Goldman Sachs analyst death: Why the Wall Street culture is not entirely 'evil'

There is always the option of moving out of a place of occupation if we do not like the work environment.

 |  5-minute read |   08-06-2015
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Let me clarify at the outset that this piece of mine is not a viewpoint related to the unfortunate and highly tragic incident involving the 24-year-old first year analyst at Goldman Sachs. As usual, the global media seems to have gone into an over analysis in a black and white mode without necessarily understanding the core issues. In most of the articles that I read, the Wall Street culture and financial services jobs have been portrayed as "evil" and yes subtly, Goldman Sachs is being blamed for promoting a 100-hour week culture.

For someone who has spent the last 18 years working in this profession including with three multinational corporation (MNC) mergers and acquisitions (M&A) practices, some of the points being raised made me ponder upon the work cultures that prevailed in my earlier firms. Did any of the firms that I worked with push me to do long hours? Did any of my seniors push me to do a 15-hour work day? Was I ever denied a vacation when I needed/wanted one? The answers to all of these are a big "NO". As I reflect back, I frankly can't think of a single occasion where the firm pushed me to do more than what I was willing to do myself. Potentially, the reason could be that I enjoyed my work thoroughly in this journey from an analyst to a practice leader and I chose the places that I wanted to work in and not vice versa. I always believe we have an option of moving out of the place we work in if we do not like the work culture and no firm in the world can stop you from doing that. That's the reason why I find this venom against Goldman slightly misplaced.

Having said that, there is a lot which can change in investment banks across the world; especially the so-called bulge brackets. For advisors who fork out million dollar recommendations to leading companies, it's highly ironical that their own internal houses tend to be a mess in terms of flexible work policies, strategy or even operations. The more senior a person becomes in a global investment bank, the more internal-focused he becomes with maximum time being spent in either handling internal politics or administrative decisions or writing long emails justifying one's role. There are strange key result areas (KRAs) laid down on the number of pitches that one needs to make or the new clients that have to be met (of course with awesome pitch packs!). In the process, a managing director/practice head puts huge pressure internally on the team to churn out "great pitches" day after day. The outcome of all this tends to be that a sizeable time of the junior team members in an investment bank is devoted to churning aesthetically great looking pitch packs and a limited amount of time is spent on the actual deal-making work (the dream job that one actually slogged for in a B-School!). In reality, 50-60 per cent of the time spent by the junior team is in completely irrelevant pitch making exercises; most of which never translate into work. Most quality deals across the world are won on relationships and not on good looking pitches; a reality which conveniently gets ignored by even senior bankers in order to justify their existence and high salaries. The pressure to continuously keep pitching is huge on managing directors/vice presidents which unfortunately creates artificial pressures on the associates and analysts.

The other challenge in larger global investment banks is the hierarchy which has crept up over the years. Inspite of a sizable part of research being outsourced to knowledge process outsourcing (KPO) companies; there are still four-to-five layers below a practice leader. This essentially means that a junior team is the backend support staff that get negligible time to face clients and hence limited real learning. This lends itself to frustration among the associates as they have limited interaction with clients. The real learning in investment banking is the interaction that one has with first generation entrepreneurs during the course of deals; I like to call this "distilled wisdom". Very few professions (maybe none) gives one the privilege to interact so early on in his career with a first generation entrepreneur at such close quarters and more importantly, learn from his industry experience. This is the high of investment banking that draws top ranking business school (B-School) professionals to this career. Unfortunately, the way most large investment banks are structured, this particular kind of learning gets lost completely. Maybe that is one of the reasons why across the world, some of the more interesting deals (not necessarily bigger) are being done by boutique banks. An excellent example today is Fan Bao-owned China Renaissance which must clearly be China's biggest entrepreneurial success story in investment banking. Boutiques have flatter organisation structures; have limited bureaucracy and less emphasis on aesthetic pitches and more on quality execution. Their nimbleness also makes them better work places; though not necessarily from a financial reward perspective.

My personal view is that the business of investment banking across the world is going through a slow metamorphosis. With this, the workplace of a typical investment bank would also change. There are several niche outfits which are already challenging the old styles of deal making and what the role of a quintessential deal maker should be. Fee structures are getting challenged by clients and so would the role and quality of client servicing. Some of these changes would also have its share of rub-off effect on organisations internally. In my mind, the issue is not of the number of hours at the workplace but the state of mind of the employee. A happy employee can easily put in 18 hours. However, an unhappy employee may find eight hours stressful. Hopefully, ongoing structural changes would also lead to some paradigm shifts in workplaces. Till then, let's keep calling everything associated with Wall Street as "evil".

Writer

Navroz Mahudawala Navroz Mahudawala

Navroz Mahudawala is the founder of Candle Partners, a boutique investment bank based in Mumbai.

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