Why is Goldman Sachs so popular
Goldman Sachs, Jeffries, Citigroup: Wall Street Bankers' Call for Help - Does the Financial Industry Need a Cultural Change?
They hit a nerve with that. Within a few days, Jeffries, Citigroup and other Wall Street houses have rushed ahead with initiatives to relieve their overworked employees or at least to reward them additionally.
But the Goldman bankers' call for help has sparked a new debate about the future of the financial world: some say young bankers are paid exceptionally well for their work, so they shouldn't complain about long nights at their desks. Wall Street has always been like that, after all.
Others, on the other hand, urge a departure from yesterday's virtues. It is already becoming more and more difficult to attract the right talent. And the new generation shows that they can no longer do anything with themselves.
You have a maximum of ten minutes to call you back at night
Frank Mason * is one of the old school investment bankers. In the first three years of his career in the 1980s, he worked practically every day. Even on weekends or over the holidays, he received faxes with documents to review.
There was only one exception. “I got married on a Saturday and had to fight hard with my bosses to ensure that I actually didn't have to come to the office that day,” recalls the New Yorker.
Others had been hit even harder: Wall Street veteran Bob Greenhill, who headed investment banking at Morgan Stanley in the 1980s, was notorious for his merciless claims. In the days before cell phones, like many other managers, he used pagers. “If he called one of his young employees at two in the morning, they had to call within ten minutes. Otherwise they would be yelled at, ”says Mason.
Today, the expectation of being constantly available has not changed much - despite melodious corporate values on the banks' websites and commitments to "stakeholder capitalism", which wants to take into account the interests of the environment and the well-being of employees as well as the share price. "If the customer wants something, it is the top priority, even if the teams are actually already overloaded," says a former banker from Goldman Sachs.
Where there is a will, there may be a way
Something could well change, say critics such as Jake Richmond *. “If the banks really wanted it, they could of course reduce the workload. There is no question. "
Richmond himself retired from a major US bank to enjoy more freedom. “The answer to any problem is always: 'You have to work harder.' The banks could also ask themselves: 'Which processes could we automate, how can we plan better to make the work of our employees easier?' But that doesn't happen, ”criticized Richmond.
He fears that this stubborn attitude could harm the banks in the long run. “In other industries, employees are encouraged to work as smartly and efficiently as possible so that they have more free time.” In the case of banks, on the other hand, it is often unnecessary work. The long working weeks resulted in people acting unproductively at some point.
The 13 Goldman employees complained in their presentation of stress-related anxiety and dwindling physical and mental health. All 13 were confronted with unrealistic work demands, which also had a negative impact on their private life.
The corona crisis has increased the burden again
The pandemic has exacerbated the situation for several reasons: The boom in mergers and acquisitions and in private equity deals has once again significantly increased the already high workload. Around 8,000 private equity deals were announced last year - more than ever before.
IPOs and especially the so-called Spacs were more popular than ever. These are shell companies that get startups public faster - one of the hottest trends on Wall Street and a lucrative business for investment banks. At the same time, the number of insolvency proceedings rose due to the pandemic.
At the same time, young bankers complain that they learn little because they can no longer accompany their superiors to appointments and in the pandemic they are not taking the time to coach them via Zoom and give them sufficient feedback. Harsh emails dominate everyday life, mostly with the content: "Can you please correct that and send it back."
The young bankers are quickly labeled as lazy by older colleagues and managers. However, critics warn not to dismiss this dynamic too quickly. "We're seeing a long-term trend: people, regardless of age, are questioning old work patterns," says Richmond. "They are looking for meaningful tasks and are no longer so easily prepared to allow themselves to be exploited to the same extent."
Goldman CEO Solomon is sending mixed signals
Other institutes are also feeling the problem. Shortly after the Goldman presentation found its way into the public eye, Citi CEO Jane Fraser announced "Zoom-Free Fridays" and encouraged employees to take vacations.
The boutique investment bank Moelis & Co. pays its young bankers an extra $ 10,000 to invest in their mental health. However, the company hardly leaves any time for this. The employees should take time off on Friday evening and Saturday morning. However, at all other times they are expected to be available.
Meanwhile, Goldman boss Solomon is sending mixed signals. He has announced that he will actually keep his old promise of free Saturdays this time and hire more bankers. At the same time, he urged his employees to continue to give everything. "You must not forget: If we all go the extra mile, even if we believe that we have reached our limits, that can really make a difference in our performance," he said in an address to his worldwide at the end of March Investment bankers.
It is not the first time that banks have had to justify their harsh working conditions - and promise improvement. In 2013, a 21-year-old Bank of America intern died of an epileptic fit in London. He worked 72 hours.
The bank then recommended that young employees allow themselves at least four weekend days off per month. Goldman Sachs introduced a limit of 17 hours a day for interns. Two years later, the suicides of two young bankers in the United States sparked a new wave of such announcements.
Experts are skeptical that a cultural change is taking place
Industry insiders don't believe that much will actually change this time around. “The bankers who make the decision point to the fact that they went through this tough school themselves,” says Mason. “They believe this is the only real way to find people with the fighting mindset they are looking for on their highly competitive teams. That also has something to do with pride. "
Mason points to the good earning potential in the later years. With starting salaries in excess of $ 100,000, the young bankers would be well paid. Hard work is the ticket to taking home seven-figure salaries in a few years.
Mason himself went into business for himself after a few years with large investment banks and is now a billionaire. “Those who work for tech corporations may initially earn more and don't have to work as much. But most of them fail to get past an annual salary of $ 500,000, ”he says. "It's different on Wall Street."
The topic of workload is also controversially discussed in career forums such as “Wall Street Oasis”. Not all of them jump in on the overworked Goldman bankers. Money and status are still important drivers for many. "I don't feel like hiring more people and our bonus melts for that," complained one user. "If you can't cope with all the work, you should just work somewhere else."
* Name changed
More: The performance rituals in investment banking are from the day before yesterday - one comment.
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