Lockheed Martin’s Skunk Works started as a secret, wartime facility, run separately from the defence company’s main operation out of a rented circus tent next to a malodorous factory. Lockheed trademarked the name but the unit’s role in the development of the U-2 and other mould-breaking aircraft turned it into a synonym for any small group of innovators working at a distance from their more cumbersome parent organisations.
The new hub for fledgling investment bankers that Citigroup is setting up in Malaga could be a sort of skunk works for the future of work. It looks different from Lockheed’s lab in almost every respect. It is not a secret, it will be based in a well-appointed office in the middle of the port city on Spain’s Costa del Sol, and it will directly feed and support teams of bankers working in established financial centres.
It is, however, innovative — and its progress will be keenly watched. Ensuring it thrives will require some serious management effort.
Citi is hiring 30 would-be bankers from around Europe for a “junior banking analytics group”. They will be paid about half the $100,000 starting salary received by the 100 first-year analysts it hires annually in New York, Frankfurt or London. On the other hand, the Malaga team will not be expected to work long evening hours or sacrifice weekends.
The cynics are already piling in to attack the idea. The lower salary will attract “plodders, not dynamos”. “Serious” trainees would rather experience a “real financial hub”. This is just a form of nearshoring — “basically an outsourced [PowerPoint] mill”. Citi risks having “the A team in London and the B team in Malaga”. All of these comments, incidentally, come from FT readers who, nonetheless, ensured that for a couple of days last week the news was one of the most-clicked stories on the website outside our Ukraine coverage.
I think Citi’s skunk works passes the smell test. Banks traditionally race to secure new blood by pumping up starting salaries. I’ve written before about law firms’ self-defeating competition for talented staff. The same applies to bankers: those who sign up to the Faustian high-pay bargain accept an implicit requirement to put in more hours. That leads to more burnout and the vicious cycle restarts. Citi has instead added a new entry-level rung to the ladder, where the lure is not only financial.
The initiative was inspired in part by exit interviews with departing Citi staff, which revealed a yearning for a better work-life balance. Pay is never the issue, Nacho Gutiérrez-Orrantia, Citi’s Emea head of investment banking and capital markets, told me. Yet the premature departure of high-potential recruits represents “a big opportunity cost” for the bank.
Clearly, banks such as Citi should continue to tackle the burnout threat throughout the group, not just by offering a less pressured work-life to a fraction of newcomers. The addition of a new layer of junior analysts ought, though, to spread the load for their colleagues in core financial centres. It might even disperse a different but equally productive style of working. After all, research suggests that beyond a certain number of hours worked, productivity plateaus and even declines.
“I take my hat off to any companies being creative and imaginative” as they emerge from the pandemic, says Lynda Gratton of London Business School. Her new book Redesigning Work identifies a few other approaches. CPP Investments, which manages the assets of the Canada Pension Plan, enables staff to work anywhere for three months of the year, in pursuit of a “golden model” that keeps staff “engaged, motivated and balanced”. Fujitsu of Japan designed three different types of workspaces — hubs, satellites and shared offices — for staff who wanted an alternative to the trials of the city centre commute and the monotony of unbroken homeworking.
Citi’s Malaga approach is another design. It should “give the organisation more insight into their jobs — and into their people”, says Gratton.
The bank insists Malaga is no experiment. But if it is to make its version of the future of work stick, it will also need to manage it carefully.
Executives will have to scotch any muttering from employees elsewhere that the Malaga operation is somehow “Citi-lite” or a slow track for plodders. They will need to ensure the career paths of the Malaga recruits link to opportunities elsewhere in the group. Above all, they will have to be vigilant about policing the better balance they promise.
“Que paséis muy bien, chicos” (have a great time, guys), commented a more enthusiastic FT reader, pointing out that $50,000 is a good salary for a 23-year-old in Malaga. But burnout by the beach is still burnout.