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Why do we work so much?
 

TesticularElephantitis's picture
O
(Baboon, 132
 
Points)
 on 6/16/12 at 2:27pm

If someone asked me why bankers work 80 hours a week instead of there just being twice as many bankers, I'd tell them that the total productivity of one working 80 hours a week is greater than two working 40, because of the exponential effects of knowledge.

Is this in any way realistic? haha :)

Nothing can stop me.
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Comments

wallstasks's picture

It depends. A lot of groups

 
Points)
 on 6/16/12 at 2:46pm

It depends. A lot of groups would benefit from having more people, but a deal driven environment requires that sometimes you stay longer and other times you have nothing to do. If pay continues to be curbed at banks it's just a matter of time until bankers refuse to work the hours they're working right now and the banks will have to hire more.

TesticularElephantitis's picture

What's the benefit for the

O
(Baboon, 132
 
Points)
 on 6/16/12 at 3:10pm

What's the benefit for the bank to have half the people at twice the wage? Or, well, likely it's less than twice the wage, right? But enough to motivate the best and most motivated to join IB / etc?

Nothing can stop me.

Relinquis's picture

There are several factors: -

RE
(Neanderthal, 2,186
 
Points)
 on 6/16/12 at 3:27pm

There are several factors:

- A lot of the work isn't divisible or suitable to shift work.

- The work is lumpy, with time spent waiting for people to give you their comments on your work, or being "on call" as your team is generally at the mercy of the deal timetable or client pitches.

- The fee income from a specific group, team or type of service is lumpy and you need to be able to ramp up / down man hours and adjust bonuses without having to lay off lots of people whenever you hit a slow patch. M&A isn't like law, accountancy or consulting where you get paid on an hourly / retained basis. The fee income is contingent on deals happening.

- The hierarchy of banking (the pyramid) means that the politics of working in banking are such that professionals would rather they worked longer hours earlier in their career than have more competition at their level when trying to progress to higher levels in their hierarchy. A particular bank is going to require a limited number of MDs / Directors to cover a specific sector. A similar argument can be made for some buyside / fund management businesses, but the driver there is economies of scope rather than the pyramid structure of a sales / advisory business like investment banking.

relinquis... Killing the GMAT this December; Over/Under set at: 725 GMATs.

Fredbird's picture

Large part of it has to do

(Baboon, 129
 
Points)
 on 6/16/12 at 3:50pm

Large part of it has to do with the "everybody can work 40hour/week jobs, but _I_ can work more"-mentality I think. Working hours as kind of a status symbol.

jrt336's picture

M&I had a good answer for

(Orangutan, 337
 
Points)
 on 6/16/12 at 4:36pm

M&I had a good answer for this question

BTbanker's picture

Relinquis: There are several

IB
 
Points)
 on 6/16/12 at 6:40pm
Relinquis:

There are several factors:

- A lot of the work isn't divisible or suitable to shift work.

- The work is lumpy, with time spent waiting for people to give you their comments on your work, or being "on call" as your team is generally at the mercy of the deal timetable or client pitches.

- The fee income from a specific group, team or type of service is lumpy and you need to be able to ramp up / down man hours and adjust bonuses without having to lay off lots of people whenever you hit a slow patch. M&A isn't like law, accountancy or consulting where you get paid on an hourly / retained basis. The fee income is contingent on deals happening.

- The hierarchy of banking (the pyramid) means that the politics of working in banking are such that professionals would rather they worked longer hours earlier in their career than have more competition at their level when trying to progress to higher levels in their hierarchy. A particular bank is going to require a limited number of MDs / Directors to cover a specific sector. A similar argument can be made for some buyside / fund management businesses, but the driver there is economies of scope rather than the pyramid structure of a sales / advisory business like investment banking.

This is exactly what I was going to say, but you said it better. +1

"A man generally has two reasons for doing anything. One that sounds good, and the real one." - J.P. Morgan

lloydmof's picture

People vs Productivity are

HF
(Baboon, 132
 
Points)
 on 6/17/12 at 1:22am

People vs Productivity are not linearly correlated however employee liabilities like salary (and related costs) and redundancy liabilities are proportional to number of employeeys. So it makes most sense to have a few people doing as much as possible. That's all she wrote...

"It's not until the tide goes out that you see who's swimming naked" - Howard Marks

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