The United States has entered a new post-bubble environment, with businesses cutting costs ahead of a possible recession. To save money, companies have been conducting layoffs, eliminating employee perks, such as free laundry service, catered meals and snacks, and pulling back on travel expenses. CFOs are reevaluating the return on investments for their myriad of software tools and tech-subscription services. Hiring freezes and rescinding job offers have become more commonplace compared to a couple of years ago.
Chief executives David Solomon (Goldman Sachs), James Gorman (Morgan Stanley) and Jamie Dimon (JPMorgan) never fully embraced remote work. With a contracting economy, the power dynamic has shifted from employees back to the employer, and the CEOs can call for a return to the office. Workers no longer have the same bargaining power they possessed during the Great Resignation and subsequent labor shortage. The days of employee-centric policies are over, and the bosses are back in charge again.
Going Back To The Office
Bob Iger, the former and now once-again CEO of Disney, made one of his first orders of business to bring back workers to the office four days a week starting March 1. Starbucks’ interim CEO Howard Schultz was displeased that employees disregarded his return-to-office request and is now requiring office workers to return for three days a week.
Elon Musk, upon acquiring Twitter, immediately put an end to former CEOs Jack Dorsey and Parag Agrawal’s pledges to allow workers at the social media platform to work remotely “forever.” Similarly, he requires employees of SpaceX and Tesla to come into the workplace. Skeptical of working from home, he tweeted last year, “All the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!”
Similar to Musk’s “hardcore” management style, Salesforce co-CEO Marc Benioff openly complained in a companywide Slack memo that newly hired remote workers are not being productive. He lamented that the subscription-as-a-service leader left the new employees isolated at home without the benefit of an office culture.
In an interview with Bloomberg at the World Economic Forum in Davos, Switzerland, Morgan Stanley’s CEO didn’t mince words about his thoughts on the prevailing permissive work culture, stating that working remotely is “not an employee choice.” Gorman said, “They don’t get to choose their compensation. They don’t get to choose their promotion. They don’t get to choose to stay home five days a week. I want them with other employees at least three or four days.” However, despite promoting the return to office, Gorman acknowledged that it’s not a one-size-fits-all declaration. Managers need to make decisions on the specific role and circumstances of the employee. “There are different kinds of jobs. Five days in the office for everybody is not going to happen again.”
JPMorgan’s CEO told an audience in Davos that remote work “doesn’t work” for bosses. Dimon, similar to Benioff’s assertions, said that younger employees are not benefiting from this work style. However, he did offer a caveat, stating that working from home may be helpful to some people. Dimon thinks that business leaders should “modify your company to help women stay home a little,” as working mothers disproportionately bear the brunt of childcare. The chief executive is also concerned that people who work remotely may be unfairly targeted for layoffs. On the topic of returning to the office, Dimon acknowledged that “people don’t like commuting, but so what?”
Goldman Sachs’ CEO shares the same sentiment as Dimon. Solomon famously said early on during the pandemic that remote work is an “aberration.” Under his remit, a number of young bankers complained that they were forced to work 100 hours a week, which led to alleged sleep deprivation and lack of work-life balance. In response, he increased their compensation and allowed them to take off on Saturdays.
Concerns Of More Layoffs
As more layoffs are announced, it’s reasonable to conclude that CEOs and executives will flex their muscles. Just as Benioff and Musk make assumptions about the productivity of remote workers, it’s logical that they’ll rescind that option. Over-the-top perks and unjustifiable expenses will be reigned in. C-suite management teams will contend that the pandemic-induced changes to the workplace led, in part, to the problems firms are currently facing. Never mind that companies were too optimistic in their excessive hiring, believing the euphoria of ever-increasing stock and real estate prices would continue indefinitely. They overlook this fact and place the blame on supposed lazy remote workers.
This month, banking giant Capital One slashed around 1,100 jobs in its technology department. This is a warning sign that the layoffs and cost cutting in the tech sector will soon spill over into other sectors, as Silicon Valley is usually the canary in the coal mine when it comes to business trends.
It looks like the boom times are over for investment banking, and big layoffs are back on Wall Street. The news of Goldman Sachs laying off 3,200 well-paid, white-collar workers sheds light on the challenging environment on Wall Street. Declines in initial public offerings, mergers and acquisitions and deal-making have caused a drop in revenue. Global IPO activity fell 45% year-over-year, according to data from Ernst & Young.
Morgan Stanley announced around 1,600 job cuts. Citigroup let go of dozens of people within its investment banking division, as dealmaking continues to slow down. One of the largest money managers in the world, BlackRock, said it would lay off around 500 professionals. Coinbase, a publicly traded cryptocurrency exchange, is once again reducing headcount, slashing 950 positions, in its third round of layoffs within a year. Bank of New York Mellon, one of the oldest financial institutions in America, has plans to cut about 3% of its workforce, representing about 1,500 jobs.
Source: Forbes
