Sandra Navidi - SuperHubs - How the Financial Elite and Their Networks Rule our World

STRESS TEST: WHEN BEING A SUPERHUB IS NOT SO SUPER

As glamorous as it appears from the outside, being a superhub comes at a price. Top finance executives live in a rarefied and insular world rich in prestige, privileges, and pecuniary rewards. However, those rewards require sacrifices and trade-offs, and the negative risks are dizzyingly high. The tough culture behind the sparkly facade of financial firms manifests itself in phrases popular in the financial world such as, “You are only as good as your last deal,” “What have you done for me lately?” and “You eat what you kill.” Recruiters give promising young professionals the star treatment and seduce them with prestigious and high-salaried job offers. Initially, the stimulating environment is invigorating, and the strong culture and camaraderie provide a sense of community, purpose, and importance. However, the unpredictability of staying on call 24/7—without any control or ability to set boundaries—eventually takes a toll. The world of finance is a way of life, an all-or-nothing culture where either you’re in or you’re out; either you play the game or you sit on the sidelines. In strict hierarchical structures with military-style discipline, everyone must pay their dues, often at the expense of personal lives and relationships.

Many executives, being workaholics and travelholics, take refuge in pills and stimulants to compensate for perpetual sleep deprivation. One private equity billionaire, who constantly circles the globe in his private jet, told me that he couldn’t survive without sleeping pills. The financial crisis only exacerbated these pressures. Ten percent of Wall Street jobs were cut, yet the workload essentially remains the same. Meanwhile, the zeitgeist has changed, and previously customary business practices are now considered unethical or illegal. Competition for clients and deals has become ever more cutthroat, while increased regulatory scrutiny and new bureaucratic compliance rules add a tedious and burdensome layer to the workload. Many people do not last long past the age of forty, and many break into the profession only to make as much money as possible before getting out as soon as possible. The average duration of an investment banker’s job is seven to nine years.3

I have personally witnessed the glorification of being overworked and underslept, the celebration of exhaustion and deification of those who could boast the most all-nighters. In this testosterone-dominated, “my bonus is bigger than yours” culture, the ability to live on virtually no sleep is equated with being a high performer. When bankers say “nine to five,” they don’t typically mean five in the afternoon, but five o’clock the next morning. One of the most annoying features of this environment is “face time”: staying at work even if there is nothing to do, simply for the sake of demonstrating your undying loyalty to the organization. Due to competitive pressures, no one wants to be the first one to leave, so everyone stays late trying to look busy. Then there is the “magic roundabout”: A town car takes you home and waits with engine running while you shower and change, only to take you directly back to work.

This lifestyle may be cool and fun when you are young, but as you get older and more senior, it takes a physical and psychological toll. Executives who mastered the obstacle course on their way to the top are either equipped with personalities conducive to this environment or toughened up along the way. In this highly Darwinian profession, executives must always be at the top of their game to generate profits and fend off competitors. As they say, it’s lonely at the top. There are only a handful of top executive jobs—and legions of ambitious executives who want them.

Married to Their Jobs: Work-Family Life Imbalance

The downside not only applys to the executives but also extends to their families. Superhubs are largely absent. When in town, they typically work late hours and entertain clients; the rest of the time they travel, and when they come home they are exhausted, especially if they don’t have “travel talent” and cannot sleep on planes. Global interconnections across time zones, combined with modern communication devices, require round-the-clock availability, and I have heard countless stories of interrupted vacations, weekends spent on conference calls, and missed family celebrations. Yet, the divorce rate among superhubs is decidedly lower than among the general population. Warren Buffett remained married to his first wife for more than fifty years, Ray Dalio has been married for forty years, and Jamie Dimon has been with his wife for more than thirty years. This could be due to making the best out of the little time available, having fewer opportunities to argue, or tacit arrangements.

Moreover, the enormous costs of a divorce and the subsequent loss of privacy are definite deterrents. During former General Electric CEO Jack Welch’s second divorce, his continued receipt of generous company benefits surfaced, which led to an SEC inquiry. As a result, Welch voluntarily gave up his $2.5 million yearly pension. The low divorce rate makes shareholders happy, as divorce can have a negative impact on performance. Depending on the financial arrangements, a CEO might lose a portion of his ownership stake in the company, thereby lessening his influence. In addition, a divorce can be an enormous distraction, negatively impacting the CEO’s productivity, concentration, and energy level. It can also influence his attitude toward risk.4

Not only spouses are affected by a superhub’s prominence but also—perhaps even worse—the children. For Catherine, the daughter of longtime CEO of Deutsche Bank Josef Ackermann, it had dramatic consequences. The terrorist group RAF had assassinated her father’s predecessor, Alfred Herrhausen, with a car bomb, and one of her contemporaries—the young scion of the Metzler banking dynasty, Jakob von Metzler—had been kidnapped and killed. She also was present when her father received a letter bomb from Italian anarchists. As a result of growing up in fear of such threats, isolated and with bodyguards as her constant companions, she developed severe panic attacks, which she kept secret from her father for a long time. By her own account, he was there for her when she needed him, but during her adolescence he had largely been absent.5

Media Madness: Living Under a Microscope

Constant media scrutiny can also take a toll, especially when the stakes are so high. At a time where virtually every move is documented, the private lives of executives have become quasi-transparent. Nothing is off-limits, and family is often dragged in. Mathias Döpfner, CEO of Axel Springer and publisher of Bild, the sixth-best-selling daily tabloid worldwide, tidily summed up the laws of tabloidism when he stated that “whoever takes the elevator up with Bild will also take the elevator down with it.”6 The same applies to U.S. tabloids. No sooner had Lloyd Blankfein, CEO of Goldman Sachs, admonished his troops to avoid undue displays of wealth than the New York Post —a tabloid that everyone disses yet devours—ran a story about his wife allegedly throwing a fit at a charity event in the Hamptons. Supposedly, she had caused a huge scene, screaming that she would not wait in line with people who had paid less money than she had. Exaggerated or not, the report was presumably utterly embarrassing for the parties concerned.7 In an era of full transparency, effective self-censoring is indispensable, a fact that Mr. Blankfein seemed to have experienced only three months later: Asked by the Times of London about bankers’ high bonuses and remuneration, he stated that he was simply a banker “doing God’s work.”8 Although he later claimed to have been joking, the blowback was significant.