The Clustering of Financial Services in London*

channels are least important for graduate recruitment which tends to be more routinized
and where the candidates concerned will have less of a reputation that might be broadcast
over informal channels. The informal recruitment of senior staff is particularly important
in investment banking and fund management. It is noticeably less likely to be regarded as
important by legal firms. Firms in legal services rate informal recruitment of graduates
significantly more highly than do banks and insurers. Informal recruitment is also
reasonably important for client-facing staff. Insurance companies are significantly more
likely to rate informal recruitment of client-facing and back office staff as important.

Finally, the presence of a pool of talented labor with relevant skills was regarded as a
highly important factor which contributed to the ability of firms to innovate. There is
virtually no difference in the importance attributed to this factor by firms in different lines
of activity. Evidence from the interviews suggests that labor market churn/turnover
(estimated to be 25% annually) was an important mechanism for all sectors to bring
innovation into the firm, whether that be the specificities of particular labor market
processes or tacit and formal knowledge brought about via new cultural working practices
or management structures.

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