Gen-z is not buying into the cult of overwork

Studies show pay rise joy wears off quickly – so banks need to find an effective way of reducing turnover rates among entry-level recruits

Banks chucking extra cash at burntout graduates to keep them on side have missed an important point. Throwing money at a problem doesn’t work when the problem is a person who is miserable. The unimaginative idea of hiking junior bankers’ pay (Goldman Sachs, HSBC, JP Morgan, Barclays, Morgan Stanley, Bank of America and Lazard) after Gen-z graduates complained that they were suffering from long hours during the pandemic will not magically create a generation of happy worker bees. Industry newcomers are not buying into the cult of overwork.

The industry-wide rush to increase entry-level salaries is a lazy solution to a complicated problem. Studies have shown that happiness from a pay rise doesn’t last long, even for a money-mad twentysomething taking home £80,000 in the first year of their working life (the median household income in the UK is £29,900). While many do enter banking just to become rich, so the extra cash won’t be unwelcome, the truly miserable are unlikely to be swayed. Even if the high pay stops overworked graduates leaving, the unhappy culture that banks are trying to tackle will still prevail. The former chief executive of one large bank complains that the pay rises show a “colossal lack of imagination” among his former peers, who keep leaning on the power of big numbers to pull in talent.

“For every junior analyst position they probably have 1,000 applicants – they’ll fill these jobs forever and they know that,” the banker says. “My beef is that they go out, find the brightest people on the planet and then the conditions are terrible.

“A lot of this work is not productive, it’s just repetitive grunt stuff. Seniors think, ‘Well I did it so why can’t they?’, which is just as smart as saying, ‘Well I was bullied at school so now it’s my turn’.” The debate around miserable investment bankers is hardly a new one, but social media gives graduates an outlet that older generations never had. A leaked Goldman Sachs survey sparked a debate in the sector about long hours culture earlier this year, after a group of 13 first-year analysts revealed the stresses of being a junior banker. Those surveyed averaged 95 hour weeks and just five hours sleep a night. One analyst wrote that the sleep deprivation, the treatment by senior bankers and the mental and physical stress was worse than foster care.

While younger workers are now pushing back at the cult of overwork, others have little sympathy and think graduates earning a fortune should suck it up or do something else.

Xavier Rolet, the former Goldman Sachs banker and former boss of the London Stock Exchange, who grew up on a Parisian estate, thinks companies should hire “poor, hungry kids who managed to put themselves through college, instead of entitled [graduates]”. But those trying to escape poverty through a lucrative career like banking should not be subjected to poor working conditions either. Whatever someone’s background, staff woes must not be dismissed by employers just because they have made their workforce rich.

Money will always pull people into banking, but the pandemic has encouraged graduates to question if it really is the life they want. Ben Chon, a former JP Morgan banker, released a video earlier this year saying he quit finance after he realised he had got “lost in the mindset of thinking a lot about compensation” and “holding on to jobs because I was used to living a certain way”.

One viewer responded saying that they had noticed a “trend lately where everyone’s leaving IB [investment banking]. I guess people realised $100k salary for 100 hours work is the same as $40k salary for 40 hours work”.

Changing attitudes on Wall Street, where most US banks are forcing staff to come back into the office full-time, is also playing out in US business school data. According to The New York Times, the five top-ranked US business schools sent 7pc of graduates from their MBA programmes into full-time roles in investment banking in 2020, compared to 9pc in 2016. Harvard sent just 3pc of its 2020 class.

In the UK, anecdotal evidence suggests a similar shift is playing out. Headhunters say banks are “haemorrhaging junior bankers” while analysts have said they are going to “batch” leaving drinks as colleagues resign en masse. Headhunters for major banks told Financial News in June that turnover rates for analysts are usually 40pc over a three-year period and have now moved closer to 70pc. Many can’t afford to swap a lucrative career in finance for something more creative or entrepreneurial. Jobs in private equity or in the technology sector could be less demanding and come with just as good pay. Gruelling hours is no longer idealised. Banks will never struggle to hire, but extra cash won’t make them desirable to the disillusioned. The bank bosses who suffered at the start of their careers must show more empathy for the next generation and start to think of more imaginative ways to improve working life.

A rush to increase salaries is a lazy solution to a complicated problem