also, dont forget that its a consulting business, ie deal flow fluctuates, and you always want to keep your people busy, that is easier done when you aren’t too many.
DirtyZ, I don’t think I’d get paid $140k in NYC (I’m smart, but not that smart. LOL).
DirtyZ Wrote: ------------------------------------------------------- > kkent - this is not really related, but in terms > of cost of living, there really shouldn’t be a > huge difference between NYC and say Raleigh, NC > for a 24 year old. I know that sounds crazy, but > think of what you actually spend money on. Your > primary costs are going to be housing, > transportation, clothing (in banking), food, and > entertainment. > > If you’re in Raleigh, you pay say $700/month for > rent and NYC $1500, so you you lose $10,000 there > ($15,000 pre-tax). Transportation you will > actually benefit because you won’t need a car. > Clothing should be the same in either place. > Entertainment is obviously more expensive in NYC, > but if you only go out 1-2 nights a week (and you > won’t be going out as an analyst) then it is > neglible. Food you won’t even by paying for as an > analyst because you’ll be at work for all your > meals - you’ll just be paying for breakfast. > Bottom line…cost of living might turn out to be > $15,000 more in NYC, but if you can make > $140-$180k in NYC vs. $80 in another spot you > still come out ahead by a substantial margin. Mostly correct. Difference is, in a place like Raleigh, $800 probably gets you a 1 BR for yourself. $1600 gets you a dingy 1 BR converted to share with another person in NYC. So cost of living, not that different…QUALITY of what you’re getting IS different. Also, you will go out and spend $$$, even as an analyst. Plus, that $15,000 is a post tax number. You need to gross it up. But I agree with your general logic.
Sims Wrote: ------------------------------------------------------- > also, dont forget that its a consulting business, > ie deal flow fluctuates, and you always want to > keep your people busy, that is easier done when > you aren’t too many. Interesting. I had sort of thought about that.
FIAnalyst - I’m very aware of the costs. Lets do a quick example: 10 analysts cost $1,500,000 in comp and another $2,000,000 for “other” (cost of seat, computer, bloomberg, 401k, health insurance, SS, training, etc). Now instead of hiring 10 analysts, you hire 20, so they now each work 50 hours instead of 100. As a result, they are willing to work for $65,000 per year. Thus, total costs are now $1,300,000 + 4,000,000 = 5,300,000. Costs have increased from $3,500,000 to $5,300,000 a 51% increase, but in absolute terms not that much (the bonus of 1 MD and a pair of VP’s). This $1,800,00 increase in costs, however, is more than offset by the substantial increase in worker productivity. Instead of having disgrunted, overworked “slaves”, who are only awake because they drank 5 espressos, you now have happy, hungry, workers who can function at a higher level.
DirtyZ Wrote: ------------------------------------------------------- > This $1,800,00 increase in costs, however, is more > than offset by the substantial increase in worker > productivity. Instead of having disgrunted, > overworked “slaves”, who are only awake because > they drank 5 espressos, you now have happy, > hungry, workers who can function at a higher > level. Ok…now that you’ve stated this, prove it. Show me an example of an industry that cut hours and pay, but was able to retain talent and improve productivity.
FIA, 10 workers X 80 hours = 800 hours. 20 workers x 50 hours = 1,000 hours. In a competitive industry with excess talent (let’s be honest, a lot of talented, capable people won’t get an IB offer), it MIGHT work. Might.
> Ok…now that you’ve stated this, prove it. Show > me an example of an industry that cut hours and > pay, but was able to retain talent and improve > productivity. I know several female physicians who choose to work part time to spend time with their families. They have cut their hours and their pay, and the hospital has “retained the talent”. I’m not sure they are any more productive (do you want a Dr. rushing a surgery anyway?), but they are very selective about what patients/cases they take and don’t take.
The bankers I know, tell me the main hours of pain you work is after 7pm, and the most important final changes to a deal/pitch happens at around 2am. So how do you hire someone to work 40 hours a week in those conditions? Now your thinking well you can have the guy come in at 8pm and work till like 5am right? But to make those changes to the deal during the day you have to be on conference calls, reading the industry, prepping comps and models to allow you to make that 3am changes efficiently. Its essentially working 2 jobs, there is alot of down time too, but you need to be there during the day and when all the superiors leave you need to make sure everything is ready for the next day. Also look at PE/VC/Corp Finance “war-rooms” you know the rooms the CEO creates of lawyers/accountants/bankers that stay there 20 hours a day to review through files and everything so they can see if the deal is worthwhile, you need all the manpower. Read up on Cerebrus war-room to buy BCE or Chrysler. Heck you can even see it in the “Family Man” where hes like the client at the very last minute is antsy so you need to fly out there and change his mind. If you made a war-room 40 hours a day practice you would lose the bid for sure. You sure you want to work in an Ibank with this attitude? I have never heard a good banker say “i am not good enough or smart enough”
kkent Wrote: ------------------------------------------------------- > FIA, 10 workers X 80 hours = 800 hours. 20 > workers x 50 hours = 1,000 hours. In a > competitive industry with excess talent (let’s be > honest, a lot of talented, capable people won’t > get an IB offer), it MIGHT work. Might. So, your costs are going up and you *might* retain talent and see a productivity improvement. Even if we assume this is all correct, the risk/reward just isn’t there for a bank to try it. And lets compare it to consulting. People I know at B/B/M work significantly harder hours than do those at some other consulting firms that most of us would probably know the names of. However, they also get paid more. The money helps attract hard workers that are willing to put in the time; the type of workers that the other firms don’t attract (in general, there are exceptions to both stories). Sure, BCG could scale back hours and pay less, but then they wouldn’t attract the same level of person as they do now (not saying they’d lose all the best performers, but they would definitely lose some).
adehbone Wrote: ------------------------------------------------------- > The bankers I know, tell me the main hours of pain > you work is after 7pm, and the most important > final changes to a deal/pitch happens at around > 2am. So how do you hire someone to work 40 hours a > week in those conditions? Now your thinking well > you can have the guy come in at 8pm and work till > like 5am right? But to make those changes to the > deal during the day you have to be on conference > calls, reading the industry, prepping comps and > models to allow you to make that 3am changes > efficiently. > > Its essentially working 2 jobs, there is alot of > down time too, but you need to be there during the > day and when all the superiors leave you need to > make sure to make everything ready for the next > day. > > Also look at PE/VC/Corp Finance “war-rooms” you > know the rooms the CEO of > lawyers/accountants/bankers that stay there 20 > hours a day to review through files and everything > so they can see if the deal is worthwhile, you > need all the manpower. Read up on Cerebrus > war-room to buy BCE or Chrysler. Heck you can even > see in the “Family Man” where hes like the clinet > at the last mintinute is antsy so you need to fly > out there and change his mind. > > If you made a war-room 40 hours a day practice you > would lose the bid for sure. You sure you want to > work in an Ibank with this attitude? I have never > heard a good banker say “i am not good enough or > smart enough” Nail >> head. Particularly that last line. I was going to comment earlier, but decided not to. Didn’t want to waste more time justifying why I am a prick. There are tons of people I work with who are too arrogant, but few, if any, that don’t think they are smart enough.
I think a key consideration is the challenges for upper management of managing larger numbers of people beneath them. Part of the challenge is ensuring that there is good communication flow, so even if you have two analysts, one working from 8am to 5pm and the next taking over at 5pm to 2am, you have to make sure that there is good communication at the handoff. What’s more likely to happen with a larger number of human bodies is that upper management will start to overestimate the amount of work they can achieve with that. This means that the 1/2 pay folks will start to have longer work hours. Fewer will be willing to do so at that pay, so this will push the hours up and the pay up again. So, basically, it comes down to “unrealistic expectations of upper management about how much work you can get people to do.” Except that it doesn’t turn out to be unrealistic, since people do end up doing it. More likely it is just unsustainable for most people at the individual level of being willing to do that kind of work, but there is always a reserve army of unemployed, new college graduates, and some people that will do any amount of work if the future money potential is high enough.
ade, FIA, fair explanation. The only thing I would argue to you, ade, is that there are a number of boutique banks with a relatively consistent client base where I could see a 50 hour week not being too far off the mark. But alas, the one I’m interviewing with was founded within the last year-and-half and they are trying to get $100 million in revenue.
chad, I think that is also a reasonable explanation. Hell, I couldn’t even get the mail room to get me my faxes in the large pseudo-bank I worked for. And even though there were 20-30 (depending on the week) analysts at my place, we still put in 60+ hours. This is why we have psych majors…
FIAnalyst: There are tons of people I work with who are too arrogant, but few, if any, that don’t think they are smart enough. Agreed…of course they think they are smart enough. Everyone knows bankers are not the smartest. They are the most driven and money hungry (I’m not saying this in a derogatory manner), but you don’t need to be a genius to be a good banker. Incredibly hard work + personability (ability to fit into the culture/system) + basic intelligence = success in banking. Smarts is not a part of the equation.
DirtyZ, ya know, I’m a really hard worker, but I’d kind of like to limit myself to 60-65 hours per week. I mean, if offered the job, I’d take it without consideration or complaint ($80k for a recent college grad? Of course), but only in ibanking could I feel lazy with my work ethic. I’ve always been an insanely hard worker, I just didn’t realize there were–well, genetic freaks out there in such quantity.
It’s hard to get things done in a timely fashion if you are working 40 hours per week. Now, if you have 2 people working 40 hours per week on the same project, it’s really inefficient. Have you ever tried handing off a half-complete model to someone else? It takes them forever to figure it out, then they add stuff to it, give it back, and you have to go through and figure out what they did. Same applies for all parts of a project – constantly trying to keep twice as many people up to speed.
I don’t work in the industry but I have friends there. I think it is more a cultural thing and also the fact that the industry can afford to do that now. They don’t mind the higher turnover rate because you don’t really need to be very smart or experienced to do this job. So they can just hire people right out of college without missing a beat. As to the management problem, I think it is the same in most industries. Most companies would also prefer hiring one person doing two jobs. But in most industries, the culture isn’t there and also the monetary earning potential is not there to keep this culture viable. But if someone manage to develop a way to make i-banking easier, then this long hour culture will fade. But maybe that’s not very possible until we have robots who can do the human job?
Comps, FICA, etc etc…its all BS. Think of it logically. If you were a BSD MD…do you want to manage a group a little IB punks with Ivy League pedigree…or would you rather have one little IB punk that you can make your lil b*tch? Compensation has nothing to do with it. BBs make millions upon millions of dollars. If they wanted to double or triple their analyst classes,its not going to adversely affect their bottom line. The monkey work required by analysts can be done by anyone. Literally. Its not hard. The reason IB is so selective when choosing analysts is because of the magnitude of each deal. Millions and billions of dollars are at stake. Do you really want Bubba from the the Stop n’ Shop working on the model the night before the team meets with a CEO? They want someone who is 150% dedicated to the cause: The cause being…make money for the bank so all the BSDs can have multi million dollar bonuses. And banks arent about to change they way they do things. How pissed would you be if you climbed the ranks and worked your 100+ hrs a week as an analyst and then see some a new class of analysts work only 50 hrs a week? I wouldnt have any respect for them at all.
didn’t you turn down a job for $70k during your last job search? is that extra $10k worth the 40 more hrs/wk you would have to work? and how is this job going to be any better then your last IB job?