COVID-19 Forces Work Culture Shifts for Private Equity Firms
April 13, 2020
The private equity industry, historically hesitant to accommodate flexible working arrangements, has had to embrace work culture shifts as the coronavirus pandemic forces employees to stay home.
Before Covid-19, flexible working in private markets was not indulged very often, according to a survey conducted by eVestment Private Markets and MJ Hudson of 311 employees from across the global private markets industry, including GPs, LPs, and outsourced practitioners of core functions. The survey found that prior to COVID-19, just 7% of private markets respondents regularly worked from home. Of the individuals who regularly worked from home 80% were executives or senior staff while not a single junior staff member reported regularly working from home.
“Hierarchy is important in private equity,” says Dale Rose, president of 3D Group, a consulting firm that works with private equity firms. “It’s harder to hold a hierarchy when working remotely.”
Working from home will be particularly difficult for junior members of the workforce, since they may have a less-established personal network, which is hard to expand and develop via digital channels as opposed to the “trust-factor and comfort” that accompanies in-person interaction, Rose adds.
On the other hand, this may be an opportunity many people have long been hoping for. “I think there is a lot of desire from people in the industry for flexible working,” says Graeme Faulds, director of private market solutions at eVestment.
Prior to COVID-19, working hours for employees of private equity and credit managers were already long. According to eVestment’s survey, 53% of respondents work more than 48 hours at the office per week on a regular basis, the upper limit of the European Working Hours Directive.
Nine percent of respondents say they regularly work more than 58 hours per week, and five individuals report regularly clocking more than 68 hours in the office each week.
While many workers may welcome the shift to flexible working, it’s not without potential negative side effects. In an industry where long hours are already the norm, and where many struggle to put work away, remote work could lead to an increase in overall work hours. That could boost productivity in the short-term, but it also increases the risk of burnout, Rose says.
“It could be detrimental to the psychological health of these individuals who now can work harder and more,” says Rose. “They may be working in their sweatpants and their suit tops but they’re working 20% more time.”
In addition to working long hours, the survey found that many people in private markets already had a hard time putting down their work prior to COVID-19.
The natural pauses that were built into the workday, such as commuting, meals and weekends have eroded under lockdown, says Robert Ryan, executive advisor at Shields Meneley Partners, a consulting firm working with private equity firms.
“You can work all day, you can work every minute of the day. You can stay busy for 60 hours a week,” says Ryan.