Disruptions resulting from Covid-19 have forced businesses to adapt and create new models of work. Although some industries may return to something resembling their pre-pandemic operating model, the investment industry has already crossed a threshold.
That is the view of Kunal Kapoor, CFA, who participated in a webinar entitled ‘The War for Talent and the Return to Work’ on 16 September.
“The longer this is drawing out, the more it’s not about navigating a period,” the chief executive of US-headquartered investment research company Morningstar said during the webinar, which was organised by CFA Institute. “It’s about permanently changing the style in which you run your team.”
Also participating in the discussion were Carol Geremia, president of MFS Investment Management and head of global distribution; and Lori Heinel, CFA, executive vice-president and global chief investment officer at State Street Global Advisors. Rebecca Fender, CFA, chief of staff for research, advocacy and standards at CFA Institute, was moderator.
New paradigm for productivity
Firms will need to adopt a hybrid model that combines flexibility and virtual work with the need for in-person interaction, all panellists agreed. “It’s not about return to the office. It’s the future of work,” said Heinel, emphasising the need for a forward-looking approach to leadership.
Even though the focus is on the emergence of a new model, some roles may not change much. Client-facing professionals who tend to travel and be out of the office a lot, for example, have long had their own hybrid model of work, while certain other functions need to be done on-site in an office most of the time (for example, traders may need to be in an office to access the right technology platform).
For Heinel, the conversation should start with a fundamental question: how can people get work done most effectively? Because different functions will have different answers, a model based on flexibility and adaptability will lead to greater complexity for firms to manage.
Many firms, including those of the panelists, have reported an increase in employee engagement during the pandemic. But the situations that correlated with higher engagement may also come with trade-offs. Regardless of how motivated and engaged employees are, a hybrid model will pose challenges for connecting individual professionals within and across teams and fostering the development of meaningful relationships.
Ultimately, any model of work will be measured by productivity, which is turning out to be an area with a significant perception gap between management and employees. When webinar audience members were asked to agree or disagree with the statement ‘Investment teams will experience a meaningful gain in productivity from a move to a hybrid model’, 83 per cent expected a productivity boost.
This did not surprise the panelists. In general, employees appear to perceive themselves as having been more productive during the pandemic, but from the perspective of management, these professionals may have been getting more accomplished simply because they have been working more hours rather than being more productive or efficient.
“I’m not sure that if you actually looked at the amount of time they spend doing things versus the output, it would actually translate through,” said Heinel. “I think it’s just been that the work-life balance has gotten a little bit out of whack.”
The question of productivity also raises what Geremia called “the biggest challenge of the hybrid model” for management. She described a scenario in which more autonomous employees may thrive with less supervision while those who need more managerial support may not get enough direction or help. Personality differences are another important factor to consider, she added.
From Geremia’s point of view, the overall challenge for leadership can be framed as another type of inclusiveness — how to manage firms in a way that includes and integrates a wider variety of workers with different characteristics and circumstances.
Impact on investment careers
If a hybrid work model increases complexity for firms, it also will add new considerations for the career planning of investment professionals.
One benefit of a hybrid model based on flexibility is that reducing geographic barriers will expand opportunities.
A global talent pool means global competition among professionals vying for positions. Building strong professional networks will become more important but the challenge of trying to form meaningful relationships will be more difficult.
The bottom line is that investment professionals will need to be more active in building and maintaining effective networks. When webinar audience members were asked for input, 71 per cent agreed with the statement “Less in-person interaction will make it more difficult to build and sustain professional connections, and networks will become more fragile.”
A hybrid model of work will also pose challenges that vary for professionals at different stages of their careers, and some of the issues can defy stereotypes about generations. Consider the impact of technology. Although younger generations are often perceived as more comfortable with technology, the panelists have found that younger employees may be the ones who have a stronger desire to work in an office environment more often.
According to Kapoor, younger Morningstar employees have said that they learn a lot by observing in the office “but they’re not seeing the people who are coaching them and mentoring them here as frequently”. Moreover, there may be concern about opportunities for advancement. “That’s an imbalance that we have to address,” Kapoor added.
The impact on individual professionals can go beyond the conventional notions of career planning. Highlighting the issue of mental health, Geremia noted that “the burnout level” has become a concern, and the problem is not limited to employees lower in the hierarchy who feel that they are under more pressure. “Even CEOs get burned out,” added Kapoor.
Is the stress associated with adapting to the pandemic only temporary? Mental health could be a heightened concern because a hybrid work model will carry forward some of the changes that began as short-term adjustments. More than ever, the work model may have to account for team members in a more holistic way — not only in the quantifiable aspects of performance, such as productivity.
Organisational cultures will need to evolve
The new work model in the investment industry will have significant implications for organisational cultures.
Within firms, leaders will have to find ways to develop cultures with a shared sense of purpose. A hybrid work model will bring opportunities to increase diversity in multiple ways (not only in the conventional sense of race, gender, etc., but also in terms of working arrangements and other factors). But greater diversity will also add to the challenge of developing a cohesive, unifying firm culture.
“Managers are just going to have to figure out a whole other level of team building,” said Geremia. “The foundation of all of it is trust and the willingness to share information, the willingness to believe that my job is to make somebody else better, to make somebody else smarter, to inform somebody more so that we can collectively have better conviction.”
“Flexibility is here to stay,” said Kapoor. “We have to prove that we can build firms and cultures that can endure with that flexibility.”
CFA Institute will dive deeper into examining the new work parameters for the investment industry in a multi-part research series that will explore what, where and how work gets done. The first of the series (CONTEXT) is now available. You can access all the findings by signing up on this page.
If you liked this post, don’t forget to subscribe to the Enterprising Investor.
By Roger Mitchell.
All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
Image credit: ©Getty Images/Peter Dazeley