Home Banking While Cracking Down on Remote- and Hybrid-Working Arrangements, Banks Face a Delicate Balancing Act

While Cracking Down on Remote- and Hybrid-Working Arrangements, Banks Face a Delicate Balancing Act

by internationalbanker

By Joseph Moss, International Banker

 

Failure to follow the workplace excellence expectations applicable to your role within two weeks of the date of this notification may result in further disciplinary action,” warned the Bank of America (BofA) in a letter sent out to an employee in January, as seen by the Financial Times. The letter was one of many issued to staff who, in the bank’s assessment, were not showing up to the office frequently enough, instead choosing to work from home.

Banks across the board are seeking to tighten physical-attendance regulations dramatically. But with the COVID pandemic fundamentally transforming the nature of work worldwide, how strict can banking employers be on this issue before their demands prove counterproductive?

Clearly, the last few years have been among the most tumultuous for workers across a multitude of industries, with financial services being no exception. Although banks were stricter than most other employers in recalling their staff back to their offices once the pandemic had subsided, recent research from hybrid-working specialist Scoop Technologies found that by the end of 2023, a sizeable 82 percent of large financial companies were still retaining hybrid work for most of their employees.

Nonetheless, banks are now cracking down on remote- and hybrid-working arrangements with more force, demanding workers show up at the office more often during the working week and warning of material consequences if they do not. “Sending out these letters, that wasn’t happening before,” Jeanne Branthover, head of the global financial services practice at recruiting firm DHR Global, told the Financial Times. “Once one firm says it is going to do X, then everyone is going to follow.”

Indeed, BofA is just one of a growing list of major financial institutions that are getting tough over office attendance—or lack thereof—with the likes of Goldman Sachs and JPMorgan Chase also turning the screws in recent months. Since October 2022, BofA has required the majority of its employees to come to the office at least three days a week, while those in client-facing roles such as investment banking, sales and trading must be in five days a week, allowing for some flexibility.

Goldman Sachs, meanwhile, has been perhaps the most voracious proponent of the back-to-the-office work ethic. While the client-facing side of the workforce has largely returned to the office full-time, reports have emerged of growing dismay at the managerial level over the persistence of remote- and hybrid-working arrangements in some divisions, which the bank is now seeking to more stringently address. “While there is flexibility when needed, we are simply reminding our employees of our existing policy,” the bank’s human-resources chief, Jacqueline Arthur, claimed in a statement last August. “We have continued to encourage employees to work in the office five days a week.”

And in July, JPMorgan’s chief executive officer, Jamie Dimon, confirmed to The Economist that 60 percent of workers had returned to the office full-time, 30 percent were in the office for at least three days a week, and 10 percent were working remotely full-time. Managing directors had also returned to the office full-time in April after the bank warned them that they could suffer consequences if they failed to do so. “I completely understand why someone doesn’t want to commute an hour and a half every day,” Dimon explained. “Totally get it… Doesn’t mean they have to have a job here either.”

This new wave of demands has emerged just as the US labour market has started to cool off, which has helped to tip the balance of power decidedly back in employers’ favour. That said, with many employees undergoing dramatic lifestyle changes due to the pandemic, not to mention the growing number of opportunities within an industry that now accommodates a substantial variety of financial firms, banks are being met with more than a little resistance to their demands. “Banks are having to come face to face with the fact that there are things that don’t work as well when no one is in the office,” Mark Mortensen, associate professor of organisational behaviour at INSEAD (Institut Européen d’Administration des Affaires) business school, explained to the Australian Financial Review on March 5. “They made promises to their employees about working from home, who then made significant life changes on the back of them. Now it is very hard to undo those promises.”

A Deloitte report published in August 2023, “Cultivating employee engagement in financial services”, explored the powerful link between flexible and remote work arrangements and engagement, retention and other key outcomes. It also considered how US financial services institutions (FSIs) could develop more thoughtful return-to-the-office policies that supported long-term employee engagement. The report found that FSIs with overly strict in-office mandates could lose their pipeline of leaders and have difficulty recruiting talent. “Among respondents who were working remotely at least part-time, 66 percent said they will likely leave their current role if mandated to return to the office five days a week,” the report found. “Some FSIs now require their workforce to return to the office three to four days a week. But only 18 percent of respondents say this would be their ideal arrangement.”

So, what is their “ideal arrangement”? When asked this question in the Deloitte survey, US FSI respondents expressed their preferences for flexible working arrangements that allowed them to choose when to work remotely and when to be in the office. “Twice as many as currently working in a flexible workplace model would like to do so,” according to the findings. “Meanwhile, fewer than 20 percent of respondents say their ideal workplace arrangement was three to four days a week in office, which is what some FSIs now require.”

It is becoming clear, therefore, that banks have a delicate balancing act on their hands to achieve ideal working arrangements without aggravating their staff through excessively onerous attendance demands. “We’ve seen a lot of good people leave this industry because they were unable to balance the demands of office-based work with some of their personal commitments,” James Bardrick, UK chief executive at Citigroup, told Financial News in May 2023. “Hybrid working helps with this, and we hear a lot of potential recruits ask about this flexibility. Our approach is flexible relative to many of our US peers, and this can be a differentiating factor when we look to hire.”

Nick Bloom, a professor of economics at Stanford University who studies remote work and management practices, co-wrote a 2023 National Bureau of Economic Research (NBER) paper that found that employees who worked on a fully remote basis were more productive than those who were fully on-site. However, the research also revealed that the working relationships of remote workers suffered as they no longer experienced in-person office conversations, while their promotion prospects were also dented, as JPMorgan’s Jamie Dimon ominously warned.

Workers who show up to their offices are more likely to have meaningful interactions with upper management, and their chances of securing promotions will rise. Indeed, a survey conducted by ResumeBuilder.com of 1,190 full-time employees who had jobs that could feasibly be done remotely—including 417 remote workers, 567 hybrid workers and 206 fully in-office workers—found that remote workers were the least likely group to receive promotions and raises. And when remote workers did receive raises, they tended to be lower than those of hybrid or fully in-office workers. Only 42 percent of fully remote workers received promotions last year, much lower than the 54 percent of hybrid workers and 55 percent of full-time office workers.

A KPMG survey of 1,325 chief executive officers found that around 90 percent of US chief executives would reward employees who tried to come into the office with better assignments, raises or promotions. Such workers would also likely receive better feedback. It is perhaps with such factors in mind that Stanford’s Nick Bloom recommended a compromise: “Three days a week is enough. You’re not out of sight and forgotten about,” he told the Wall Street Journal in January.

According to Erwin Chong, managing director at Singapore’s biggest bank, DBS Bank, making hybrid models work with people requires management attention and constant calibration between “hardware and heartware”, with the specific design of the particular hybrid-working system being crucial. “Solutions that make duality work are balanced policies and curated spaces for teams that form the hardware of hybrid working,” Chong noted in a piece published on the bank’s website. “Making available activity-based workspaces, to support productive individual work and optimised ‘phygital’ collaborative spaces, will help build synchronicity. However, to truly harness the best from a high-performance hybrid team, shaping the heartware with managers winning people over with empathy is required.”

 

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