Category Archives: Work world

How Valuable is Flextime?

Workers underestimate the benefits of a flexible schedule

EARLIER THIS MONTH, the city council in Copenhagen voted unanimously to give all municipal workers greater control over their schedules. The city’s 10,000 employees will work the same number of hours as before but with greater freedom to decide when that work gets done. Though Copenhagen’s all-in commitment to flextime is unusual, arrangements such as telecommuting and flexible working hours have been around for a while, with nearly a quarter of the U.S. workforce doing some work from home.

Workplace flexibility has obvious appeal as an alternative to the traditional 9-to-5 day. It allows employees to get to the doctor, stop for a haircut or attend a school assembly during the day and to wrap up work after the kids go to bed. And if employees value this flexibility, companies may benefit as well—by attracting better employees or making existing ones more productive because they are happier on the job. But how much do employees value this flexibility? And how good are they at assessing the factors that contribute to their own happiness? The answers are not what you might think.

Economists Alex Mas and Amanda Pallais recently partnered with a call center to find out exactly how much job seekers value flextime. Their premise was that if job seekers really value flexibility, they should be willing to choose a job offer with more freedom even if it pays a little less. The results, reported in a National Bureau of Economic Research working paper released last September, clearly indicate that, whatever people might say about their desire for greater scheduling choice, most employees aren’t willing to give up much pay to get it.

The study involved a simple experiment in which the company varied the job options communicated to more than 3,000 applicants. Prospective employees were given two possible work schedules: a standard 9-to-5 day and a second option with either more or less flexibility. The less flexible option gave the company the power to assign last-minute shifts (including nights and weekends). The flextime options offered more freedom in the days, times or number of hours the employee would work per week. But these options came with a catch: Applicants had to take a pay cut in exchange for increased flexibility.

The average applicant, it turned out, was willing to take a sizable pay cut—about 20%—to avoid having hours scheduled at the whim of the company. Who, after all, wants to work weekends or nights on short notice?

But flextime didn’t fare so well. About 60% of would-be employees weren’t willing to take any wage cut, even a tiny one, in exchange for flexibility in the number or scheduling of hours. About a quarter of applicants were willing to take a cut of about 10% in exchange for schedule flexibility, and about a quarter were willing to take a 6% cut for flexibility in the number of hours. Perhaps unsurprisingly, the applicants that valued flexibility were disproportionately women with young children. Does this mean that most applicants don’t value flextime? If we assume, as economics research often does, that people have a good sense of what makes them happy, then that is the study’s main takeaway. Moreover, for the employees who do value flexibility, there may already be efficient sorting into jobs with more scheduling discretion. That is surely part of the story.

But research in social psychology suggests that we might not be so adept at making decisions about when, where and how much we work. In particular, people may not realize the cost—in terms of their happiness—of working harder to make more money.

A 2016 study in the journal Social Psychological and Personality Science, based on surveys of thousands of Americans, found that while most respondents reported that they would prefer more money to more time, the ones favoring time were more apt to report being happy. (A second study, published last year in the same journal, yielded very similar findings.) This shouldn’t be surprising. Research has shown that money does indeed buy happiness, but only up to a point. In an influential 2010 study in the Proceedings of the National Academy of Sciences, Nobel laureates Angus Deaton (an economist) and Daniel Kahneman (a psychologist) found that rising income increases emotional well-being for those with relatively modest earnings but that the effect stalls at around $75,000 a year. This suggests, for example, that a job paying $100,000 a year, with a flexible schedule, may leave you happier than a job paying $10,000 more but with inflexible hours.

If people overestimate their ability to buy happiness and underestimate the joy they derive from more time and freedom, flextime appears in a very different light. The applicants in the Mas and Pallais study may be unwilling to pay for flextime simply because they don’t realize how much happier they would be with shorter or more flexible hours.

Looking at today’s labor market, these findings point to both challenges and opportunities. We should be discouraged that more jobs have less security and more last-minute demands. Many of the 9-to-5 jobs that are disappearing are turning not into flextime positions but into less predictable contracts that people would be willing to pay to avoid, if given the chance. But there is promise in today’s trends as well. Technology has given us an unprecedented capacity to trade time and flexibility for money. Employers such as Uber and TaskRabbit allow people to make granular, hour-by-hour decisions about whether they want to work or play. And Skype and FaceTime make it easier to work from home.

With the number of such options growing, we may all come to a deeper appreciation of the power of flexible jobs to transform our daily lives. It may be time to start Skyping into more meetings, beginning the workday a little later and finding ways to meet your spouse for an afternoon coffee before going back to work.

Of course, employees don’t make decisions about when and where to work in a vacuum. Even when flextime is available, its attractiveness depends on how it is perceived by others, particularly by higher-ups. Employees may wonder, for example, whether they will be at a disadvantage for promotion if they don’t put in enough face time at the office during business hours. If we really are going to change the way that people think about the benefits of flextime, managers need to make it clear that there is no stigma attached to it.

The new labor market in the U.S. might develop in any number of directions, which leaves us with important choices ahead. We can converge on a world in which we all work 9 to 5 (and often longer), with little flexibility. Or we can find a way to build everyday routines that are more accommodating, more flexible and potentially a lot happier.

Mr. Fisman is the Slater Family Professor in Behavioral Economics at Boston University. Mr. Luca is an assistant professor at Harvard Business School.


Do You Know Your Employee?

I believe lots of organizations are in the very same boat.
WSJ 4/9/2016

Entry-level bankers from Goldman Sachs Group Inc. gathered in a lower Manhattan hotel ballroom last April to listen to the firm’s top executives try to fire them up about their budding careers. David Solomon, co-head of the firm’s investment bank, took on the touchy subject of young employees leaving for private-equity jobs.

“At this time next year, there’s a lot of you in this room who won’t be working at the firm,” he said. “That’s a fact, candidly, we would like to change.”

Mr. Solomon grew animated as he advised the aspiring financiers that leaving Goldman was unwise, according to people who attended. They should think more about their longterm career trajectories, he said, and they would be more marketable after four or five years.

Some in the audience found his tone off-putting. It felt as though they were being lectured, even scolded, several of them said in interviews, rather than getting reasons to stay at the firm.

For decades, success on Wall Street followed a simple formula: Grind out years of marathon workweeks and menial tasks in exchange for a shot at helming deals and amassing millions. The industry’s biggest firms now acknowledge the math doesn’t work for many of their youngest bankers.

Six months after Mr. Solomon’s speech, Goldman announced changes designed to provide junior bankers with faster advancement and more stimulating work. “We’re well aware that our junior bankers have many options, so we’re doing everything we can to retain our best talent,” says Mr. Solomon.

Since then, J.P. Morgan Chase & Co., Citigroup Inc. and others have revamped their rules and added sweeteners for young employees, tweaking the delayed-gratification model to better suit the expectations of the millennial generation.

Bank managers are trying to persuade younger employees to stick around and rise through the ranks, as generations of bankers did before them, instead of bolting to Silicon Valley or smaller investment firms.

According to a LinkedIn Corp. analysis conducted for The Wall Street Journal, analysts and associates who left their positions at a dozen investment banks in 2015 stayed an average of 17 months, compared with a 26-month average for those departing the same positions a decade earlier. Back in 1995, the average tenure was 30 months.

Altered traditions

The entry-level exodus has spurred Wall Street into an uncharacteristic bout of soul searching, as leaders conclude that the industry must alter its long-held traditions and rethink its approach to management.

“We’re focused on trying to understand what’s important to the folks we hire right out of school,” says John Waldron, co-head of the investment banking division at Goldman Sachs.

The relative satisfaction of junior bankers matters because Wall Street firms are slashing thousands of moresenior jobs in a push to cut costs. The drive has picked up in the past year as low interest rates and difficult trading conditions weigh on the industry.

Goldman Sachs said in a February presentation it has reduced compensation expenses by $270 million since 2012, in part by eliminating higher-paid positions and bolstering the ranks with younger, more inexpensive employees. The firm said it reduced the number of partners and managing directors by 2% between 2012 and 2015, while increasing the number of analysts, associates and vice presidents by 17% over the same period.

In interviews, more than 40 current and former juniorlevel bankers at major firms— called analysts and associates— described a tension between banking’s hierarchical institutional culture and their desire to take on more substantial work sooner.

When Steve Wu began his two-year stint as an analyst at investment bank Moelis & Co. in July 2013, long hours were a given, but so were fastpaced deals, good money and prestige. The recent graduate of the University of California, Los Angeles, told his girlfriend he wouldn’t have time for a relationship.

What Mr. Wu says he didn’t expect was the drudgery—the amount of trivial work that got passed on to entry-level bankers. One night, he says, after he had worked until 1 a.m. preparing a 60-page client book, his managing director told him to replace all the logos in the presentation because they appeared “fuzzy.”

In June 2014, after 11 months on the job and just weeks shy of receiving a fivefigure bonus, he left Moelis for a mobile-gaming startup and what he saw as the chance to be more than a cog in the machine. “Every day I can see the direct result of my action,” he says of his new job.

A spokeswoman for Moelis said more than two-thirds of the firm’s bankers are under 35, and that the firm is committed to the development of its bankers early in their careers. She declined to comment on individual employees.

At J.P. Morgan, associate Lee Tsai says he grew disenchanted about one year into the job. Objectives in his semiannual reviews, he says, were easy to meet and after requesting new responsibilities, months passed and nothing changed. “Same spreadsheets, same pricing models, same slides,” he says.

At the same time, he was giving talks to recruits, he says, repeating buzzwords he heard when he was a student. Big deals, client exposure, professional mobility—“feeding them,” he now says.

Mr. Tsai soon stopped attending recruiting events. He passed on mentoring new hires. “I couldn’t keep telling them about how great it was,” he says. He left the bank in August and is now learning to code.

J.P. Morgan, which declined to comment on Mr. Tsai, made several changes this year to the way it handles young bankers. One initiative, dubbed “Pencils Down,” urges the firm’s 2,000 global investment bankers to take weekends off, so long as they aren’t working on a live deal. It also expanded an accelerated promotions track that shortens the path from analyst to managing director by as many as four years for star performers.

The changes are “enhancements,” says Carlos Hernandez, J.P. Morgan’s head of global banking, “and realistic to what this generation wants.”

Anne Hubert, a senior vice president at Scratch, a consulting unit of Viacom Inc. that performs research on millennials, says she advised a major investment bank about young workers. Senior bankers, she says, hated the fact that young people constantly wore headphones, preventing them from hearing instructions shouted across the trading floor. “Those damn earbuds,” she recalls them grumbling.

Ms. Hubert says she encouraged them to view it as an opportunity to connect with the new generation and “tune in” to what they want. “What’s going on behind those earbuds?” she recalls asking them. “Are they listening to music or podcasts? What are they thinking about?”

At Goldman Sachs, “Managing Millennials” has been one of the most popular training sessions for years.

Limiting hours

Beginning last year, the bank began limiting hours for its most junior staff, requiring summer interns to stay away from the office between midnight and 7 a.m. during the week. Chief Executive Lloyd Blankfein’s daughter, a senior at Harvard, interned with the bank last summer.

Goldman and other banks have retooled their analyst programs, including new measures to outsource grunt work and invest in timesaving technology.

Credit Suisse Group AG has begun putting early-career bankers in front of clients soon after hiring—something that might have taken years in another era on Wall Street.

The Swiss bank also appointed a program director to coach senior bankers on communicating with young staffers, providing tips such as “don’t lean on hierarchy,” says Amy Hudson, chief operating officer of the firm’s invest- ment bank and capital-markets division. The appointee, Nancy Nightingale, is a “total mom figure,” says one third-year analyst. She recently helped shepherd an effort to get bosses to send personal emails highlighting junior bankers’ individual achievements.

“The things that [young workers] want are frankly the things that all of us always wanted,” says Ms. Hudson. But today’s junior bankers, she says, are “more confident about expressing it in the workplace.”

That dynamic isn’t unique to finance. Only 28% of millennials feel their current employer is making full use of their skills, according to a survey by Deloitte & Touche LLP. On Wall Street, however, paying one’s dues has long been part of the culture.

Michelle Wu discovered that fact six months into her job as a credit analyst at Goldman Sachs when she sought a transfer to another group to learn new skills. Her team mentors turned her down, she says. “Their responses were, ‘Keep your head down’ and ‘Focus on your work,’ ” she recalls. Goldman declined to comment on specific employees.

In December 2014, after less than a year at Goldman, she accepted a job on Google’s small-business team and moved to California. Despite working more than 100 hours a week—about the same as her job at the bank—Ms. Wu says she feels more energized. When she told her boss about an opportunity to increase revenue, she says, he told her to “run with it.”

Wall Street’s postcrisis landscape has been reshaped by job cuts and reduced risktaking, and pay packages don’t tip the scales like they used to.

At three elite business schools—Harvard University, Stanford University and University of Pennsylvania’s Wharton School—M.B.A. graduates who accepted jobs in investment banking or trading had a first-year base salary of $125,000, on average, similar to those who join technology companies, and less than the roughly $150,000 base at other Wall Street firms such as hedge funds and private-equity firms, according to the schools.

Surveys show that young people who came of age during the economic downturn are less trusting of the financial sector in general, and more eager to find jobs that they believe serve a social good. A 2014 Brookings Institution report concluded that millennials are likely to “find an outlet for their desire to change the world for the better somewhere other than on Wall Street.”

Some veteran executives say banks should do a better job of explaining how helping clients raise capital and manage their financial risks is good for society.

Citigroup announced in March a program to allow incoming analysts to spend a year at nonprofits before beginning their banking careers. Citigroup will pay them 60% of their starting salary during that time. Nine recruits already have signed on.

The bank also introduced a program for young bankers to travel to Kenya for a fourweek microfinance project, mirroring an initiative launched by Moelis earlier in the year. Moelis employees who have been with the firm for at least five years are entitled to a four-week paid sabbatical program, a spokeswoman said. Some young Wall Street bankers say initiatives to reduce long hours, however well-intentioned, are having unintended consequences. Analysts at Goldman Sachs, J.P. Morgan and other banks say mandatory days off have made it tough to spread out workloads, ramping up pressure when they are in the office. Analysts in a few Goldman groups say capping intern hours has undermined team dynamics and created tensions over division of work.

Some bankers are baffled by the attitude of their more junior colleagues. There is a pain point among midlevel bankers who “can sometimes get frustrated if the younger analyst isn’t as available as they want them to be,” says Mr. Waldron, Goldman’s investment banking co-head.

Nevertheless, he says, “just because other people worked 80 to 100 hours [each week] in their life history doesn’t mean these people should.”

Senior bankers hated that young people constantly wore headphones.



The Wrong Way to Thank Employees

“You’re not talking their language.”
Too bad this article doesn’t talk about things that companies SHOULD do.
No worker has ever received an engraved plaque that read “Thanks for keeping your seat warm for 10 years.”

Yet that is the message employers send with awards for employees’ five, ten or 20-year anniversaries, according to human resources and recognition experts. They say that most recognition programs reward the wrong things.

As evidence, consider the many employee-service awards for sale on eBay, like this gold tie clip celebrating a 35-year anniversary at Goodyear, yours for about $7.99.

Anniversary awards – from medals to gift certificates redeemed via a catalog of jewelry and household appliances – have little to no impact on whether employees feel good about their company, says Eric Mosley, chief executive of Globoforce, a company that designs employee-recognition programs for companies.

Even so, 59% of employers are offering tenure-based awards this year, a figure that has ranged between 54% and 62% since 2011, according to the Society for Human Resource Management.

“You’d never add this kind of program to a new company, but it’s pretty hard to do away with it” once in place, said Robert Calamai, a retired human-resources executive who now teaches at New York University’s Stern School of Business.

Companies spend about 1-2% of payroll on recognition programs, according to HR consultancy Bersin by Deloitte, but firms like JetBlue Airways Corp. and Intuit Inc. are modernizing them to reward results and execution, not inertia.

The new awards also bring in social elements, such as using praise or “badges” bestowed by colleagues on a company’s internal network to dole out points that can be converted into gifts or cash.

In part, those changes are happening because loyalty and longevity are no longer the goal for many employers or workers, said Razor Suleman, founder of Achievers Corp., another vendor of employee-recognition programs.

That’s particularly true for younger workers, who expect to be recognized sooner than later. “Millennials are staying in jobs, on average, 18 months, so if you tell them their first opportunity to get recognized is in five years, you’re not speaking their language,” said Suleman.

NYU’s Calamai suggests ditching anniversary awards, which he says are meaningless and often removed from what’s actually happening in a person’s career.

“I’ve been at luncheons of people for their 25-year celebration that we knew were on the verge of getting fired. Talk about an awkward moment,” he said.

The Wrong Way to Thank Employees – At Work – WSJ.