the team. We present a
clear outline of the requirements and
experience necessary for internal de-
velopment, which we keep saved as a
shared document and discuss openly.
Without transparency and communica-
tion, there is too much room for error
and discouragement. And without trust
between team members and managers,
transparency and communication are
meaningless.
Evaluating Engagement
The benefits of retention are a natural sell
to employers, but not as easily accepted
by employees. Job hopping is popularly
seen as a path for individuals to get ahead,
particularly in terms of pay. Other ben-
efits of job hopping may be a broadening
of one’s knowledge, skills, and network.
However, individuals who switch
companies often forgo significant upward
movement. Eventually, they risk having
too little leadership experience to be
hired within their desired paygrade and
and have open conversations about their
interest.
Internal career development is a win
for all involved: The associates experience
career fulfillment, their new teams gain a
valuable member, the company retains a
strong asset, and our department further
builds a positive reputation and broadens
its network within the institution.
Communication and Transparency
Retention is an extremely attractive con-
cept from the perspectives of cost and
team productivity, but one easily put on
the back burner as the time and effort
it requires get allocated to more imme-
diately pressing projects and deadlines.
Thus, a pivotal step toward retention
is to make it an active priority. Retention
must be a daily exercise in nurturing
employee engagement and development,
since strategies are rendered useless
without a consistent commitment of the
time and resources needed to achieve
retention goals.
Retention strategies, once integrated
into the team culture, can become second
nature. The strategy involves constant
communication in order to encourage
growth and engagement. One form of
communication we’ve found helpful is
having all team members fill out a skills
assessment and then update it as their
skills and interests change. Individu-
als report on two things: the skills they
currently have and those they wish to
fall behind their peers who’ve pursued
more intra-company opportunities.
To this point, we studied the back-
grounds of model validation and develop-
ment heads in the banking industry and
assembled this general profile:
• Rarely at a firm for fewer than three
years.
• Average time at a firm was five to seven
years.
• Rarely at more than four firms within
the first 20 years of their careers.
• Had progressive responsibility within
their firms.
• Moved between departments in their
firms.
The common background among quan-
titative leaders is a strong advertisement
for internal development, showing that
intra-institution career development is
rewarded across the industry. However,
we don’t take this assertion for granted.
Corporate culture is a dynamic entity,
and future trends are likely to differ from
those of the past. Accordingly, we con-
tinuously strive to make internal growth a
mutually attractive arrangement between
individuals and the institution.
Conclusion
Over the past year, Regions Bank’s model
risk management and validation group
had an average count of 25 full-time em­
ployees and experienced just two exter-
nal turnovers, resulting in an 8% annual
external turnover rate, notably below the
all-industry average. We are very proud
of that success and this article summa-
rized our path to that success.
Jacob Kosoff is head of model risk management
and validation at Regions Bank. He can be reached
at Jacob.kosoff@regions.com. Irina Pritchett is a
model validation analyst at Regions Bank. She can
be reached at Irina.Pritchett@regions.com
Notes
1. The source for this figure is a December 2016
publication by Crowe Horwath LLP.
2. See http://www.compensationforce.com/2017/
04/2016-turnover-rates-by-industry.html.
RETENTION IS an extremely attractive
concept from the perspectives of cost and team
productivity, but one easily put on the back burner
as the time and effort it requires get allocated to
more immediately pressing projects and deadlines.