The press on both sides of the Atlantic was abuzz this past week about an internal document from Goldman Sachs, apparently leaked to many outlets, describing overworked junior analysts who are at the point of exhaustion. Lots of tut-tutting about what has gone wrong in a system that drives these young people to physical and mental health problems.
If this is going on at Goldman, I’m pretty sure it is happening elsewhere as well. The truth is that there is nothing new about this problem. At the Wharton School, where we turn out huge numbers of these junior analysts as undergraduates and then bring them back in later as MBA students, we have been using investment banking as the posterchild for bad management of employees for at least two generations.
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We often use a case about junior analysist in investment banking that was actually written in the early 1980s by my colleague Ross Webber, but students every year assume it was based on their experience: Junior analysts are given time-consuming tasks at the last minute that are parceled out in pieces so they rarely know what they are working on, their work is micro-managed to the point where their immediate supervisors redo it just to make sure it is right, they get no feedback on what they have done and have little contact with management. Money is the only feedback, and bonus checks are simply dropped on their desks often with no explanation as to why they got what they did.
We teach how this could all be fixed, we graduate generation after generation who go back into these firms and run them, and nothing changes. I suspect my colleagues at other business schools have had the same experience.
Every decade or so, at least some executives say they are going to fix this. They impose limits on hours of work, opt to change the way their employees are managed and so forth. The most recent of these, ironically, was Goldman Sachs, which, following its “teamwork” push in the early 2000s was seen as having the best working environment.
At least for me, this story about overwork is a wonderful illustration of the phrase “Culture eats strategy for lunch,” or breakfast depending on the time of day I guess, attributed to Peter Drucker and lots of other people, too. To illustrate, here’s what prior students have said about the 90-plus-hour workweeks, which have been going on for decades. They come in at a reasonable hour in the morning—not super early but not late enough to look like a slacker. There isn’t much of anything to do, but at the end of the day, their supervisor will come around and drop a project on their desk that needs to be done by the next morning. They stay through the night working on it, sometimes all night, and get it done by morning.
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Our response is always, “Why don’t you go home then?” The answer is, we can’t because everyone else is still there. We’d look like slackers.
No one is requiring that they be there 90 hours per week. It is the culture: a belief in facetime, along with management that isn’t paying attention to and doesn’t particularly care about their subordinates, an idea that money will smooth over all those problems, the fact that the current managers all went through the same thing and so forth.
If one is not in this world, it is easy to say, “Why don’t kids stop working there, and why don’t the ones who do go quit?” Then the companies will shape up. The fact is that investment banking has already fallen pretty far down the list of desirable careers because the initial pay rates have declined a lot while the work experience has remained unpleasant. The people who take these jobs haven’t had much interest in staying there for some time. It used to be four years and out. Now they go for the initial experience and then hop off after only a year in some cases to go to hedge funds and other investment sectors where life is better.
“The market” isn’t changing these practices. Administrative efforts haven’t changed them, either. It is hard to imagine that this situation is working for the investment banks.
This is a great example of the problem of organizational change. We’ve all seen situations where there are obvious problems, where changes are announced and where we know they aren’t going to “take” because we can see that there isn’t enough effort underway to make them happen. It is ultimately a lack of will and interest to make the changes a priority.