Why Jamie Dimons of the Corporate World Can’t Force People Back to Offices
Big banks CEOs want people back in offices arguing that productivity-wise WFH has demonstrated shortcomings.
Other industries continue to promote working from home.
Changes in business operations from retail, services, and hospitality to real estate and studying are affecting the big corporate office traditional idea of work.
The reasons behind these pushes lie in the senior management’s old-fashioned ideas of a workplace, personal insecurity with tech, and the fear of change.
Those wanting employees back in the office will have to offer some kind of incentive to make people actually want to come back.
In the past, industry CEOs were able to set the working culture. Now they will have to adapt to external pressures.
Banking dinosaurs calling for return to office
Jamie Dimon, the CEO of JPMorgan has called his workforce to return to office stating that millennials are not as productive working from home comparing to seasoned employees.[i]
Global shifts in attitudes towards working from home (WFH) are not only clear but are also being executed organically without much planning (when it comes to survival it’s amazing to what extent we are able to reset our priorities to the most basic ones and still have them aligned with our unchanged goals).
Google and Facebook have both put in place plans for their employees to WFH until at least Summer 2021.[ii] Some indefinitely.[iii] Data has shown that demand for office space has sank to its lowest in Silicon Valley, prompting employers to pay higher wages to those staying in the office and reducing wages for those moving away from the tech Mecca[iv].
This trend seems to have limited reach within Wall Street as many others are calling for return to office. With winter coming and people spending more time indoors where it’s easier to spread the virus it remains to be seen if Wall Street efforts can turn into reality.[v]
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For some industries WFH works like a charm not only when it comes to cutting costs but also changing working culture, promoting innovation and growth. But those who are stubborn about keeping things traditional will not be able to go untouched by these tectonic shifts — their offices will have to provide something that actually makes a difference comparing to WFH.
Why these are lone voices ignored by other industries
CEOs such are Jamie Dimon of JPMorgan and David Solomon of Goldman Sachs (who followed Dimon’s suit) are obviously in industries run on more traditional working cultures that have little incentive for change.
Corporate culture change comes from the top down which means we have to look at the CEOs themselves to understand why these calls lie on shaky ground:
- their age — this sets the foundation for their own (in)security with using tech
- their own working habits — which are hard to break as one gets older
- rigid[xvii] views of their employees’ work-life balance at a time when so many kids are forced to do online schooling (traditionally this disregard was compensated through higher wages and perks, but not now).
But this is a dying tradition for a few major reasons:
- A new breed of executives have already taken over and continues to do so as the traditional breed is retiring
- Younger management is more confident in the power of technology, having better tech skills themselves, which has in turn produced a different mindset and affected working culture: Facebook, Twitter, Square, Slack, Zillow have told their employees they don’t ever have to come back to the office (notice that these are tech companies very comfortable with remote communication even before COVID):[vi][vii]
- The new post-COVID world has focused on social justice, equality and well-being of every individual, and better quality of life (we are still to see the reality of theory)
- Different objectives (e.g. social pressure to follow suit, as well as the fact that a higher salary cannot replace the quality of life)
Jamie Dimon’s motivation is probably also skewed by the fact JPMorgan has already invested tons of money in a new state of the art mid-town office building. This investment will be lost to expenses if offices remain empty. That’s why Jamie Dimon’s voice may not be the one we should pay attention to. But his is the loudest.
External factors beyond corporate CEOs control
Finance industry is not an isolated island in this sea of change. External factors will eventually weight on Wall Street CEOs attempts to keep the status quo.
Shifts in other industries’ consumer priorities:
- Retail — online shopping is skyrocketing. The projected 5-year growth happening in only 6 months [viii]. Retail hybrid stores have been popping up doing business in most unorthodox ways.
- Hospitality and Events — restaurants doing more deliveries than ever before (GRUB Q2 revenue increase was a staggering 41%![ix]), liquor stores doing curb pickups and deliveries[x], Zoom graduations, weddings, drive-in movie theaters[xi], etc.
- Services — mobile personal trainers and outdoor boot camps are on the rise, mobile hair dressers, Zoom therapies, telemedicine, freelancers, digital marketers.
- Real estate — virtual viewings are on the rise amplified by social media apps such as TikTok, Instagram, live streams, and YouTube people are purchasing properties without seeing them first-hand (@samanthasalem selling real estate in Kansas City, @cash.jordan real estate broker in NYC)
Demographic and societal fluxes:
- the exodus that moved millions worldwide from cities to the suburbs and beyond is telling that those people will continue working from those remote suburbs after COVID[xii]
- high living expenses, lack of work, overcrowding, and moving to online studies — due to all these young people had been fleeing the cities even before COVID hit. Now that COVID prevents them from returning, they are discovering the comfort of new cheaper out-of-metro lifestyle
- workforce movements between industries — pre-COVID rat race was at its highest prompting many to seek better work life balance by switching careers. COVID has forced every aspect of economy to turn to the internet and new ways of making money are mushrooming overnight. These realignments are not temporary — and their impact on overall society is yet to be seen.
These are not single issues; these are large scale movements that will only be measured and reckoned with after the pandemic has subsided and we are able to measure its impact. At this time, we are still in mitigation phase.
The devil is in the data:
- In June, Harvard Business Review published a study carried out by the University of Chicago, saying that “37% of jobs in the US can be performed entirely at home with significant variation across cities and industries. These jobs typically pay more than jobs that cannot be done at home and account for 46 percent of all US wages.”[xiii]
- Other similar studies by industry think tanks have confirmed this.[xiv]
Why Jamie Dimon’s calls are out of touch and short-lived
Jamie Dimon comes from the 80s Wall Street corporate upbringing, a protégé of Sandy Weill, arguably one of the most influential icons of the 80s and 90s Wall Street, who built Citigroup to the financial beast that it was pre-GFC. Jamie Dimon might have been forward thinking back in the 80s when junk bonds ruled Wall Street and the rule of law was still preoccupied with Main Street. Since then he’s been outgrown and overtaken by new kids who were quicker to accept the changes that tech brought on.
The inability to acknowledge the shift in millennials’ values toward work-life balance is also what made his bank a disliked workplace[xv]. While Dimon is citing skepticism of millennials’ productivity as key motivator for his return to office calls he fails to recognize external factors affecting his workforce: e.g. his employees’ kids stuck at home because schools are not fully open, other COVID related circumstances (e.g. health, caring for family member, unemployment of a family member, stress related issues, etc.) putting extra pressure on his employees.
Google’s CEO Sundar Pichai is conscious of external factors impacting his staff’s productivity. He is ready to make whatever changes are necessary, given the circumstances. Pichai is not only 20 years Dimon’s junior but is also confident in the capability of technology, and is comfortable with his own ability to keep his employees productive in tech heavy environment. Jamie Dimon is not.
Then again some outliers — resulting from age, seniority, and tax bracket — will continue to exist. What does that mean? — Corporate world will still be able to enforce traditional office work for junior, admin positions, and those in supporting roles who are weighting down corporate P/L (typically occupied by younger employees with not enough leverage to argue their way out).
There is one thing Jamie Dimon and David Solomon of Goldman Sachs are right about: WFH makes deals harder to negotiate. These semi-official rituals typical of every high-level communication are especially important in Wall Street.[xvi] They argue that if they make money for the company they should be able to do the job in a way that makes them comfortable: on their own turf, away from written accounts, emails, conference calls, and other documented communication. Perhaps this level of governance will be left to corporate dinosaurs to control after all.
Originally published at https://www.linkedin.com.