Amazon CEO Andy Jassy caused a stir last month when he asked all employees to return to the office five days a week. The declaration seemed to justify similar demands by executives such as JPMorgan Chase & Co.’s Jamie Dimon and Goldman Sachs’ David Solomon. And naturally, the question arose whether others would follow suit. (Some people seem to do that.)
But it also brought us face-to-face with researchers and their work finding that hybrid work benefits companies. For example, Nick Bloom of Stanford University found that employees who work from home two days a week are equally productive and less likely to quit their jobs. (Bloom, like others, speculates that Amazon’s announcement was actually an attempt to reduce its workforce without formal layoffs.)
So why do so many employers who claim to be data-driven seem to defy science?
Management is not satisfied with this investigation. “It’s not like, ‘Aspirin definitely helps with headaches.’ That’s been proven over and over and over again,” Laszlo Bock, Google’s senior vice president of human resources, told DealBook. Ta. “The academic studies that have been done so far, there aren’t that many, but they show mixed results. And they generally show some kind of neutral to slightly positive results.”
Wharton organizational psychologist Adam Grant pointed Dealbook to a meta-analysis of 108 studies and said he disagreed.
Some people are just beyond that. Nearly five years into the pandemic, many CEOs are preparing to move on from experiments they never wanted to start. “As we look back over the past five years, we continue to believe in the great benefits of being together in the office,” Jassy wrote in a memo regarding the end of remote work at Amazon.
Like academic researchers, Grant said, CEOs cannot always systematically manage whether the impact is due to remote work, the pandemic, or other factors. Ta.
You may also not want to know that hybrid working is better.
“Leadership is a lot less rewarding and fun when you do it remotely,” Bock says.
They see their companies differently. Many executives who have brought employees back to the office point to the uniqueness of their businesses and industries that require in-person work.
This includes Jassy. “Our culture is unique,” he wrote in a memo.
This tendency to ignore external data is common. “When we replicated the study in different industries and different organizations, the patterns looked pretty similar,” Grant said. “And when you talk to CEOs, no matter the industry, they all have the same struggles and challenges.”
That’s not practical. While hybrid working may be technically the best option, it is also complex to supervise. Time is money, and CEOs may not want to spend time making decisions about bringing back employees or figuring out how to manage a hybrid workplace.
But Grant argues that may be beside the point.
“The business world is all about decisiveness,” he says. However, “when you have to make very important and irreversible decisions, you need to slow down as much as possible.”
— Lauren Hirsch
In case you missed it
Major banks reported better-than-expected results to start the earnings season. JPMorgan Chase & Co. and Wells Fargo & Co. beat analysts’ expectations, despite lingering concerns about the health of the economy. The results pushed up the stock prices of each company, but JPMorgan CEO Jamie Dimon warned that rising geopolitical risks in the Middle East and Ukraine could have a negative impact on the global economy. did.
The Department of Justice is considering breaking up Google. After the company was declared a “monopoly” in an online search, regulators offered possible remedies, including forcing the technology group to spin off one of its businesses. But any action to force a breakup of Google could be difficult to accomplish, and legal experts say the Justice Department would need to prove that other changes won’t solve the problem.
Hurricane Milton hit Florida, causing billions of dollars in damage. The storm battered the state, leaving more than 2.5 million people without power.
BlackRock’s Rick Rieder wants further rate cuts for everyone’s benefit
Fall, and the fourth quarter for corporate America, is just beginning. But the financial world has already gone through several seasons, from concerns about an economic slowdown to optimism about the labor market and now concerns about whether inflation has been completely overcome.
Rick Rieder, head of BlackRock’s global asset allocation team, reported on Friday that the firm had record revenue of $221 billion in the third quarter and total assets under management of $11.5 trillion. He feels that the big picture and the right course of action is already clear. In his view, inflation is largely resolved and the Fed needs to keep cutting rates, even if recession risks remain low.
Speaking with the Times’ Talmon Joseph Smith at BlackRock’s Hudson Yards headquarters, Rieder further emphasized his outlook. This interview has been edited and condensed for clarity.
You mentioned that it might be better to think of the U.S. economy as a satellite constantly in orbit, rather than as an airplane approaching a hard or soft landing. Some business cycle traditionalists shake their heads at this.
Satellites don’t land. They get tired over time and need a little more energy. I truly believe this. Even if the Fed raises interest rates by 500 basis points, there will be no change because the service economy is not cyclical. There is a big cycle in goods.
But this is why I think the Fed will continue to cut rates further. Look at what’s happening to low-income people. Look at credit card delinquencies, car loan delinquencies, and mortgage interest rates. We have to bring that rate down.
Some who think the Fed doesn’t need to cut rates at all echo the service economy argument and argue that it can actually coast on without further cuts.
I think the economy has a two-tiered structure. Businesses are doing great. They have already paid off all their debts. Baby boomers, high income, and doing great.
The rest of the country doesn’t have cash, but the money is at home. Therefore, keeping mortgage rates around 7% means that housing will become unaffordable and there won’t be enough inventory. If the Fed lowers interest rates, it will end its cruel treatment of low-income people and small businesses. People ask, “Isn’t inflation still high?” No, only shelter inflation is high. And prices are high because there aren’t enough homes on the market.
So, how fast and how much do you think you need to cut?
I think we should raise it another 25 basis points in November. I think I will turn 25 in December. And I don’t think you need to do that much after that.
What do you think about housing supply now being a major issue in the presidential election?
I think some of the policy proposals that create incentives for home building and incentives for first-time homebuyers are really compelling. Lower rental prices and address inventory issues.
What do you think about the ongoing AI race?
We’re going to get through this incredible mountain of spending on AI and infrastructure. Once you get to the other side, you can reap the benefits for the next five, 10, or 20 years. The main form is personnel costs.
I’ve seen studies that show that 30 percent to 60 percent of jobs could be augmented or replaced. And I think people underestimate that.
Are you worried that after AI spending peaks, there will be a dot-com bubble-like crash when the wheels stop turning?
If you were to ask me if I would still invest in tech stocks today, I would say that the multiples for tech stocks are not that high. They will become an increasingly large part of the corporate world. I think that will continue forever.
It’s difficult from an asset allocation perspective. How much do you want to make with 7 shares?
Activists at Pfizer’s gates
Few activist investors today are as ambitious or busy as Starboard Value. The hedge fund is pushing for change at Pfizer, while at the same time trying to bring about changes at News Corp, Match and others.
While Starboard has enjoyed quiet success, it has also had many memorable and heated public battles. It’s not yet clear which direction Pfizer’s campaign will go, but investors can expect some rebound if it’s a long game. Below is a sample of previous battles.
Darden: One of Starboard’s most famous battles was an attempt to completely replace the board of restaurateurs. In 2014, the hedge fund alleged mismanagement at Darden, which owns chains such as Olive Garden, in a nearly 300-page presentation that became the stuff of Wall Street legend. I accused him of being there.
Surprisingly, Olive Garden no longer adds salt to the water in which they boil their pasta. This is simply to extend the warranty period of the pot. This surprising decision shows how much the management cares about providing a quality experience to their guests.
Starboard succeeded in ousting Darden’s entire board, an unusual feat for an activist. (But Darden didn’t start adding salt to the pasta water.)
Yahoo: Starboard has become involved with the struggling web pioneer amid long-running financial struggles under Marissa Mayer. Mayer, the company’s CEO, reportedly struck a secret deal with Starboard in 2015 to limit Yahoo’s costs in exchange for the hedge fund’s request for a board seat.
But spending on Yahoo has increased instead, with the company announcing plans to spin off a huge and highly valuable stake in Chinese internet giant Alibaba. Outraged, Starboard attempted to overthrow most of the board.
For more than a year, we have sought to work constructively with Yahoo’s management and board of directors. We have been working hard “behind the scenes”. We were getting more and more frustrated.
Yahoo ultimately settled with Starboard, giving the hedge fund four seats on its board.
Thank you for reading! See you tomorrow.
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