It feels like an almost surreal prospect – the bankers are pulling another all-nighter, the financial models are coming together, the client is anxiously awaiting the pricing and … somebody’s alarm goes off, and all the analysts have to down tools and go home because they’ve reached their maximum hours for the week. But this is apparently what at least one manager at Bank of America is telling his team will happen, going forward.
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It's a reaction to the allegations, reported in the Wall Street Journal yesterday, that junior bankers are being encouraged to “work off the books”, recording fewer hours than they are actually doing in order to avoid triggering reports to HR. BofA has made it clear that this practice is not going to be tolerated. It was the subject of a top-level meeting with global investment banking head Matt Koder on Monday, and some juniors have apparently been told that they have to whistle-blow if they come under any pressure to under-report hours worked.
This could only happen in the topsy-turvy incentive structure of the banking industry. In most firms where timesheets are kept, scandals tend to relate to juniors coming under pressure to record more hours than they’ve actually worked, not less. But in banking, Parkinson’s Law operates with a vengeance – work expands to fill the time allowed for it. When you combine the notorious perfectionism of Managing Directors with the equally famous ambition and energy of junior bankers, that means that the number of working hours in a day will inevitably increase unless something is done to stop it.
But the trouble is that, as banks ought to know from bitter experience, you can’t just legislate a problem out of existence if you leave the underlying incentive structures in place.Being removed from a live deal is perhaps the worst thing that could happen to a junior banker, and they know it.If that is really going to happen, then it’s quite likely that the juniors will work out that they have to fake their timesheets without being told to do so. Already, one manager at Bank of America has apparently said that he was “shocked” to hear that the practice took place, which sounds a bit too naïve to be true.
So if the industry really wants to do something about the overwork culture, it needs to address the root of the problem and to work smarter rather than harder. Lots of the hours worked by junior investment bankers are spent in very low value-added activities, or even simply in waiting around for the next set of revisions. To put it bluntly, the root cause is often that junior bankers’ time is a free resource for MDs, and so they have no reason to develop efficient working practices. It might concentrate the mind if a bank were to tell its managers that Human Resources was prepared to pay for 60 hours per week per analyst, and that anything else would have to be recorded as a direct payment from the MD to the junior, in cash, from his or her own wallet on Friday evening. That would certainly get people scrutinising the time sheets carefully.
Separately, several recent surveys have found that as much as half of all job applications are being generated using ChatGPT or its equivalents. This is confirmed by recruiters, who note that as well as the candidates who simply cut and paste the chatbot output, there are plenty of genuine applicants who use a bit of AI help to make sure that they’re hitting the right keywords.
It’s apparently turning the process of sifting applications into a bit of a nightmare. The automatically generated applications tend to get through the initial filters (because they’re optimised to do so), but to be written in a “clunky and generic” style that’s easy for a human being to spot. That means that the poor recruiter has to go back through the whole pile, trying to work out which applications are actually coming from viable candidates and which are the job market equivalent of gray goo. It’s tempting to say that the recruitment industry brought this upon itself – for more than a decade, there have been automated resume-scanning robots. But the arms race is clearly not doing anyone any good.
Meanwhile …
“It kind of feels delusional now, but I was thinking I could get a $100,000 job”. Recent computer science graduate Brandon Solon is quite unusual in facing up to the reality of a weak job market, though. It seems that there is a gender divide in the US, with young women settling for what’s available, while young men are more likely to keep holding out for what they think they’re worth. (Bloomberg)
Amy Ya used to be a Vice President in Morgan Stanley’s electronic trading team, but unlike so many bankers, she actually did take a break to go travelling rather than just constantly talking about doing so. While in Central America, she realised that the job had made her “snobby and arrogant”, so she gave up banking for a life in $10 hostels. (Mirror)
Shobhit Maini, Citi’s head of digital assets in the markets group, has left the bank for an undisclosed “entrepreneurial opportunity in the digital asset space”. (Reuters)
Marko Kolanovic, the former market strategy guru from JPMorgan, has shown up again with a new social media account, but no clues as yet about his future career destination. The fact that he’s posting market commentary on Twitter might suggest that it’s going to be a Substack rather than a rival bank? (Bloomberg)
Viking Global used to only recruit analysts after they had done two years in investment banking and another two in private equity, but it’s started to look at younger and less experienced recruits to keep its “talent pipeline” full as more of its portfolio managers leave to start their own firms. (Business Insider)
Brevan Howard continues to grow in Singapore, taking David Nash from Modular, the Millennium spin-out hedge fund. (Bloomberg)
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