The investment bank Morgan Stanley recently announced a set of new policies for its junior associates, offering higher base pay and a faster track to promotion, while also underscoring its work-life balance policies, Preeti Varathan reported at Quartz last week:
According to its memo, Morgan Stanley is raising base pay for associates in investment banking and capital markets by 20% to 25%. It is also speeding up its promotion timeline for high-performing analysts—the entry-level position below associate—from three years to two. The memo also reiterated the bank’s current vacation and hours policies: two mandatory one-week vacations every year and limited staffing on Fridays and weekends.
Wall Street has long had a reputation for debilitating hours, consecutive all-nighters, and frequent weekend work. But even the most competitive firms are now grappling with a new generation’s insistence on rapid promotions and better work-life balance. “The ability to recruit, develop, and retain top talent by offering attractive career opportunities is a key priority,” the memo noted.
Indeed, at a time when the labor market is tight and employers in all industries are having to compete harder for talent, it’s unsurprising to see another large employer make investments in its most junior employees. The financial sector, however, has also been grappling for several years now with a particularly difficult employer brand problem. More than ever before, prospective employees now question whether the lucrative rewards of investment banking’s traditional high-stress, high-pay model are worth the costs to their quality of life.
Like Morgan Stanley, other investment banks have made a point of discouraging their employees against working seven-day weeks and never taking a vacation. JPMorgan Chase introduced a new “pencils down” policy in 2016 that instructs employees to avoid weekend work unless they are in the middle of a live deal. Credit Suisse encourages employees to leave work by 7:00 p.m. on Fridays and not come back until at least lunchtime on Saturday, to ensure that they have at least one night to themselves a week—unless, of course, a major deal is breaking. These changes were motivated in part by scandals like the death of 21-year-old Bank of America Merrill Lynch intern Moritz Erhardt, who had an epileptic seizure and died after 72 straight hours at work in 2013.
In the past, financial firms could more easily sustain a high-churn employment model of hiring young associates fresh out of college or business school, paying them high salaries to work grueling hours, and promoting those who survive a few years without burning out. Today, however, work-life balance is a much more attractive component of the employee value proposition among candidates worldwide, and although this trend is often attributed to millennials, it applies to all generations. Millennials just happen to be the largest segment of today’s workforce, the most vocal about their needs, and increasingly willing to turn down jobs that don’t meet those needs—witness the culture change millennial employees effected at PwC by forcing the accounting firm to turn its analytical powers on its own approach to work-life balance.
Another complicating factor in finance’s talent equation is that it is no longer the only game in town for talented young professionals who want to work hard and make a lot of money. The leading business schools in the US are seeing more of their newly-minted MBAs go on to work in tech companies rather than financial firms. Tech giants like Amazon, Google, and Microsoft have been aggressively courting MBAs, forcing banks to retool their recruiting strategies to keep pace. At the same time, many business school graduates are looking to start their own businesses rather than go to work for legacy companies.