This article was first published in Finance Monthly
When you think of Wall Street, what do you see in your mind’s eye? Probably the stock exchange with its gleaming technology. Or bustling trading floors filled with analysts sitting in front of multiple screens, working the phones. Or perhaps a boardroom with plush leather seats, finance moguls hammering out the details of the next big merger. For years, working in these types of environments seemed to be the only way to get things done, both for the security of financial institutions and their clients, and the speed in which decisions had to be made.
But we’re now seeing a divergence among banking behemoths. No longer is Wall Street a united front in corporate American culture. They’re each carving out their own protocols as to when and where work must get done. Citigroup and UBS have taken a hybrid approach, citing the distinct benefits of being together in person while also recognizing that working remotely has benefits and creates flexibility for employees. Meanwhile, Goldman Sachs and Morgan Stanley have pushed for employees to return to the office five days a week, saying that everything else stifles innovation, training and mentoring.
Many of these large financial institutions have invested enormous resources into office space. Goldman’s headquarters at 200 West Street cost $2 billion to build more than a decade ago and this spring, JP Morgan unveiled plans for 2.5 million square feet of office space in midtown Manhattan. It’s hard to imagine they’d leave these spaces largely empty, particularly when they think there are plenty of people who would be willing to come in and work for them. After all, big banks remain highly desirable workplaces, garnering thousands of job applicants per year only to accept, in Goldman’s case, less than 2% of them – making the institution more selective than Harvard.
Of course, the past year has been a grand experiment with different work practices. Wall Street’s banks now have four options:
- Everyone needs to be back in the office full time.
- Everyone needs to be back in the office two or three days a week.
- Everyone can work remotely.
- Everyone can choose where they work best.
From our perspective, we think there’s an important insight that decision-makers are missing. For the first two options, being in the office gives managers the ability (or so they think) to see exactly what their employees are working on, when they clock in and out, and who is meeting with whom, raising their sense of certainty. It also gives them a sense of control by dictating when and how work happens. These two actions – raising their sense of certainty and control – may make a manager feel better, but they aren’t accurately calculating how much worse it could make their teams.
According to our research, a majority of employees across a variety of sectors – 54% – don’t want to be back in the office at all and 40% want hybrid options. Only 6% of respondents want to “always or mostly” work in the office. Having to return to the office can threaten people’s sense of status, or their sense of value. They feel untrusted, and treated like children. Second, it can affect their sense of autonomy, or our sense of control over a situation, which researchers have found is strongly tied to job satisfaction. Finally, returning to the office also triggers fairness threats, particularly since both the quality of people’s lives and their work performance may diminish when forced back.
The real challenge is that returning to the office isn’t a zero-sum game. A manager feeling more in control turns out to be less of an issue than an employee who feels less in control. The reason? In the brain, a drop in certainty or autonomy turns out to be significantly stronger than an increase in the same experience. Our brains are built to pay far more attention to negative experiences than positive ones, perhaps for good reason: if you miss a reward you may miss lunch, but if you miss a threat you might be lunch. The result is that managers may not notice that they feel slightly better, but their teams feel dramatically worse.
The big question that no one can answer yet, is the true cost of these different options. When you add in the emotional rawness we all still have from the roller coaster of the past two years – the net effects of offering choice in work environments may outweigh the upsides of mandating people be back in their office swivel chairs. If you require everyone back in, and use the real estate, what percentage of employees will you actually lose and what does it cost to replace them? Will that cost matter if others want to come in? Similarly, we know that only 3% of Black professionals want to return to the office full-time and that women prefer working remotely compared to men. Will requiring office time then impact your diversity, if the majority of people who are happy to work nine to five in a city office come from similar demographics? Further, what is the net drop in productivity of making people return to the office, given that working from home is about 25% more productive than working in the office?
When viewed from that perspective, it may be best to consider the net effect of all these considerations, compared to the benefits of being together all week. When much of the work can be done virtually, getting together feels special; people are excited to see one another, and be productive together. They feel respected and appreciated, instead of being treated like employee No. 749. They’re eager to come to the office for a few days each month for a working session and then grab drinks after. And that, ultimately, may be the best return on an investment you can make right now.