Why do investment banks hate staff working from home?

Jamie Dimon is perhaps the most recognisable investment banker on the planet, so when the longtime chief executive of JPMorgan has something to say on an issue, people tend to listen.

And a topic the 69-year-old currently has a lot to talk about is his clear dislike for employees working from home.

In leaked audio of an internal town hall meeting that took place last month, Dimon went on a prolonged, expletive-laden rant after a staff member challenged him on his order for all employees to return to the office five days a week. In fact, almost 2,000 disgruntled staff had signed a petition demanding the company retain its previous hybrid work model.

“Don’t waste time on it. I don’t care how many people sign that fucking petition,” said Dimon, before reminding staff that they have a choice as to whether or not they want to work at JPMorgan. “It’s a free country, you can walk with your feet. But this company is going to set our own standards and do it our own way.”

Yet Dimon is not alone in his thinking. Goldman Sachs has hauled its staff back into the office five days a week, while investment bankers at Barclays are also required to be at their desks Monday to Friday.

So why do investment banks seem to be so averse to their staff working from home? Some say it is due to the high salaries they earn and the need to squeeze out productivity, while others believe it is because senior managers — who have historically put in long shifts at their desks — feel put out by younger employees not working in the same way. A few simply suggest the job cannot be done remotely.

Dani Grieveson, an executive coach, who has worked with a number of CEOs, told The Banker: “Jamie Dimon’s outburst didn’t surprise me as there’s such a need for productivity in investment banking. It’s a high-stakes, hyper-competitive game and people have to be available — and that means being at their desks.”

Productivity is the rocket fuel of profitability, she adds, and in order to capture that investment banks have “decided remote working is an inferior way of doing business”.

Tom Andrew, senior manager at Robert Walters, a headhunter and recruiter that specialises in investment banking, agrees.

“The bulk of work happening within investment banking relies heavily on teamwork. Complex projects often requiring real-time collaboration and quick decision-making are made difficult and more time-consuming when employees are dialling in from a range of different locations.”

Investment banking is also an extremely risk-averse industry, he adds, and as such banks want their teams in more often to maintain tighter controls over sensitive information. “Professionals working remotely on public or home WiFi could potentially trigger vulnerabilities, data breaches or unauthorised access to confidential information,” he says.

He does point out, however, that it should not be ignored just how much banks have spent on centrally located offices and the sway that has on where they want people to work. JPMorgan, for example, will open its new $3bn US headquarters on Park Avenue in New York later this year. Designed by architect Norman Foster, the skyscraper will house up to 14,000 of the bank’s employees over 60 storeys.

“It mustn’t be overlooked that as one of the highest-paying industries, many banks spend millions on top-tier office space in central locations that leadership teams want to be used,” says Andrew.

In London, meanwhile, Goldman Sachs spent £1bn on its London headquarters when it opened in 2019, just before the Covid-19 outbreak. The 10-storey building, known as Plumtree Court, is bigger than 26 football pitches and has the largest trading floor in the capital.

Jo Keddie, partner and head of employment and partnerships at law firm Forsters, says: “With rising office costs in the Square Mile, where premium and new five-star office premises are now edging into the region of £100 per square foot, and with lease commitments making it difficult to surrender office space, there is every reason to ensure occupancy is maximised.

“This is not least because many banks have been reducing the total number of their UK-based workforces over the past six months — so there should be no excuses that there is not enough space to accommodate everyone.”

Those job cuts are also important in perhaps explaining why banks are being more bullish about getting their employees back into the office than other sectors. The sense is that workers have fewer job opportunities available to them and so have to grin and bear the shift back to their desks.

Keddie says: “The pressure on London investment banks to perform is immense as other regions vie for new company flotations and London needs to retrieve its position. There have been several notable restructuring and redundancy exercises across the sector over the past two years, and those employees that remain are grateful for their jobs as the prospect of finding roles elsewhere is challenging.”

Job security is a priority for most bank staff at present, she continues, and so for these reasons “banks are far less worried about losing their staff — something that is likely to continue for the foreseeable future”.

Andrew adds: “No, it’s not surprising that many prominent corporates, who are less vulnerable to the fallout of staff departures, have been forerunners in return-to-office mandates.”

One investment banking executive based in Paris puts it very simply: “Front office jobs in investment banking are deeply interconnected. You need to be aware of everything that is going on. The bottom line is managers believe people will miss out if they are not in the office. In fact it’s deeply frowned upon if they aren’t.

“The message is now clear: barring exceptions, you are not allowed to work from home any more.”