Weak winter sunlight streamed through the glass atrium ceiling. The couple of hundred suits seated around large tables in the expensive restaurant looked on in horror towards the head table.
It would have been a beautiful setting for a wedding or awards ceremony. Attentive waiting staff silently floated amongst the tables, keeping the audience caffeinated and hydrated, as the self-indulgent speaker held court. What he lacked in oratory skills, he more than made up for with hubris.
Except this was no wedding. It was a corporate away day.
No expense had been spared. A Japanese taiko drum master had been flown in to lead a team-building exercise. The cast of a West End musical performed live. The quantity and expense of the swag handed out to the attendees would have put private equity firms and venture capital backed startups to shame.
Except this was no successful wealth management shop or record label. It was a financial regulator.
A new strategy was being set out.
A new course charted for the organisation.
The days of eye-watering fines and heavy-handed enforcement were over.
The City had paid its pound of flesh after the debacle that was the Global Financial Crisis.
The bankers had served their time on the naughty step.
Now it was time to “let business do business” once more.
The speaker had been talking about how laughably bad the average regulated firm was at risk management. This was an open secret, nobody in the audience had been surprised.
The firms couldn’t externally report risk exposure accurately because internally they didn’t know themselves. They didn’t know because they consciously didn’t want to know. The financial system runs on faith: as long as everyone was making money, it was best not to ask too many questions.
Ever-increasing regulatory reporting requirements had created thousands of new compliance jobs. The reporting regimes were mostly regulatory theatre, but all those new white-collar professionals earned good money and paid taxes, which was good for the economy.
For the speaker, the financial crisis had represented the most exciting time of his professional career.
The more he talked about it, the more animated he had become.
Speech punctuated with exaggerated gestures, facial expressions, and improvised sound effects.
As his talk concluded, he extended one arm high above his head. Using his hand to simulate a swan dive, complete with cartoon whistling sound as it fell, before slapping the table with dramatic finality. An illustration of what might have happened, had the regulators not stepped in to save the day.
Until that point, the audience had watched on in boredom and bemusement.
However, as the speaker’s arm raised above his head, their eyes were drawn through the atrium roof to the sloping glass ceiling of the building next door. Where just days before, an unhappy investment banker had landed after leaping 20 odd floors to his death.
The audience had looked on in stunned silence as the speaker had inadvertently acted out the banker’s tragic final moments. Speech finished, he looked around the room expectantly. Visibly deflating when only the most shameless of brown-nosing sycophants offered token applause.
I was reminded of that reaction when I read about the controversy caused by a recent Goldman Sachs working conditions survey.
A group of first-year financial analysts had complained that working 120 hours per week was inhumane. Ruinous on their health and wellbeing. Leaving little time for anything beyond work.
They were right.
As I read the survey findings, I couldn’t help but nod along. Their experiences mirrored my investment banking misadventures decades ago. There were only three things in the report that surprised me.
First, the analysts formally complained on the record. That would have been career-ending at the banks I have worked for. It would be “career limiting” at many client sites I have worked at since.
Second, only 17% of the analysts reported being frequently shouted or sworn at, while 83% did not. On every trading floor I’ve ever visited, those proportions would have certainly been reversed!
Third, that three-quarters of the financial analysts had sought therapy to help them cope. While it was terrible that so many of them needed assistance, it was fantastic they sought it out. This is a huge improvement on the bad old days of “real men don’t cry”, when therapy was found in a bottle, and admitting to any form of coping or mental health issue was career terminal.
However, the main thing I took from the working conditions survey was a sense of puzzlement.
All through their lives, the financial analysts had been indoctrinated into believing this was the pinnacle of achievement. Where the best of the best got rich while doing great works. Attending the right schools to get into the right universities. Studying hard to get good grades. Cramming their CV full of extracurricular activities to create the illusion of being a well-rounded character. Then calling in favours, pulling strings, and working their family’s network to gain admission to the legendary hallowed halls where the masters of the universe shape the world.
The analysts had then worked there for long enough to see through the myths told in the graduate recruitment seminars and glossy career office brochures. To witness the world as it really was.
Experience the harsh realities of life as an investment banker. Understand that the opportunity came with a high toll.
All reported living a miserable existence. Performing a job that was actively doing them harm.
Each and every one of them had the option to quit. None of those surveyed had chosen to take it. Yet.
No matter how bad it got, they desperately clung to the illusion. It couldn’t possibly have all been lies, could it?
I found that bewildering. The opportunity cost was clear. If the financial analysts wanted the money, they would have to suck it up and endure the lifestyle that came with it. They were all free to leave.
Yet this group of financial analysts objected to that Faustian bargain.
Refusing to accept the world as it was. Complaining that the world was not as they wished it to be.
I couldn’t decide whether this was brave or simply naïve.
When I cast my eye up the greasy pole, I see the graduate classes from a decade or two earlier. Their ranks greatly reduced, as the gruelling pace and relentless demands took their toll and thinned the herd. The survivors who remained on “the fast track” were Managing Directors. Partners at Magic Circle law firms or Big 4 consultancies. A select few occupied the C-suite in listed companies.
To a person, they still worked long hours. Got by on not much sleep. Prioritised work over all else.
Clawing their way up the career ladder. Claiming credit. Shifting blame. Sabotaging rivals. Throwing elbows.
Relentlessly seeking “more”. More influence. More money. More power. More status.
Which is what those financial analysts had sought all along. After all, isn’t that how the game is won?
Collect now, pay later
A few weeks ago I read an interesting observation that Amazon applies the same approach to paying staff that it uses for paying suppliers.
When a customer hits the “Buy Now” button, they pay for their items immediately and in full.
Meanwhile, a supply agreement typically contains delayed payment terms, allowing a period ranging between 30 and 180 days for the retailer to pay their supplier. This means for the duration of the payment term period, the retailer enjoys the full usage of the sale proceeds before eventually paying the supplier. A scaled-down version of Warren Buffett’s famed insurance premium free cashflow float.
That is standard retail practice, nothing particularly new or interesting there.
Where things did get interesting was applying the same lens to employee remuneration packages. Specifically, those heavily featuring stock options or restricted stock units.
The employer pays wages to receive the labour immediately and in full.
Meanwhile, a typical option vesting schedule spans a period of up to 5 years. This means for the duration of the vesting period, the employer gets to fully exploit the employee’s labour, while the employee only receives the full extent of their remuneration package via a drip-fed trickle up to five years later. A great deal for the employer, with the employee carrying the investment risk that the company succeeds and the options will be worth the wait.
Arrangements vary, but vesting schedules are often back-ended. This means the employee has to go the distance to receive the bulk of their remuneration package, wearing the proverbial “golden handcuffs”. Depart earlier, and a big chunk of that remuneration package gets left behind.
This observation was obvious in hindsight, an employee is simply a supplier of commodity labour. Little different to a wholesale supplier of widgets for resale or a utility provider.
This brings me back to the opportunity cost being paid by those financial analysts.
The pursuit of those potential future riches has high opportunity costs indeed.
Sunshine and fresh air.
Happiness and well-being.
Things those ambitious souls consciously and voluntarily sacrifice. Trading the best years of their lives in terms of athleticism, attractiveness, fertility, and flexibility in pursuit of the almighty dollar.
An always-on existence. Full of busywork. Cancelled plans. Fluorescent light tans. Stress.
This is sporadically true of many professions. The business end of a project. Financial year-end. Peak periods at the local Accident and Emergency room. Exceptions rather than the norm.
Are the sacrifices worth it? This is something that can only be determined by the individual.
I have met plenty of CxOs who own beautiful homes in South Kensington or Virginia Water, with price tags in the mid-seven figures. Driving around town in a shiny new Tesla or upmarket Range Rover. Flying to Zermatt for a weekend’s skiing or a summer vacation at Lake Como.
I have met very few people who led a similar lifestyle, without having put in that kind of monumental effort (or having a spouse/parent who did). These folks got lucky. Performance artists who were “discovered” or had a creation go viral. Not something planned for or repeatable.
I know far more people who pursued a similar path to those financial analysts. Making it onto the bottom rung of the professional services career ladder. Possessing stars in their eyes and unshakable faith that successful advancement was theirs by right. Inevitable. Preordained.
Ground down. Chewed up. Spat out by the relentless demands of the corporate machine.
Some decided for themselves that the prize wasn’t worth the price.
Others found themselves eased (or shoved) out the door, after being passed over for promotion or receiving a suboptimal performance review.
Some, like the unfortunate investment banker at the beginning of our story, couldn’t see any other way out. Success impossible. Failure unconscionable. Status quo untenable. The pressure too much to bare.
The employer cares little about the departures, not really. It is a simple numbers game, with a queue of ambitious rivals more than willing to take their place. The temporary friction of change partially mitigated by foregone bonuses and abandoned employee stock options.
The long game
Next time you find yourself listening enviously to the achievements and successes of others, take a moment to ask yourself what they had to give up to make those achievements possible?
Then ask yourself whether the sacrifices required to play the long game had been worth it?
Finally, ask yourself for every winner, how many also-rans there were? People who had made the same sacrifices, yet fallen short of achieving their goal. Real life doesn’t award consolation prizes or participation trophies.
Many of those prizes lose their lustre once the opportunity cost is factored into the equation.
We are told to shoot for the stars. Invest in our careers. Work hard. Be patient. The rewards will come.
Yet vanishingly few of us are destined to join the C-suite or become high flying masters of the universe.
Fewer still would be happy making the sacrifices required to do so.
There is nothing wrong with having more modest ambitions. Consciously making more balanced lifestyle choices. Leaving the office by 18:00 each evening. Raising children who are not strangers.
Some may say that enjoying the journey feels like winning.
It certainly provides a more certain outcome!
- Buffett, W. (2009), ‘Berkshire Hathaway Shareholder letter‘
- Gawthorpe, C. (2020), ‘Top Ten locations where CEOs live are all situated in London and South East’, UHY Hacker Young
- Goldman Sachs (2021), ‘Working Conditions Survey‘
- Real Finance Guy (2018), ‘Amazon RSU stock compensation is great as long as the stock keeps going up‘
- Upcounsel (2021), ‘Stock Option Vesting Schedule: Everything You Need to Know‘