Bankers and lawyers are on an unhealthy treadmill; While long hours are not worth the effort, those able to effect change do not care

January 15, 2014 6:56 pm

Bankers and lawyers are on an unhealthy treadmill

By John Gapper

While long hours are not worth the effort, those able to effect change do not care

For years, getting a job at a Wall Street bank, a Magic Circle law firm or a blue-chip management consultancy was a route to a very rewarding career in return for an awful lot of work. Lately, the bargain has lost some of its appeal to the best and the brightest.The death last year of Moritz Erhardt, a German student who was interning at Bank of America in London, was one prompt for a rethink among investment banks about how they treat young employees. So too, is growing competition for talent from technology companies that offer equity, informality and less relentless work demands.

Both Bank of America and Credit Suisse haveannounced measures

to curb the tradition of making young bankers work into the early hours and through weekends on spreadsheets and pitch books. Law firms are trying to curb attempts by juniors to shine by billing incredible numbers of hours. Consulting firms are telling partners to show a little respect for their juniors.

There is no simple fix for an entrenched culture of overwork at professional services firms. The fact that an entry-level analyst at a Wall Street bank is required to sacrifice his or her personal life to the job – sitting at a desk until dawn, eating order-in food and correcting invisible errors in spreadsheets – has been built into the system.

“They know they have signed up for long hours but, until they get there, they don’t realise how disruptive it is. Your friendships deteriorate and your boyfriend or girlfriend is angry because they have not had a meal with you for a month. You lose touch with your family. It’s miserable,” says Kevin Roose, the author of Young Money , a forthcoming book on Wall Street’s first- and second-year recruits.

It is, of course, an elite problem. Despite everything, thousands compete for such jobs, hoping the Faustian pact will pay off. Goldman Sachs, which has tried to reform how it treats junior employees, received 17,000 applications for its 2014 intake of analysts and recruited 330.

In some ways, those jobs have become more attractive as other industries have reduced recruitment of young people, instead taking on unpaid interns who must work for nothing, relying on parental subsidies. The deal-related professions not only pay well but train their recruits.

There is, however, a flaw in the all-or-nothing choice. The imposition of long hours on analysts and associates is not simply a rite of passage, a military-style effort to destroy resistance and inculcate loyalty to the organisation. It is a symptom of a problem with work in professional services in the 21st century – it is unhealthy.

Erhardt’s death may have been an extreme example – the cause was an epileptic fit that a coroner said could have been triggered by overwork. But many bankers, lawyers and consultants face the stress of not being able to set any boundary between work and home. It ripples down the chain of command, starting from the top.

For a generation, occupational psychologists have viewed the most stressful kind of work as that with high demands and no autonomy: for example, a factory worker who has to follow a strict routine but is given little time to do it. Such employees face higher risks of heart disease and stress-related illness.

Professional services jobs are not like that – consultants and lawyers have a lot of autonomy and tend to work independently. The difficulty is that clients pay large amounts of money to firms for deal-related advice – often running into millions of dollars. In return, they expect high levels of service delivered seamlessly and without delay.

This has always involved working on deals late or on weekends. But technology and globalisation have now lowered the barriers to working around the clock routinely. A banker or consultant is always available to be pulled into a conference call in any timezone.

“It is not enough for your health to limit your work stress. You also need to control your time strain,” says Professor Phyllis Moen at the University of Minnesota. The easiest way for senior bankers or lawyers to do that is by handing out-of-hours work over to juniors and disrupting their lives instead.

Many junior bankers end up working in the evening because a partner who has been out pitching to potential clients all day returns to the bank late in the afternoon, and tells them to prepare a document immediately based on the sortie. Although they have been at their desks for hours, they start to work intensively only then.

The good news is that this method of organising work is inefficient and thus ripe for reform. The bad news is that many lawyers or bankers do not care much about that. Not only do they feel, like senior doctors, that they too were juniors once and this generation deserves to suffer equally, but the status quo is easier for them.

It is thus tougher to change than declaring officially that juniors really ought not to work so hard. “If you simply tell people not to work on Tuesday nights, they will work on Saturdays instead,” says Grant Freeland, a senior partner of Boston Consulting Group. “You must fix the whole organisation, not just individual behaviour.”

BCG has instituted a policy of giving its employees predictable times off – an evening or a day at the weekend when they will not be contacted and they can switch off the phone. It hardly sounds like a revolution to place some border between work and home but, for many firms, it is.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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