Picture a first-year associate who makes plans with college buddies on a Friday evening at about 8:30 pm after a long, tough week. Just as she taps the elevator button, she is summoned back to her desk, because a vice president in M&A just received an e-mail from a managing director, who just received a phone call from a client CFO who on a whim decided to increase the offer price that the client company wants to make on a target firm. The CFO, responding to the CEO, wants to know if the numbers make sense for the new offering price and wants to know the answer by Saturday afternoon.
The associate returns to her desk and cancels her Friday plans and all hopes of spending a weekend winding down from a week of hard labor. Back into the dozens of variations of Excel spreadsheets depicting merger-acquisition scenarios she plunges. Nothing is new. She and her analyst and associate colleagues encounter this scene several times a month.
The tale is told frequently, year after year. In post-crisis times and in times when recent college and MBA graduates can be lured into other more humane (and perhaps similarly compensated) career choices, some financial institutions worry they must do something about a potential talent drain. This tale, however, has been told over generations. Financial analysis, financial modeling, and the early years of banking and financial research have been marked by stories of hours working until 2 a.m. and weekends erased by a sudden tap on the shoulder.
Banks, too, have endured intermittent panics about about potential talent drain since the mid-1990's. The current times aren't the only times they've hustled among themselves to do something about it. Remember the dot-com craze of the late 1990's and early 2000's? An analyst from this period wrote a memorable treatise, a state-of-banking message about what banks must do to appease the junior crowd and keep them from escaping to more interesting dot-com jobs on the West Coast. His plea and his presentation of soft demands appeared on the front page the New York Times.
Around that time, banks, one by one, began to ease the starched-shirt, Brooks Brothers suit dress code and permit what is now know as "business casual" fashion in the office. Many of his "demands" from that time, however, have disappeared into history, and banks quickly resumed their culture of expectations that analysts and associates must work marathon hours to justify their handsome compensation packages and must, as industry old-timers contend, "pay their dues just as those who trekked before them."
Voluminous websites, chat-rooms, magazine stories, and books have been written about the lifestyles and work burdens of those in their early career years working at banks, private-equity firms or hedge funds. In recent years, especially in 2014, big banks have reviewed work-life balance in the trenches and tried to come up with satisfactory solutions, including offering juniors the occasional weekend off and presenting ways to relieve the work pressures and daily burdens.
Some banks are considering increasing the number of hires in the coming year under the premise that (a) business conditions are better, (b) there is more work to be done for clients and (c) it would be better to spread this work among a larger number of analysts and associates. In the last few weeks, a few banks (notably, Goldman Sachs stepping out in the middle of summer with its announcement that it will pay analysts and associates base salaries that are about 20 percent higher) have decided to increase compensation in ways they did routinely before the crisis.
History suggests the pathways to better work experiences are slippery. They improve. Business (deals, client activity, trading, and expansion) takes off. Competition grows stiffer. Work burdens pile up. Work environment inevitably sinks back to days of dreary, exhausting work weeks. Banks resolved and committed to improve the work-life balance of young professionals. But the real world got in the way.
When deals must get done before they are lost to competitors and when client presentations must be prepared overnight, or when market conditions change suddenly as stocks rumble or interest rates surge, vice presidents and managing directors hardly think about work-life experiences. Bank senior managers slip back into old habits and forget about the newly implemented programs to improve the lives of juniors.
(In banking, the competition to win a client or a new deal has been and continues to be fierce. Bankers know that clients sometimes resort to whimsical, illogical criteria in choosing a winning bank. Pricing, fees and execution may be a primary reason why a Fortune 500 company chooses Citi to lead a financing deal (or why Alibaba opted for Goldman to lead its upcoming IPO).
But in some cases, bankers know the client might choose a bank based on exuberant vibes in a client meeting, a polished presentation before the client's board of directors, or a personal relationship that goes back to good times in a freshman-year dorm. Bankers, therefore, don't want to take chances; hence, they summon analysts and associates to be accessible 24/7 to help find more ways to increase the probability that their bank will be selected.)
After the financial crisis of the late 2000's, banks once again felt they reached an emergency state, where they feared the best and brightest will ignore Wall Street. Most inside and outside the industry (whether they were just about to embark on a career or had survived decades) contemplated deeply about long-term careers in financial services: How will roles change? When will client activity rebound? What impact will regulation have on roles? As banks re-engineered the organization, how would they re-design work roles? Will bank jettison entire units (trading desks, departments, etc.) over time or in one leap?
An industry in turmoil also had to confront criticism from every direction--regulators, politicians, the public, other market participants, and clients. How could financial institutions, therefore, convince a recent Brown graduate or a new Michigan MBA that he should migrate to Wall Street and be assured that his business unit will be in operation a year or two later? And how could they convince him to ignore a sweet offer to work at Google or at a West Coast start-up, where the grass is green, the sun shines, lunch is free, and time spent away from the office is applauded?
The environment continues to be tweaked. Banks (and hedge funds and private-equity firms) continually address work conditions, even as traders and deal-doers slip back into old habits. Even if the long work hours are still characteristic of the banking life, the discussion continues.
Tracy Williams
Se also:
CFN: Delicate Balance: Long Hours and Personal Lives, 2010
CFN: Goldman Sachs and Work-life Balance, 2013
CFN: MBA's and Investment Banking, 2013
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