What also becomes apparent through the career pattern of many job changes is the very specific nature of the firm: They function less as a hierarchical structure of command and control, as traditional organizational theories would have it, but rather take on the form of a network: secondments, be it to sub-branches or to customers, blur the boundaries of the organization, and give it a rather fluid appearance. While financial professionals still are pro-forma employees, their income relies largely on bonuses and fees generated through making deals.
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This leads in turn to a specific stance of the employees towards their organization. In terms of placing their international exchanges over their career, they can use the option to go abroad to maintain their position in the field, as Linus explains:
Usually you do that after three years and sometimes later. That always depends on the demand and the situation… sometimes there’s a position available because someone went to Hong Kong or left the firm. Then they need someone quickly and maybe can’t find anybody, while you are sitting in a slow market, maybe in Germany, when your boss says, ‘yeah I’ve got three people here at the moment but really I only need two, go somewhere else and make some luck, you can return when the market here turns.’ That’s OK, it’s better than being fired
This quote shows how the personal career of financial professionals relies not so much on their intra-organizational performance, but on the state of the market. If a local market is “slow”, i.e. there is not much money to be made, a move to another country might not just benefit the organization but secure the position of the individual. In other words, the fate of financial professionals is increasingly tied to the state of the market, and only to a lesser degree to the firm.
Nicolas reiterates this point from the perspective of a CEO:
So, we try, I mean, in our case, what we try and do is articulate a story for the people that come on board; basically says something like- yeah, it is a little bit more subtle than this, but is the message: "You are a smart person. You have got some great skills. You have gone through a long process to get on board. We are an organisation that is set up to prosecute and to take advantage of opportunities, to take advantage of change. You guys on the ground, wherever you are: in New York, or in the US or in Asia, in Europe- wherever you happen to be; you guys on the ground are close to the opportunities.
While Nicolas is obviously giving the interviewer a boiler-plate speech about working at his firm, it speaks clearly of an conception of very self-sufficient employees who are expected to show initiative and diligence. He continues:
Okay. So, and we as an organisation have an umbrella, if you like, of capabilities. Those capabilities could be people, they could be history and experience of doing particular things, they could be particular products that
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are useful, they could be money, obviously- financing, they could be access to other things around the world, they could be a whole bunch of things. We have these capabilities. You on the ground need to- What we watch you try and do is take advantage of all those opportunities, understand what our firm looks like, be close to your clients on the ground, identify the opportunities what we have can make a difference to the client, draw then what you need out of the organisation and then turn those dreams into a reality.
Nicolas highlights the entrepreneurial aspects of being employed in an investment bank.
The role of the firm is basically relegated to a pool of resources (“umbrella”) for the individual to use in order to create and exploit “opportunities” on the market – on his or her own accord and responsibility.
Financial professionals are, in other words, employees on paper, but the practice of their work are actually more akin to the ones of an independent entrepreneur. This relegates the role of the firm to three main functions: Firstly, they act as gatekeepers to financial markets, because the access of an individual to the market is bound to certain licences which are only accessible through a firm (the professional designations mentioned in the previous section being one of them, but also trading licences on stock exchanges), secondly, they act as facilitators for individual market success by providing resources, most notably contacts and capital, and thirdly, they act as regulators in terms of ethical behaviour. Classical functions of the firm, such as “command and control” of their employees are not on the forefront of their agenda.
Financial professionals, on the other hand, have to make use of the resources a firm provides. Joshua, who moved from an investment bank to a big Australian retail bank which had integrated investment functions into its wholesale department, describes this as follows:
So you kept everything to yourself, you worked with yourself and your staff that worked for you. That was it. It was all kept very tight. Whether you had developed, I had developed certain things I would not tell anyone how it was done. If you want, hire me. That's what I used to say, hire me. Um I'll come and part work for you as part of your team, but I want a share of the (1) share of the pie at the end of the year. Um, so it was all about keeping the intelligence and the information to yourself. Um (1) when (1) when worked for the (1) retail bank it was delegating, I never used to delegate. I was terribly bad at delegation, I just // when you keep informa- you just don't delegate,
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right, so I started to delegate, and I started to share information and I'd keep their boss at the top informed. He used to look like a star 'cause he'd go to the executive meetings and tell everybody what we're doing and they've just done this and they're, you know, he always looked good in front of his peers, um I would be then (1) I would get, share and I used to involve other departments, get their thoughts, ideas 'cause there was quite often l-. Big retail banks had more knowledge than any investment bank could ever hope to. It is just because they've been doing it for so long and they just know so much about customers. Their knowledge is incredibly powerful, so I started using the different parts of the bank. So I'd get very big ticks about sharing that around and getting other people involved so that's what I did. I reversed exactly what I used to do, it was very controlled, involving other people and sharing information.
Joshua describes two possible courses of action: The first is to work for oneself in a competitive environment, and profit from one’s work by trying to get hired upwards. The second mode is to cooperatively change the environment of the firm one is working for in order to make it function for one’s own advantage. This is what Godechot (2008) calls “internal entrepreneurs”: Instead of being directed by the firm, financial professionals actively change the work practices in order to gain an advantage on the market.
In conclusion, the relationship between the financial professional and their firms is one of mutual dependency: The firm enables market access through employment and profits from the market activity of its employees, financial professionals on the other hand act after a training phase mainly on their own accord, and utilize the resources provided by the firm for personal gain. This relationship is more or less openly acknowledged.
The mutual dependency of firm and employee and the self-directedness of financial professionals lead to an instrumental relationship between those two. Together with the effect of firms (and their employees) becoming themselves subjected to the pressures of financial markets they create in the first place, layoffs and mergers are a constant feature of financial careers, as can be seen from the frequent job changes of most of our interviewees.
This instrumental relationship, plus the pressure to find and “exploit” opportunities create an instrumental relationship to the world, producing a economistic doxa, not true cosmopolitanism. The respondents are trained to spot market opportunities, but this also undermines the relationship with their organizations. This also produces certain patterns of engagement among the agents in the field and forms a specific habitus.
176 10.3 Gender
When examining the recruitment practices in finance (Chapter 9.1.3, pp. 143-150), the stance of my respondents from the executive level was quite clear: Investment banking is an industry where diversity matters, and their firms pursue active strategies to hire women and applicants from multiple socio-economic backgrounds. As already mentioned, in terms of socio-economic background, these strategies are not necessarily successful, a finding corroborated by other research (e.g. Ashley et al. 2016, McDowell 1997).
Similarly, when researching gender relations in the field, the sentence “Finance is a men’s world” can be found in most publications dealing with the topic. Statistics on the matter for the gender relations in investment banking are scarce. An approximation however can be gleamed from data for the bulge-bracket investment banks in the United States (Crowe and Kiersz 2015).
The picture emerging is one anecdotally confirmed through most of the literature, and seen as representative for the industry globally (Honegger 2010):
Over all categories of employees, investment banking achieves roughly gender parity, at four of the six big American investment banks, slightly more women than men are employed.
However, most of them work in roles described as “other”, that is as administrative or supporting staff, or in other roles not associated with the core business. In these roles between sixty and seventy percent of all staff are women. Moving up through the ranks and closer to the market activity, the share of female employees drops. In middle management their representation varies between those six firms from twenty-four to fifty-one percent, among executives and board members the share of women lies between nineteen and thirty-four percent, dropping to zero among CEOs.
According to a report by the consultancy firm Oliver Wyman (Jäkel and Moynihan 2016:
9-10), these numbers fit well with the global data from the bigger category of financial services firms (also including consulting firms, central-, retail-, and commercial banks, market infrastructure providers and insurance companies). In the whole sector, the global average of female executives (board members and members of executive committees) is sixteen percent, however varying between values of two percent for Japan and thirty-three percent for Norway.
In Australia, twenty-one percent of executives are women, in Germany only ten percent. Again, among these executives, female representation is larger in roles removed from the market, such
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as human resources and legal departments, where women have the strongest representation with forty-five and thirty percent, whereas only fourteen percent of all executives responsible for business lines and finance, and only eight percent of all CEOs are women.
The situation of women in investment banking is therefore not only one of a glass ceiling preventing upward mobility, rather there seems to also exist what I would like to call a “glass wall” confining women to the less lucrative administrative and supporting departments within financial firms.
While the effect of the glass ceiling is well researched and known to exist throughout most organisational fields, the glass wall seems to be a particular feature of investment banking.
Since women do not advance in corporate hierarchies in step with men, in the literature (for an overview see e.g. Barreto et al. 2009) usually two interrelated explanatory factors are given: In a structural perspective, major career advances happen for men at a stage in the life course (between the age of thirty and forty) when women tend to reconsider their priorities, have children, and devote more time for family life. When returning to the workplace they have to compete with a younger cohort of men for advancement, while their male peers have already
“overtaken” them. This structural effect however is heavily steeped in the cultural conditions of the workplace, on its own the factor of child-rearing explains very little. Rather it is the cultural factors such as societal role expectations, gender stereotypes and sexual discrimination, which are generally viewed as the decisive reason for the underrepresentation of women in the upper echelons of hierarchies.
The glass wall as a specific feature of investment banking is often attributed to a culture of masculinity specific to investment banking. As for instance McDowell (1997) or Honegger (2010) argue, the competitive nature of the business reinforces male stereotypes of aggresivity and combativeness. This goes hand in hand with martial self-images of the men dominating the field as “warriors”, “soldiers” or “sharks”, and finds its expression in rough interactions and machoistic language, as well as bellicose status games in the workplace.
While this is often treated as a mere cliché of finance as a rough “boy’s club”, the only two women in my sample (representative of the under-representation of women in investment banking) confirmed this culture outright. Both women in my sample experienced the harshness of manners and felt “in the wrong place”, as Carolin from Frankfurt put it. Kim tells the following story of her time at an Australian investment bank:
Swearing. All the time. You know, like, a lot of swearing, and they would say to you: “Get that done! Get this done! Get that done!” You know, it's not nice language, you're being told what to do in a very rude way. Y- you can
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say that…you can’t say these words in public though. And it's very fast. It's extremely fast. Yeah and I think it wasn't great for me. I didn't like that aggressiveness, and I didn't like being told what to do either.
Kim describes the normalcy of a rudeness she was not even willing to replicate in the interview. The men I interviewed, when asked about gender relations had less of a problem describing this culture. Thomas from Sydney for instance does not have any inhibitions in expressing himself towards the (also male, and of a similar age) interviewer in a rather explicit way, when asked about whether he had any female colleagues:
There were quite a few women in back office, four girls on a desk. [The first firm] was small, we had four girls, one of them was a manager and she was, she was just great at her job, like a really clever, clever woman. One was a salesperson, actually no there were five. Two of them were salespeople, one was Greek and one was Chinese and they just looked after that market, so the Greek one had so many contacts in the Greek community she got all her business from there. The Chinese one, her dad owned a Chinese newspaper so she got all the business through her dad, another girl, was really good at derivatives, she worked on the derivatives desk. And another one had huge fabulous breasts and she used them to her advantage very very well in
<laughs> in acquiring clients… then [at other firm] there were three girls, four girls that worked on the desk there, and that was like fifty people on the desk. And they were all hired because they were extremely good-looking and sluts as well. Two of them were twins and they were so sexy those two twins, and each of them slept with like eight or nine guys in the office, so they were just... At [first firm], the women that worked there were good at their jobs, at [the second firm] the women that worked there were good at sleeping with the right people in the office to keep their jobs <laughs>.
The way he refers to the women could be owed to the casual interview situation; however, the use of expletives implies that this derogatory way of talking about women is perceived as normal. The rather unapologetic way Thomas talks about the gender relations at the workplace, and his stereotypical reduction of former female co-workers to either “sluts” or people who get their business not from their ability, but rather their belonging to an ethnic community is mirrored in a politer way in the reason given by Sebastian, for why the business is male dominated:
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Women find professional places like that very hard because, erm, the hours, so women tend to get to a certain level and not above. Very few, few women survive that type of environment, which is a shame, but it's true. Um, with men, you find that those that have the ability to get up every day, persevere, um, no matter, just start again and start again because in banking you get knocked down ten times, you have to get up ten times, each day.
Sebastian’s explanation of women as the “weaker sex”, and Thomas’ overt sexism demonstrate the power of gender stereotypes in finance. Underlying both statements is a sense of normalcy, a position of “this is just how professional places are”, which defines the workplace as a male space, and runs counter to the claims of diversity being a true value of investment banks discussed in Chapter 9.1.3. As both, Carolin and Kim stated, it was this culture of diminishing women which made them leave investment banking.
10.4 Ethnicity
While the gender hierarchy seems firmly entrenched, investment banking also prides itself of its ethnical diversity. As I discussed previously, the approach to ethnic differences seems different to how gender is dealt with. The argument of voiced in the interviews was that “true cultural differences” would get “sanded down”, therefore ethnic differences had no substance in finance.
However, in the interviews, the respondents seemed generally to conflate the category of ethnicity with internationality. Their experience with ethnic diversity referred to international work contexts, not so much to different ethnic backgrounds from the same country.
Data on ethnicity in investment banking is even harder to come by than for the representation of women. The exception again is the United States, where the national discourse over race and racism has sparked a small debate on the “whiteness” of the industry. In terms of general representation in the workforce and career advancement, Crowe and Kiersz (2015) report that among the top six bulge-bracket investment banks, the total share of non-white workforce varies between twenty-two and forty-seven percent. As with female representation, this drops to values of roughly a third of middle management being non-white, and again among executives to values between four and nineteen percent. The authors conclude that as for women, an ethnic glass ceiling seems to exist as well. For Britain, Ashley et al. (2016) find that
Data on ethnicity in investment banking is even harder to come by than for the representation of women. The exception again is the United States, where the national discourse over race and racism has sparked a small debate on the “whiteness” of the industry. In terms of general representation in the workforce and career advancement, Crowe and Kiersz (2015) report that among the top six bulge-bracket investment banks, the total share of non-white workforce varies between twenty-two and forty-seven percent. As with female representation, this drops to values of roughly a third of middle management being non-white, and again among executives to values between four and nineteen percent. The authors conclude that as for women, an ethnic glass ceiling seems to exist as well. For Britain, Ashley et al. (2016) find that